SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

         [x]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended June 30, 2005

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

                  For the Transition Period from_______ to _______

                         Commission file Number 0-14859

                          GARB OIL & POWER CORPORATION
                  ---------------------------------------------
                 (Name of small business issuer in its charter)

             Utah                                         87-0296694
-------------------------------            -------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification. No.)
 incorporation or organization)

                        1588 South Main Street, Suite 200
                           Salt Lake City, Utah 84115
               --------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number (801) 832-9865

          Securities registered pursuant to Section 12(b) of the Act:

          Title of each class Name of each exchange on which registered

                                      None

          Securities registered pursuant to Section 12(g) of the Act:

                           Common stock (No par value)

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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.
(1) Yes [X] No [ ] (2) Yes [X] No [ ]


Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

State Issuer's revenues for its most recent fiscal year: $590,559

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. $99,667.

<PAGE>

                         (ISSUERS INVOLVED IN BANKRUPTCY
                     PROCEEDINGS DURING THE PAST FIVE YEARS)

                                 Not Applicable.

                     (APPLICABLE ONLY TO CORPORATE ISSUERS)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of June 30, 2005, the Issuer had
outstanding 20,000,000 shares of common stock (no par value).


Transitional Small Business Disclosure Format (check one) Yes [X] No [ ]

PART I

1.  DESCRIPTION OF BUSINESS

Garb Oil & Power Corporation (the "Company") is in the business of developing
and marketing processes which will recover crumb rubber or other recyclable
rubber, oil by-products, commercially marketable char and steel from scrap
tires, a system and process to recover, repair and market truck tires of all
sizes, market new tires imported for sale through Distributors and market
processes which will utilize scrap tires and/or municipal waste to generate
steam for the production of electricity. During 1999, the Company acquired
certain assets from its sister corporation Garbalizer Machinery Corporation,
including the rights to manufacture and sell Garbalizer tire shredders. The
Company has designed a system that in its opinion is capable of recovering
rubber from used large, off-the-road (OTR) tires. The Company has the rights to
act as the non-United States agent for a third party's unproven technology for
the remediation of radioactive wastes and exclusive rights to build its plants
in the United States and abroad.

The Company received revenues of $590,559 in the fiscal year ended June 30, 2005
and at the end of the year its current liabilities exceeded its total assets by
approximately $1,762,970. The Company continues, as it has done in recent years,
to actively pursue sales of its OTR Tire Disintegrator System, Garbalizer tire
shredders and crumb rubber plants. These activities resulted in the sale and
delivery of a shredder October 2004, and a contract for the sale of an
additional shredder which is under construction as of June 30, 2005. There are
continuing negotiations for additional significant sales but there is no
assurance they will materialize during fiscal 2005. The Company has limited
financial resources, and it may not be able to continue in business if it does
not receive significant additional cash from operations or financing activities.
The Company cannot give assurances that its plans to generate cash will be
successful.

The Company's predecessor, Garb-Oil Corporation, was incorporated and commenced
business on September 11, 1972, under the laws of the State of Utah. The Company
changed its name to Garb Oil & Power Corporation in 1985.

OTR Tire Processing System

The Company has designed a system known as the OTR Tire Disintegrator System
which it believes will be capable of recovering used rubber from large,
off-the-road (OTR) tires. The Company has substantially completed the
engineering and design of the OTR Tire Disintegrator System, but to date has not
constructed a commercially operating system. Currently the company is in
discussions with a company, (INTERPIPE) located in the Ukraine, who has
indicated an interest in completing the development of the OTR Tire Processing
System for marketing in Eastern Europe. If an agreement is reached the Company
would retain marketing rights for North America where the process would be
marketed by the Company.

<PAGE>

Although such discussions are underway there is no assurance that the
discussions will result in an Agreement between the two companies or that the
process would be successful if constructed by INTERPIPE.

Commercially available tire shredders, including shredders made by the Company,
are designed to process standard automobile, truck tires and some OTR tires,
which may include semi-trailer or over-the-road tires. Tires used in a variety
of off the road equipment, such as graders, bulldozers, mining equipment, etc.
cannot be processed directly by these shredders. Although these tires, which may
weigh from 400 pounds to 9 tons each, are less numerous than standard tires, the
Company estimates that over 2,600,000 tons of OTR tires of all sizes require
disposal in the United States each year.

Current methods of disposal include land filling and surface disposal, which are
accepted only due to the lack of a viable alternative. Most states have passed
laws prohibiting land filling or storage of whole tires.

The OTR Tire Disintegrator System uses mechanical means to remove the exterior
rubber from OTR tire carcasses without shredding. After removal of non-rubber
components, primary shredding and wire separation, the resulting particles are
then processed into crumb rubber during secondary processing. The shredded
particles could also be used as fuel or safely disposed of in a landfill,
although the Company believes that the rubber particles will be of such high
quality that landfill disposal or use as fuel will be unnecessary or desirable.

The Company has prepared what it believes to be the final design of the OTR Tire
Disintegrator System and has analyzed its expected performance. When the first
OTR Tire Disintegrator System is built, it is expected that only slight
modifications to the design could be required to maximize performance. It is
also possible, although the Company does not anticipate this, that the OTR Tire
Disintegrator System will not perform as planned when built.

The Company has received United States Patent No. 5,299,748 on the OTR Tire
Disintegrator System design which expires April 5, 2011, Patent No. 5,590,838
which expires January 7, 2014 and patent number 6,015,105 which expires January
18, 2018. An additional patent improvement has been filed and is currently
pending in the United States. The pending patent improvement was granted in
Canada on July 6, 1999 as Canadian Patent No. 2,178,326 which expires March 23,
2015 and an additional patent is pending.

The Company announced the availability of the OTR Tire Disintegrator System in
July, 1992. Although the Company has received and continues to receive numerous
inquiries from potential buyers or users of the OTR Tire Disintegrator System,
it has not built or sold an OTR Tire Disintegrator System. The Company's
original intent was to retain ownership of the OTR Tire Disintegrator System,
allowing its use by persons who purchase an exclusive territory from the Company
and who agree to pay the Company a share of any profits earned. However, the
Company has decided to modify its requirements to allow others to purchase and
use the technology and machinery on a license and royalty based upon gross
sales.

Shredding Systems

On March 19, 1999 the Company acquired a patented shredding system from its
sister company, Garbalizer Machinery Corporation ("GMC"). See "Certain
Relationships and Related Transactions". This system became available when GMC
merged with a Canadian Internet company, changed its name to RecycleNet, Inc.
and ceased its shredder business. The Company acquired from GMC all of its then
existing assets, including the Garbalizer name and logo, patents, machinery
designs and contract rights in exchange for assumption of all then existing
indebtedness of GMC in the approximate amount of $500,000.

<PAGE>

The system known as the "Garbalizer Shredder" has a thirty-year history of
shredding automobile and truck tires in the United States, Canada and Europe.
During this period of time, GMC acquired fourteen U.S., and six foreign patents
all of which have expired except U.S. patent number 4927088 which expires on May
22, 2007.

The Garbalizer Shredder employs a cutting method rather than the impact method
embodied in hammer mills and grinders. This cutting method consists of a
rotatable shaft or pair of shafts, supported by bearings, upon which are fixed a
series of blade holders at 120(Degree) or 180(Degree) intervals around the
shaft. The blade holders to which blades are attached are positioned along the
length of the shaft so that their tips form a helix which tends to position the
tires for cutting.

Spacers to which no cutting blades are attached are located between each blade
holder mounted on the rotatable shaft so that the rotating blades and the
spacers form the cutting mechanism of the Garbalizer Shredder when co-acting
with stationary blade holders.

The shredding mechanism for all of the electric-driven models is protected by
fluid couplings, torque limiting couplings and overload relays in the electrical
control system. If non-shreddable material is encountered within the Garbalizer
Shredders, the torque limiting or fluid coupling and relays stop the machines
and protect the Garbalizer Shredders from serious damage. The rotatable shaft or
shafts are driven by an electric motor or diesel electric system through a
system of gear reducers. The diesel electric-driven mobile Garbalizer Shredder
is protected from non-shreddable items by similar couplings and overload relays
that stop the Garbalizer Shredder if it becomes overloaded or jammed. If this
happens on any of the Garbalizer Shredders, it is simple to reverse the rotor
and remove from the Garbalizer Shredder the item or items that jammed or stopped
the machine. This, and several additional unique and beneficial features of the
Garbalizer Shredder, reduces the time and effort required for maintenance.

In operation, material to be shredded is placed on a conveyor and carried to the
top of the hopper where it falls by gravity upon the rotating blade or blades or
can be fed directly into the cutters by a patented controlled feeding system.
The rotating blades position the material and cut it as it is forced between the
stationary blades. The shredded material is then transported away from the
machine by conveyor to be used as tire derived fuel (TDF), crumb rubber
production or other processes that use shredded tires.

The Garbalizer Shredders are offered in mobile and stationary models of various
capacities.

The Company believes that acquisition of the Garbalizer Shredder system and
related marketable items from GMC will benefit the Company by allowing it to
quote complete recycling systems more economically and efficiently.

There are a number of companies that sell competitive products. The Company
believes that the design of the Garbalizer Shredders is equivalent or superior
to competitive designs. Some of the competitors are larger and better financed
than the Company, and the Company believes certain competitors may have a
competitive advantage on the sale of stand-alone shredders with respect to
marketing prowess, financing terms, cost and perceived customer support.

Historically, GMC had determined that it could manufacture the Garbalizer
Shredders more economically on a contract basis with local machine shops in lieu
of its own manufacturing facilities and personnel. The company has now
discovered that the shredders can be built much more economically outside of the
United States and would give the company better advantage to compete with larger
and better financed competitors. The Company has investigated this potential and
decided that future shredders should be constructed outside of the United States
to give the Company more flexibility in marketing.

<PAGE>

During the third quarter of 2001 the Company began a new marketing strategy to
market its products. The Company began, and is still continuing to establish
distributorships in the United States and Internationally. As of June 30, 2005
the Company has established Distributorships in New Jersey with National
Recycling Corporation that covers a three state area, New Jersey, New York and
Delaware. A Distributorship has been established in Virginia with Minority Tire
Reclamation, Inc. that covers Virginia, North Carolina and Maryland. The Company
will continue searching for dependable Companies to establish Distributorships
throughout all of North America. Internationally the Company has concluded an
Agreement with Micron SA of Odessa, Ukraine to manufacture and market its
Shredders and other Technology throughout Eastern and Western Europe. All
Machines and Equipment for the European Market will be manufactured by Micron on
a licensed basis and marketed jointly by Garb-Oil and Micron throughout the
European market area. The Company has concluded a Distributorship with
Representaciones Internacionales of Guadalajara, Mexico for all of South and
Central America.

All machines, Equipment and Technology for the South and Central America
Distributorship will be manufactured in Mexico on a license basis with the
marketing being done jointly by Garb-Oil and Representaciones Internacionales.
It is anticipated and planned that all items sold by Garb-Oil Distributorships
in the United States and Canada will be manufactured in Mexico. The Company has
concluded a Distributorship with The Princeton Group of Alhambra, CA for all of
Asia. Machines, Equipment and Technology for the Asian market area will be
manufactured in China. Certain Technology and Machinery owned by the Chinese
Manufacturer for crumb rubber processing will be manufactured in China and
purchased by Garb-Oil to be sold in all of the marketing areas inside and
outside of the Asian market area. Because of the NAFTA Agreement and other
International Agreements currently existing, the Company is now able to
establish these Distributorship agreements and contractually protect its
technology and proprietary rights. These Agreements give the Company access to
less expensive manufacturing and technology, which Management believes will make
the Company more competitive and generate sales on a worldwide basis. As of June
30, 2005 the company management has determined that the company should take
advantage of the benefits of such manufacturing and marketing in future Company
operations.

The Garbalizer Shredder takes approximately four to five months to construct. It
is manufactured and assembled from stock alloy steel, gear reducers, drive units
and motors. Any heavy equipment machine shop with standard machine technology
can manufacture the shaft, blade holders, blades, spacers, hopper, structural
frame and supports for the Garbalizer Shredder from standard alloy steel stock.
The gear reducer, bearings, electric motor and related drive components are
standard items available from several suppliers. The completed components are
assembled into major units for shipping to the installation site by sea, truck
or railroad flat car. At the site, the major units can be field assembled with
local construction or rigging workers who need have no previous experience with
the Garbalizer Shredder. Location of the manufacturing facilities in close
geographical proximity to the installation sites of potential customers, is not
considered by management to be a significant factor.

Crumb Rubber Plants

The Company markets plants and equipment to process scrap passenger car and
light truck tires into crumb rubber. The Company is marketing such plants
worldwide on a "turn-key" basis. The equipment for such plants will include
third party equipment, equipment made to the Company's specifications, shredders
and other items provided by the Company. The new marketing strategy currently
being established by the Company has made available crumb rubber technology
which heretofore was not available to the Company.

<PAGE>

If the Company is successful in selling a crumb rubber plant, it will be exposed
to the risks of process engineering and equipment manufacturing concerns,
including potential contract, warranty and liability claims. The Company has
limited experience in engineering for or constructing crumb rubber plants. The
Company relies on third parties including engineers and sub-contractors for the
supply of a majority of the equipment in the plant and the actual assembly and
construction labor.

Trenergy Radioactive Waste Technology

On May 11, 1998, the Company entered into a Project Development and Construction
Agreement with Trenergy Inc. ("Trenergy"). Pursuant to the Trenergy Agreement,
the Company has been engaged to provide consulting and analysis regarding the
potential commercial application of Trenergy's unproven claimed technology to
neutralize and remediate radioactive waste.

Trenergy has reported to the Company that the Trenergy technology has the
potential of neutralizing radioactive waste. The Company has not verified
Trenergy's claims. If true, Trenergy's technology would involve a substantial
departure from current methodology and currently accepted scientific principles.
Trenergy has informed the Company that it has applied for a patent on the
Trenergy technology. Filing of a patent application does not indicate that any
third party has verified the validity of the technology.

The Trenergy Agreement is for a five-year term with renewal provisions and gives
the Company the right to build all systems and plants for Trenergy on a cost
plus basis which cannot exceed similar costs for similar projects. The Company
is designated as Trenergy's exclusive agent to exploit the Trenergy technology
outside of the United States with the exception of the Republic of Belarus,
Ukraine, Romania, Macedonia, Greece and Hungary. Trenergy and the Company intend
to equally share license revenues from potential licenses of the Trenergy
technology in the Company's territory; provided that Trenergy may negotiate the
Company's compensation for licenses where Trenergy had initial discussions with
the licensee. No licenses for the Trenergy technology have been granted as of
the date of this report and it is possible such licenses may not be granted in
the future.

Trenergy may not be able to establish the scientific validity or commercial
viability of the Trenergy technology. Neither Trenergy nor the Company have the
resources necessary to develop or evaluate the Trenergy technology without
infusion of substantial capital or the joint venturing with third parties.
Neither Trenergy nor the Company have any such arrangements in place. The
Company plans to use management time and financial resources pursuing possible
transactions with the Trenergy technology for which the Company may receive no
revenue. During the years 1998, 1999 and 2000 Trenergy has continued research on
the process but at June 30, 2001 had not completed the "hot test" which would
further prove if the process could be viable. As of June 30, 2005 the "hot test"
had not been completed by Trenergy and no date has been given the Company as to
when such test would be completed.

UTTI Tire Repair and Resale Business

The Company's efforts have historically focused on reducing the environmental
problems of disposing of used tires by creating fuel, power or useful
by-products from the tires. Although such efforts have not resulted in
commercial operations, the Company's management has gained extensive knowledge
of the used tire distribution and disposal business through such efforts. On May
20, 1994 the Company formed Utah Truck Tires, Inc. ("UTTI") as a majority owned
subsidiary to exploit the perceived demand for repaired and retreaded commercial
truck tires. Although UTTI did demonstrate that there was a demand for these
used tires, UTTI incurred operating losses due principally to overhead costs and
high carcass costs. The Company believes that the repair and resale business
could be commercially viable if operated in conjunction with a recycling plant,
where overhead costs can be shared with other operations and usable carcasses
obtained at relatively low cost. In 1996, UTTI ceased active operations and as
of June 30, 2002 both the Company and UTTI have decided that future operations
for UTTI probably would not be re-started.

<PAGE>

The Company is proposing to establish used tire processing and sales joint
ventures with purchasers of tire shredders or OTR Tire Disintegrator Systems in
the United States, to date the Company does not have any agreements to establish
such joint ventures. As with any start-up operation, there is substantial
uncertainty regarding its ability to operate at a profit.

The Company owns 55% of UTTI, which interest it received in exchange for
guaranteeing the loan for startup capital, its expertise and other intangible
capital contributions. The remaining 45% of UTTI is owned by an investor who
loaned $165,000 of seed capital to UTTI and who is an officer and director of
UTTI.

Co-generation and Electrical Power Generation

Since 1982, the Company has been involved in planning and preparation for plants
generating electricity or process steam to be fueled by scrap tires. The Company
may build such plants alone or in joint venture with others. During the past
fiscal year, the Company has concentrated its efforts on other aspects of its
business and has held only very preliminary discussions regarding the
possibility of construction of such plants. To date the Company has not built a
plant. However, with the current and projected acute energy shortage, management
now believes that this technology is timely and has an improved potential for
development.

The design, which the Company developed for these plants calls for scrap tires
to be shredded into hand sized pieces. The shredded tires are then burned in a
fluidized bed combustor to produce steam, which may be used for the generation
of electricity or may be used as process steam in nearby industrial plants.

Pyrolysis

The pyrolysis patents granted the Company has expired and the Company has
decided at this time no further research would be warranted. The Company
concluded that although the process worked the markets for such plants are
financially unfeasible at this time.

Patents, Trademarks and Proprietary Data

The Company has received two United States patents on the OTR Tire Disintegrator
System design. The patents expire in the year 2011, 2014 and 2018. One patent
has been issued in Canada that expires in 2015. Additional patents are pending
in the United States and Canada.

The Company does not hold patents on the plant and process to be used in
connection with its proposed electricity, co-generation plants or nuclear
remediation.

In connection with the Garbalizer Shredder design, the Company owns United
States patent number 4,927,088 that expires May 22, 2007 and Canadian patent
number 1,137,949 that expired December 21, 1999.

In addition to the above patents, the Company has the following patents which
relate to Tar Sand development:

Hydropulper & Classifier for Tar
  Sand Application                     Patent No.  3,814,336
Improvement Patents for Tar Sands      Patents No. 4,361,476

<PAGE>

Process

The Company plans to exploit these patents if and when the board of directors of
the Company determines that the financing and timing is appropriate. It is not
expected that such exploitation will occur in the foreseeable future and
accordingly the patents have not been considered important to the Company's
immediate future.

Employees

The Company's CFO, John C. Brewer, it's Chief Engineer and Secretary each devote
40 hours, or more, per week to the Company's business, as well as one additional
engineer. All additional work is performed on a sub-contract basis. UTTI
currently has no employees and has no plans to hire employees in the foreseeable
future.

Additional personnel will be required when the Company expands its business or
enters into agreements for construction of power plants, crumb rubber and OTR
plants. The Company does not anticipate problems in finding suitable additional
personnel.

The Company believes its relationship with its employees to be good. The Company
is not a party to any collective bargaining agreement.

Research and Development

During the fiscal years ended June 30, 2005 and 2004, the Company has not
expended any funds on research and development activities.

Environmental Regulation

Neither the Company nor UTTI believe that any of its activities result in
harmful discharge of pollutants in the air, water or soil.

Any power plants built by the Company in the future utilizing tires as fuel will
be required to comply with state and federal regulations regarding the discharge
of pollutants into the atmosphere. The Company believes that the plants can
comply with such regulations.

2. DESCRIPTION OF PROPERTY

The Company's executive offices are located at 1588 South Main Street on a lease
basis, which expired in November 2004. An option for an additional 5 years
renewal is currently under negotiation. The offices consist of approximately
1,400 square feet and more square footage is being negotiated. The premises are
being leased from Utah Automobile Dealers Association, an unrelated third party,
on a monthly basis. UTTI leases space in Salt Lake City from a third party to
store its equipment and inventory pursuant to a month-to-month lease.

3. LEGAL PROCEEDINGS

Not Applicable.

4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

<PAGE>

PART II

5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The Company's common stock is traded in the over-the-counter market. The
representative bid and asked quotations are posted on the National Association
of Securities Dealers OTC Bulletin Board under the symbol GARB. On August 2,
2002 there were approximately 568 holders of record of the common stock of the
Company and the Company believes there were approximately 1,000 beneficial
owners.

During the years ended June 30, 2005 and 2004, the stock was only sporadically
traded. The following table sets forth the range of high and low representative
bid quotations for the periods indicated.

   Period
         (Fiscal Year)                               High              Low
         -------------                               ----              ---

             2004
             ----
         1st Quarter                                  .06               .045
         2nd Quarter                                  .06               .045
         3rd Quarter                                  .10               .05
         4th Quarter                                  .07               .055

            2005
            ----
         1st Quarter                                  .06               .045
         2nd Quarter                                  .065              .032
         3rd Quarter                                  .055              .032
         4th Quarter                                  .40               .025

The foregoing over-the-counter quotations are inter-dealer quotations without
retail mark-ups, mark-downs or commissions and may not represent actual
transactions.

Dividends

No cash dividends have been paid by the Company in the past, and dividends are
not contemplated in the foreseeable future. Utah law currently prohibits the
payment of dividends since the Company's liabilities exceed its assets.
Dividends will be dependent directly upon the earnings of the Company, financial
needs, and other similar unpredictable factors. For the foreseeable future, it
is anticipated that any earnings that may be generated from the operations of
the Company will be used to finance the operations of the Company and dividends
will not be declared for shareholders. The Company is not subject to any
contractual restrictions on the payment of dividends.

Sales of Unregistered Securities

During the fiscal year ended June 30, 2005 no sales of unregistered securities
were made by the Company.

6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

As discussed further in Item 12, in exchange for the Company's assumption of
GMC's net liabilities, Garbalizer Corporation of America transferred 1,061,668
shares of RecycleNet, Inc. common stock to the Company. As of June 30, 2005 the
Company had none of these shares remaining.

Management is pursuing avenues of generating cash or revenues during the next
twelve months. The Company is pursuing sales of the crumb rubber plants on which
the Company would earn a commission. The Company is also attempting to interest
purchasers, or potential purchasers, of Garbalizer shredders in establishing

<PAGE>

used and new tire marketing joint ventures. The Company continues to pursue the
licensing or leasing of the OTR Tire Disintegrator System. The Company is
exploring the synergies of its businesses - such as offering to joint venture a
UTTI-type operation with the purchaser of a crumb rubber plant. Management also
believes that with the new marketing strategies that are now implemented the
potential for machinery sales has increased. The Company is now in the process
of marketing commodities imported from China through its Minority Distributor,
Lone Willow, LLP of Virginia. The Company has submitted quotes for dry wall,
cement and other building materials to Lone Willow which Lone Willow will market
to users of such materials in the Eastern, North Eastern and South Eastern
United States. Because of its Minority status Lone Willow has an opportunity to
achieve a favorable position for sales to contractors involved in rebuilding in
Louisiana, Mississippi, Texas and other areas. Additional building materials and
other commodities are available to the Company from China if the Company and Its
Distributor are successful in marketing the commodities. If any of such possible
transactions occur, management believes that the Company would have sufficient
resources to operate for the next twelve months. There is no assurance that the
Company will be able to obtain cash flow from operations or to obtain additional
financing. If these are not available to the Company, the Company may not be
able to continue operations. While management remains hopeful that one or more
transactions will proceed, no assurances can be expressed as to the Company's
continuing viability in the absence of revenues. Substantially all of the
Company's existing liabilities, other than trade payables and deferred revenue,
are owed to the Company's Chief Financial Officer, John Brewer or other
shareholders of the Company. Current funding has come from operations and sales
and the Company is currently in negotiations with several investment sources for
equity investment in the company, which if successful, will satisfy long-term
operations and capital expenditures. There are no guarantees that such
negotiations will be successful.

Operating expenses for the Company have been paid in part from short-term
unsecured notes from shareholders. At June 30, 2005 the Company had a deficit in
working capital (current liabilities in excess of current assets) of $1,764,024.
The working capital deficit at June 30, 2004 was $1,846,573. The decrease in
working capital was caused by the continued accrual of salary, unearned revenue,
accounts payable for expenses, which the Company was unable to pay in cash and
additional short-term unsecured notes incurred as part of the assumption of GMC
liabilities.

Other than its short-term office lease and loans payable to affiliates, the
Company, excluding UTTI, is not subject to any material commitments or capital
expenditures. The start-up costs for UTTI were financed with a loan in the
principal amount of $165,000 from the minority shareholder of UTTI, who is also
an officer and director of UTTI. UTTI is obligated to its minority owner in the
principal amount of $165,000, plus interest. Such loan is now due on demand. The
Company also made advances to UTTI to pay its operating expenses during its
start-up phase.

When shredding machines are sold the company requires that 50% of the total
selling price be deposited with the company as protection against cancellation
of the sales contract. The company has access to these funds and uses them to
cover part of the manufacturing costs of the shredder. The company is also
required to give a deposit to the manufacturer of the shredder, at the time the
company contracts with the manufacturer to build a machine. When the machine is
finished and delivered to the buyer, it is completed and tested prior to
delivery. At the time of shipment the buyer is required to pay the balance due
on the sales contract. Because of the successful history of the company's
machine performance, the deposit requirement has not presented a problem in
sales. For one year the buyer has a warranty to cover performance of the
machine.

The Company received revenue from the sale of two shredders and spare parts of
$553,750 during the current fiscal year, as well as revenue from a customer
deposit which defaulted to the Company when the customer was unable to perform
on the associated contract, and miscellaneous parts sales. The resulting gross
profit from these revenues is approximately $278,084 or 47%.

<PAGE>

The Company derived income from operations before other income (expense) and
extraordinary items during the year ended June 30, 2005 of $64,392 compared to
an operating loss of $137,951 for the year ended June 30, 2004. Total expenses
for 2005 were $213,692 compared to $163,813 in 2004. Salaries, wages and
commissions were $117,692 for 2005 compared to $93,054 for 2004. Rental expenses
were $13,900 in 2005 and $11,400 in 2004. Total expenses increased primarily
because of increases in Salaries, wages and commissions and Travel expenses.
These expenses have increased because of the increase in activity. An additional
engineer has been hired and additional commissions have been paid on the
shredder sales. Travel costs have increased due to several trips to China
regarding the shredder contracts and other marketing opportunities. If more of
the Company's plans for revenue producing activities come to fruition, expenses
will rise accordingly.

Net loss for the year ended June 30, 2005 was $33,947 compared to a net loss of
$196,183 in 2004. On a per share basis, the net loss for the year ended June 30,
2005 was ($0.00) compared to net loss of ($0.01) in 2004. Operating losses are
expected to continue until such time, if ever, as the Company receives
sufficient revenues from the sale of shredders, crumb rubber plants, the lease
or license of the OTR Tire Disintegrator System, or other operations. There is
no assurance that the Company will ever be profitable. The ongoing losses have
created substantial pressure on the Company's liquidity. The Company has had to
engage in less favorable borrowing arrangements with higher interest and
borrowing costs, to meet its cash flow requirements.

UTTI is 55% owned by the Company and operates at a loss. UTTI's losses have
exceeded the equity capital contributed by the minority shareholder. Therefore,
in preparing its consolidated statements of operations, the Company does not
adjust its consolidated net loss by the minority shareholder's interest in the
UTTI loss. For several years the tire repair equipment owned by UTTI has been
stored in facilities in Illinois for use by a company associated with Garb-Oil.
Consequently there has been no storage or rental expense related to the UTTI
tire repair equipment during this time. Current plans include use of this
machinery at facilities owned by a purchaser of one of the company's shredders.
Current negotiations are continuing regarding use of the tire repair machinery
and the company is incurring no storage costs during these negotiations.

During the year ended June 30, 2005, the Company had a net increase in cash of
$50,894. The primary sources of cash were from the sale of shredders and
additional loans from financing activities.

7. FINANCIAL STATEMENTS


            [The remainder of this page was intentionally left blank]

<PAGE>

                 GARB OIL & POWER CORPORATION AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                                  June 30, 2005




                                      F-1
<PAGE>

                                 C O N T E N T S



Report of Independent Registered Public Accounting Firm ................... F-3

Consolidated Balance Sheet................................................. F-4

Consolidated Statements of Operations...................................... F-6

Consolidated Statements of Stockholders' Equity (Deficit).................. F-7

Consolidated Statements of Cash Flows...................................... F-8

Notes to the Consolidated Financial Statements ............................ F-9


                                      F-2
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Stockholders
Garb Oil and Power Corporation and Subsidiaries
Salt Lake City, Utah

We have audited the consolidated balance sheets of Garb Oil and Power
Corporation and Subsidiaries as of June 30, 2005, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
years ended June 30, 2005 and 2004. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Garb
Oil and Power Corporation and Subsidiaries as of June 30, 2005, and the
consolidated results of their operations and their cash flows for the years
ended June 30, 2005 and 2004, in conformity with U.S. generally accepted
accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company is engaged in the
production and marketing of tire shredding machines as well as the marketing of
various types of tires. As discussed in Note 1 to the consolidated financial
statements, the Company's operating losses and lack of working capital raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 1. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ HJ & Associates

HJ & Associates, LLC
Salt Lake City, Utah
October 5, 2005

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                                           Consolidated Balance Sheet


                                                     ASSETS

                                                                                                     June 30,
                                                                                                       2005

CURRENT ASSETS
<S>                                                                                            <C>
   Cash                                                                                        $          54,495
   Work in progress - Note 9                                                                             199,164
   Inventory                                                                                              28,797
   Prepaid expenses                                                                                        1,500
                                                                                               -----------------

     Total Current Assets                                                                                283,956
                                                                                               -----------------

PROPERTY AND EQUIPMENT

   Engineering drawings                                                                                    2,500
   Office equipment                                                                                       11,658
   Tools and equipment                                                                                    31,340
   Building improvements                                                                                   8,022
   Less:  accumulated depreciation                                                                       (52,466)
                                                                                               -----------------

     Total Property and Equipment                                                                          1,054
                                                                                               -----------------


     TOTAL ASSETS                                                                              $         285,010
                                                                                               =================



                 The accompanying notes are an integral part of these consolidated financial statements.

                                                              F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                                     Consolidated Balance Sheet (Continued)


                                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


                                                                                                    June 30,
                                                                                                      2005

CURRENT LIABILITIES
<S>                                                                                            <C>
   Customer deposit                                                                            $         144,905
   Accounts payable and accrued expenses                                                                  89,755
   Notes payable - Note 7                                                                                 30,000
   Notes payable - related parties - Note 3                                                              765,923
   Accrued interest                                                                                       23,182
   Accrued interest - related parties - Note 3                                                           345,168
   Wages payable                                                                                         649,047
                                                                                               -----------------

     Total Current Liabilities                                                                         2,047,980
                                                                                               -----------------

     Total Liabilities                                                                                 2,047,980
                                                                                               -----------------

COMMITMENT & CONTINGENCIES (NOTE 5)

STOCKHOLDERS' EQUITY (DEFICIT)

   Common stock; (no par value) 20,000,000 shares
    authorized; 20,000,000 shares outstanding                                                          2,650,048
   Accumulated deficit                                                                                (4,413,018)
                                                                                               -----------------

     Total Stockholders' Equity (Deficit)                                                             (1,762,970)
                                                                                               -----------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                      $         285,010
                                                                                               =================

                The accompanying notes are an integral part of these consolidated financial statements.

                                                              F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                                      Consolidated Statements of Operations


                                                                                      For the Years Ended
                                                                                           June 30,
                                                                                   2005                 2004
                                                                            ------------------  ------------------
SALES
<S>                                                                         <C>                 <C>
   Shredder sales                                                           $          553,750  $                -
   Tire sales                                                                                -             150,000
   Contract defaults                                                                    35,000                   -
   Other sales                                                                           1,809                   -
                                                                            ------------------  ------------------

     Total Revenues                                                                    590,559             150,000
                                                                            ------------------  ------------------

COST OF SALES
   Cost of shredders                                                                   311,040                   -
   Cost of tires                                                                             -             124,138
   Other direct costs                                                                    1,435                   -
                                                                            ------------------  ------------------

     Total Cost of sales                                                               312,475             124,138
                                                                            ------------------  ------------------

GROSS PROFIT                                                                           278,084              25,862
                                                                            ------------------  ------------------

EXPENSE

   Salary and wages                                                                    104,520              87,866
   Sales commissions                                                                    13,172               5,188
   Office                                                                                4,257               7,883
   Rent                                                                                 13,900              11,400
   Telephone                                                                             3,271               2,408
   Professional fees                                                                    17,699              12,835
   Insurance                                                                             7,978               8,790
   Taxes and licenses                                                                    4,974               4,043
   Travel                                                                               25,138              12,013
   Advertising                                                                           1,611               1,558
   Depreciation                                                                            936               1,427
   Auto expense                                                                              -                   -
   Repairs and maintenance                                                               5,274                 139
   Other                                                                                10,962               8,263
                                                                            ------------------  ------------------

     Total Expenses                                                                    213,692             163,813
                                                                            ------------------  ------------------

OPERATING INCOME (LOSS)                                                                 64,392            (137,951)
                                                                            ------------------  ------------------

OTHER INCOME (EXPENSES)
   Interest expense                                                                    (98,339)            (59,037)
   Income from expired option                                                                -                 805
                                                                            ------------------  ------------------

     Total Other Income (Expense)                                                      (98,339)            (58,232)
                                                                            ------------------  ------------------

NET LOSS                                                                    $          (33,947) $         (196,183)
                                                                            ==================  ==================
BASIC LOSS PER SHARE                                                        $            (0.00) $            (0.01)
                                                                            ==================  ==================

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                                       19,985,790          19,873,500
                                                                            ==================  ==================


                 The accompanying notes are an integral part of these consolidated financial statements.

                                                              F-6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                            Consolidated Statements of Stockholders' Equity (Deficit)



                                            Common Stock                                     Treasury Stock
                                   ------------------------------      Accumulated    -------------------------------
                                        Shares         Amount            Deficit           Shares           Amount
                                   --------------  --------------    --------------   --------------   --------------
<S>                                    <C>         <C>               <C>                     <C>       <C>
Balance, June 30, 2003                 20,000,000  $    2,654,811    $   (4,182,888)         126,500   $      (10,455)

Net loss for the year ended
  June 30, 2004                                 -               -          (196,183)               -                -

Balance, June 30, 2004                 20,000,000       2,654,811        (4,379,071)         126,500          (10,455)

Issue treasury stock in
  payment of accrued interest                   -          (4,763)                -         (126,500)          10,455

Net loss for the year ended
  June 30, 2005                                 -               -           (33,947)               -                -
                                   --------------  --------------    --------------   --------------   --------------

Balance, June 30, 2005                 20,000,000  $    2,650,048    $   (4,413,018)               -                -
                                   ==============  ==============    ===============  ==============   ==============


                 The accompanying notes are an integral part of these consolidated financial statements.

                                                              F-7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                                      Consolidated Statements of Cash Flows



                                                                                           For the Years Ended
                                                                                                 June 30,
                                                                                           2005              2004
                                                                                   -----------------   -----------------
<S>                                                                                <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                        $         (33,947)  $        (196,183)
    Adjustments to reconcile net loss to net cash provided
    (used) in operating activities:
     Depreciation                                                                                936               1,427
   Changes in current assets and liabilities:
     Restricted cash                                                                               -                   -
     Prepaid expenses                                                                           (250)               (950)
     Work in progress                                                                       (118,287)            (80,877)
     Inventory                                                                                 1,435                   -
     Accounts payable and accrued expenses                                                    42,427              (5,329)
     Customer deposits                                                                       (65,095)                  -
     Accrued payroll                                                                          49,047              48,000
     Accrued interest payable and accrued interest payable
       - related party                                                                        34,634              33,951
     Equity option liability                                                                                        (805)
     Other current liabilities                                                                     -             200,000
                                                                                   -----------------   -----------------

       Net Cash Provided (Used) by Operating Activities                                      (89,100)               (766)
                                                                                   -----------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES

   Equipment                                                                                  (1,241)                  -
                                                                                   -----------------   -----------------

       Net Cash Used by Investing Activities                                                  (1,241)                  -
                                                                                   -----------------   -----------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Bank overdraft                                                                                  -                (134)
   Proceeds from notes payable -related party                                                171,235               4,501
   Payment of note payable                                                                   (30,000)                  -
                                                                                   -----------------   -----------------

     Net Cash Provided by Financing Activities                                               141,235               4,367
                                                                                   -----------------   -----------------

NET INCREASE IN CASH                                                                          50,894               3,601

NET CASH AT BEGINNING OF PERIOD                                                                3,601                   -
                                                                                   -----------------   -----------------

NET CASH AT END OF PERIOD                                                          $          54,495   $           3,601
                                                                                   =================   =================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

   Cash paid for interest                                                          $          45,972   $               -
   Cash paid for income taxes                                                      $               -   $               -




                 The accompanying notes are an integral part of these consolidated financial statements.

                                                              F-8
</TABLE>
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

         a. Organization

         Garb Oil & Power Corporation (Garb Oil) is a majority owned subsidiary
         of Garbalizer Corporation of America and was dormant at January 13,
         1981. Since January 14, 1981, Garb Oil had been considered to be in the
         development stage. Development stage activities have consisted of
         raising capital, purchasing property and developing technology related
         to production of electricity by the burning of used rubber, pyrolysis
         (extraction of oil, carbon, and steel from used tires), the recovery of
         used rubber from large off-the-road tires and repair and sale of used
         truck tires. The Company exited the development stage on June 30, 2004

         The accompanying consolidated financial statements include Garb Oil and
         its wholly-owned subsidiary, Rialto Power Corporation (which was
         dissolved by the State of California), and its 55% owned subsidiary,
         Utah Truck Tire, Inc.; which are collectively referred to as the
         Company. The following is a summary of the significant accounting
         policies.

         b. Use of Estimates

         The preparation of consolidated financial statements in conformity with
         accounting principles generally accepted in the United States of
         America requires management to make estimates and assumptions that
         affect the reported amounts of assets and liabilities at the date of
         the financial statements and the reported amounts of revenues and
         expenses during the reporting period. Actual results could differ from
         those estimates.

         c. Basis of Presentation - Going Concern

         The accompanying consolidated financial statements have been prepared
         on a going concern basis, which contemplates the realization of assets
         and the satisfaction of liabilities in the ordinary course of business.
         As shown in the consolidated financial statements, during the years
         ended June 30, 2005 and 2004, the Company has incurred a net loss of
         $33,947 and $196,183, respectively, and as of June 30, 2005, the
         Company's accumulated deficit was $4,413,018. These factors, among
         others, indicate that the Company may be unable to continue as a going
         concern for a reasonable period of time. The consolidated financial
         statements do not include any adjustments relating to the
         recoverability and classification of recorded asset amounts or the
         amount and classification of liabilities that might be necessary should
         the Company be unable to continue as a going concern. The Company's
         ability to continue as a going concern is dependent upon its ability to
         generate sufficient cash flows to meet its obligations on a timely
         basis, to obtain additional financing as may be required, and
         ultimately to attain successful operations. Management is continuing
         its efforts to obtain the necessary financing as may be required to
         generate sufficient cash flows for future operations. The company sells
         tire shredders and has sold one machine in the current fiscal year, and
         is under contract to deliver one more next year. The Company also
         imports new tires from China to be sold through Black Minority
         Distributors. The company has imported and sold two orders of new tires
         for a total of $305,400 in recent years. A new scrap tire- processing
         machine owned by the company is being developed in China and the pilot

                                      F-9
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
         (Continued)

         model is expected to be completed before the end of 2005. In the
         Business Description section of the 10K report the machine is described
         and discussed as the OTR Disintegrator machine to process large Off the
         Road Tires used in the mining, road construction and related
         industries. There are hundreds of millions of these large scrap tires
         stored worldwide at various mining sites that can be recycled if the
         machine proves successful when completed and tested. Currently there
         are no machines available that are capable of processing these large
         tires. Current plans to utilize this machine have been made by the
         company to sell or lease the machines with a continuing royalty to be
         paid the company each year for a seven-year period. Representatives of
         the company have contacted the companies who have the stockpiled OTR
         scrap tires and have received much interest and indications that the
         companies would like to become involved when the machines are ready for
         operation

         d. Principles of Consolidation

         The consolidated financial statements include the accounts of Garb Oil
         and its subsidiaries. All significant intercompany accounts and
         transactions have been eliminated in consolidation. The Company has
         recognized all of the losses of Utah Truck Tire in its statement of
         operations, with no offset to minority interest.

         e. Property and Equipment

         Property and equipment is recorded at cost and is depreciated using the
         straight-line method based on the expected lives of the assets which
         range from five to ten years. Depreciation expense for the years ended
         June 30, 2005 and 2004, was $936 and $1,427, respectively.

         The Company records impairment losses when indicators of impairment are
         present and undiscounted cash flows estimated to be generated by those
         assets are less than the assets' carrying amount.

         f. Revenue Recognition

         Revenue is recognized when the sales amount is determined, shipment of
         goods to the customer has occurred, and collection is reasonably
         assured. The sales recorded in 2005 and 2004 were to single customers.

         g. Advertising Costs

         The Company expenses all advertising costs as incurred. Advertising
         expense was $1,611 and $1,558 for the years ending June 30, 2005 and
         2004, respectively.

                                      F-10
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2004 and 2003


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
         (Continued)

         h. Income Taxes

         The Company recognizes the amount of income taxes payable or refundable
         for the current year and recognizes deferred tax assets and liabilities
         for the future tax consequences attributable to differences between the
         financial statement amounts of certain assets and liabilities and their
         respective tax bases. Deferred tax assets and liabilities are measured
         using enacted tax rates expected to apply to taxable income in the
         years those temporary differences are expected to be recovered or
         settled. Deferred tax assets are reduced by a valuation allowance to
         the extent that uncertainty exists as to whether the deferred tax
         assets will ultimately be realized.

         i. Basic Income (Loss) Per Share

         The following is an illustration of the reconciliation of the
         numerators and denominators of the basic loss per share calculation:

                                                      For the Years Ended
                                                             June 30,
                                                       2005          2004
                                                  -------------  ------------

         Net income (loss) (numerator)            $     (33,947) $   (196,183)

         Weighted average shares outstanding
           (denominator)                             19,985,790    19,873,500
                                                  -------------  ------------

         Basic income (loss) per share            $       (0.00) $      (0.01)
                                                  =============  ============

         j. Financial Instruments

         Cash equivalents include highly liquid short-term investments with
         original maturities of three months or less, readily convertible to
         known amounts of cash. The amounts reported as cash, prepaid expenses,
         trade accounts payable and notes payable to related parties are
         considered to be reasonable approximations of their fair values. The
         fair value estimates presented herein were based on market information
         available to management as of June 30, 2005. The use of different
         market assumptions and/or estimation methodologies could have a
         material effect on the estimated fair value amounts. The reported fair
         values do not take into consideration potential expenses that would be
         incurred in an actual settlement.

         k. Concentration of Credit Risk

         The Company maintains cash in federally insured bank accounts. At times
         these amounts exceed insured limits. The Company does not anticipate
         any losses from these deposits.

                                      F-11
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
         (Continued)

         l. Newly Issued Accounting Pronouncements

         During the year ended June 30, 2005, the Company adopted no new
         accounting pronouncements.

NOTE 2 - UTAH TRUCK TIRE, INC.

         Utah Truck Tire, Inc. was formed May 20, 1994, and on May 24, 1994, the
         Company was issued 55% (55 shares) of the outstanding shares of Utah
         Truck Tire, Inc. in exchange for the Company's experience, expertise
         and reputation in dealing with tire and rubber products. The remaining
         45% (45 shares) was issued to a director of Utah Truck Tire, Inc. for a
         commitment to loan Utah Truck Tire, Inc. $150,000. Utah Truck Tire,
         Inc. is currently dormant, having no revenues and incurring minimal
         expenses during the years ended June 30, 2005 and 2004. Utah Truck
         Tire, Inc. was primarily in the business of selling retread diesel
         truck tires.

NOTE 3 - RELATED PARTY TRANSACTIONS

         The Company executed an employment agreement with its then President on
         May 1, 1986. The agreement is of a continuing nature and specifies no
         date of termination. On June 15, 2005 a new President was appointed and
         the former President became the Chief Financial Officer. Under the
         terms of the agreement, the CFO's salary is $48,000 per year and is
         reviewed by the Board of Directors annually. As of June 30, 2005 and
         2004, the CFO (former president) was owed accrued salary of $648,000
         and $600,000, respectively.

         During the years ended June 30, 2005 and 2004, notes payable - related
         parties increased $171,234 and $4,501. The changes are due to
         additional proceeds from and payments on notes payable.

                                      F-12
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004


NOTE 3 - RELATED PARTY TRANSACTIONS (Continued)

         Accounts payable and notes payable to related parties consisted of the
         following at June 30, 2005:


           Accounts payable to a related party, due on demand, no
             interest                                               $   227,118

           Note payable to a related party, due on demand, plus
             interest at 12% per annum, unsecured.                      265,312

           Note payable to a related party, due July 15, 2005,
             plus loan fee of 80,000 shares of company stock and
             $500 per week penalty                                       40,000

           Note payable to a related party, due on demand, plus
             interest at 12% per annum, unsecured.                       68,493

           Note payable to a related party, due on demand, plus
             interest at 12% per annum, unsecured.                      165,000
                                                                    -----------

           Total note payable to related parties                        765,923

           Less: Current Portion                                       (765,923)
                                                                    -----------

           Long-Term Notes Payable to Related Parties               $         -
                                                                    ===========

         The aggregate principal maturities of notes payable to related parties
         are as follows:

                      Year Ended
                         June 30,                           Amount

                           2006                       $         765,923
                           2007                                       -
                           2008                                       -
                           2009                                       -
                    2010 and thereafter                               -
                                                      -----------------

                          Total                       $         765,923
                                                      =================

         As of June 30, 2005 and 2004, accrued interest related to the related
         party notes payable was $345,168 and $309,237, respectively. Interest
         expense related to the related party notes payable for the years ended
         June 30, 2005 and 2004 was $87,866 and $49,075, respectively.

NOTE 4 - INCOME TAXES

         Deferred taxes are provided on a liability method whereby deferred tax
         assets are recognized for deductible temporary differences and
         operating loss and tax credit carryforwards and deferred tax
         liabilities are recognized for taxable temporary differences. Temporary
         differences are the differences between the reported amounts of assets
         and liabilities and their tax bases. Deferred tax assets are reduced by
         a valuation allowance when, in the opinion of management, it is more

                                      F-13
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004


NOTE 4 - INCOME TAXES (Continued)

         likely than not that some portion or all of the deferred tax assets
         will not be realized. Deferred tax assets and liabilities are adjusted
         for the effects of changes in tax laws and rates on the date of
         enactment. Net deferred tax liabilities consist of the following
         components as of June 30, 2005 and 2004.
<TABLE>
<CAPTION>
                                                                               2005               2004
                                                                      ------------------  -----------------
         <S>                                                          <C>                 <C>
         Deferred tax liabilities:
           NOL Carryover                                              $          949,082  $         968,330
           Related Parties                                                       396,800            364,100

         Deferred tax liabilities:                                                     -                  -

         Valuation allowance                                                  (1,345,882)        (1,332,430)
                                                                      ------------------  -----------------

         Net deferred asset                                           $                -  $               -
                                                                      ==================  =================

         The income tax provision differs from the amount of income tax
         determined by applying the U.S. federal and state income tax rates
         of 39% to pretax income from continuing operations for the years
         ended June 30, 2005 and 2004 due to the following:
<CAPTION>
                                                                              2005                2004
                                                                      ------------------  -----------------
         <S>                                                          <C>                 <C>
         Book income                                                  $         (13,240)  $         (76,510)
         Related accruals                                                              -                  -
         Accrued wages                                                                 -                  -
         Meals and entertainment                                                     149                  -
         Other                                                                      (357)             2,345
         NOL allowance                                                                 -                  -
         Valuation allowance                                                      13,448             74,165
                                                                      ------------------  -----------------

                                                                      $                -  $               -
                                                                      ==================  =================
</TABLE>

         At June 30, 2005, the Company had net operating loss carryforwards of
         approximately $2,450,000 that may be offset against future taxable
         income from the year 2005 through 2025. No tax benefit has been
         reported in the June 30, 2005 financial statements since the potential
         tax benefit is offset by a valuation allowance of the same amount.

         Due to the change in ownership provisions of the Tax Reform Act of
         1986, net operating loss carryforwards for Federal income tax reporting
         purposes are subject to annual limitations. Should a change in
         ownership occur, net operating loss carryforwards may be limited as to
         use in future years.

NOTE 5 - COMMITMENTS

         During the year ended June 30, 2001, the Company signed a
         Confidentiality & Non-Circumvention agreement with Micron Manufacturing
         for the purpose of building equipment for Garb Oil to import to North
         America for sale to the scrap tire processing industry. Micron
         Manufacturing was to have engineered a pilot model of the shredder.
         Once the pilot model was complete, a formal agreement was to have been
         signed.

<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 5 - COMMITMENTS (Continued)

         During the period of time the company's agreement was in effect with
         Micron the company communicated and met with executives of Micron who
         informed the company they would not be able to fulfill the terms of the
         agreement. They indicated to the company that, after a thorough
         examination of the machine design drawings, it was discovered that
         Micron would be unable to manufacture certain parts of the shredder.
         The company decided it would not be financially feasible for the
         company to obtain from other sources the components not manufactured by
         Micron and after discussions with Micron management, mutually
         acceptable terms for canceling were agreed to and executed. The machine
         is now currently under development in China; the pilot model is
         expected to be completed before the end of 2005.

         The Company executed an employment agreement with its then President on
         May 1, 1986. The agreement is of a continuing nature and specifies no
         date of termination. On June 15, 2005, a new President was appointed
         and the former President became the Chief Financial Officer. Under the
         terms of the agreement, the CFO's salary is $48,000 per year and is
         reviewed by the Board of Directors annually. As of June 30, 2005, the
         CFO (former president) is owed $648,000 of accrued salary.

NOTE 6 - OPERATING LEASES

         The Company shares office space with Garbalizer Corporation of America
         under a lease agreement on a month-to-month basis. The Company also
         leases facilities on a month-to-month basis. Rental expense relating to
         these operating leases was $13,900 and $11,400 for the years ended June
         30, 2005 and 2004, respectively.

NOTE 7 - NOTES PAYABLE

         During the years ended June 30, 2005 and 2004, notes payable decreased
         $30,000 and increased $0. The changes are due to payments of, and
         proceeds from, additional notes payable. No payments were made on notes
         payable during the years ended June 30, 2004.

         Notes payable consisted of the following at June 30, 2005:

         Note payable, due on demand, plus interest
           at 8% per annum, unsecured.                        $          30,000

         Less: Current Portion                                          (30,000)
                                                              -----------------

         Long-Term Notes Payable                              $               -
                                                              =================

                                      F-14
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

NOTE 7 - NOTES PAYABLE (Continued)

         The aggregate principal maturities of notes payable are as follows:

                  Year Ended
                     June 30,                                  Amount

                       2006                              $          30,000
                       2007                                              -
                       2008                                              -
                       2009                                              -
                2010 and thereafter                                      -
                                                         -----------------

                      Total                              $          30,000
                                                         =================

         As of June 30, 2005 and 2004, accrued interest related to notes payable
         was $7,400 and $12,585, respectively. Interest expense related to notes
         payable for the years ended June 30, 2005 and 2004 was $6,868 and
         $6,000, respectively.

NOTE 9 - STATEMENT OF CASH FLOWS CLASSIFICATION

         At June 31, 2004, costs being accumulated regarding the construction of
         a shredder machine were incorrectly shown as an investment activity. At
         June 30, 2005, these costs have been reclassified as operating costs.

NOTE 10 - SUBSEQUENT EVENTS

         On July 13, 2005 the shredder which was under construction as of the
         balance sheet date was delivered. Income and related costs from this
         transaction will be recognized as of that date. During August of 2005
         the board of directors terminated the employment of its new President
         and CEO, who had been appointed June 15, 2005. The former President,
         who is also the chairman of the board of directors, was appointed as
         Chief Financial Officer. Upon the termination of the new President, the
         chairman of the board was appointed Acting President and CEO.

                                      F-15
<PAGE>

8. CHANGES IN ACCOUNTANTS AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable except as previously reported.

8A. CONTROLS AND PROCEDURES

The registrant maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the registrant's Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to the registrant's management, including its Chief
Executive Officer, as appropriate, to allow timely decisions regarding required
disclosure based closely on the definition of "disclosure controls and
procedures" in Rule 13a-14(c). In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.

Within 90 days prior to the date of this report, the registrant carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the registrant's Chief Executive Officer, of the
effectiveness of the design and operation of the registrant's disclosure
controls and procedures. Based on the foregoing, the company's Chief Executive
Officer concluded that the registrant's disclosure controls and procedures were
effective.

There have been no significant changes in the registrant's internal controls or
in other factors that could significantly affect the internal controls
subsequent to the date the registrant completed its evaluation.

PART III

9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; COMPLIANCE WITH SECTION
16(A) OF THE EXCHANGE ACT.

The term of office of each director is one (1) year or until his successor is
elected at the Company's annual meeting and qualified. The term of office for
each officer of the Company is at the pleasure of the Board of Directors. The
Board of Directors has no nominating, auditing or compensation committee.

The following table sets forth the names, ages, and positions with the Company
of the directors and officers of the Company.

               Name            Age    Position
               ---------                -----    ------------
         John C. Brewer         82      Acting President and CEO, CFO, Chairman
                                        of the Board of Directors and Director

         Bill Vee Anderson      53      Vice-President and Director

         Lou Zant               54      President, CEO and Director

         Charles Laver          80      Secretary and Director

John C. Brewer had been the President and a director of the Company since
January, 1981, and from 1972 until January, 1981, was President and a director
of the Company's predecessor Garb-Oil Corporation. Mr. Brewer also serves as
president, chairman of the board of directors and a director of Garbalizer
Corporation of America which is the majority shareholder of the Company. Mr.
Brewer devotes approximately 40 hours per week to the Company as well as
additional time to his other business interests. On June 15, 2005, the Board of
Directors appointed Lou Zant President and CEO, retaining Mr. Brewer as its
Chief Financial Officer. Subsequent to June 30, 2005, Mr. Zant has been
dismissed as President and CEO by the Chairman of the Board of Directors and Mr.
Brewer has been appointed acting President and CEO.

<PAGE>

Bill Vee Anderson has been Vice President and a director of the Company since
September 1993. He has been employed by the Company as a design engineer since
February 1990. Prior to joining the Company, Mr. Anderson spent five years as a
design engineer at Sperry Univac. Prior to that, he was a design engineer with
Bell Telephone Laboratories. Mr. Anderson declared personal bankruptcy in July,
1992 and agreed to a payment plan whereby his creditors have been or will be
paid the full amount of his indebtedness.

Charles Laver has been the Secretary and a director of the Company since
January, 1981, and from 1972 until January, 1981, was secretary and a director
of Garb-Oil Corporation. On June 15, 2005, Mr. Laver resigned as Secretary,
Treasurer and director of the Company. Mr. Laver's principal occupation for the
last 34 years has been a self-employed certified public accountant. Mr. Laver
will devote such time as may be necessary from time to time as a consultant of
the Company including but not limited to regular and special meetings of the
board of directors.

Compliance With Section 16(a)

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.

To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended June 30, 2005 all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-percent
beneficial owners were complied with.

ITEM 10. EXECUTIVE COMPENSATION

There is shown below information concerning the compensation of the Company's
chief executive officer for the fiscal year ended June 30, 2005. The board of
directors had approved a compensation package for Mr. Zant but has rescinded
that agreement upon Mr. Zant's dismissal. Compensation for the other highly
compensated executive officers is not required nor presented as no such
executive officer's salary and bonus exceeded $100,000.

                           SUMMARY COMPENSATION TABLE
                                                           Annual Compensation
Name and Principal Position      Fiscal Year                   Salary ($)
---------------------------      -----------              ----------------------

John C. Brewer                      2005                        $48,000
President and CEO                   2004                         48,000

<PAGE>

No person received any form of non-cash compensation from the Company in the
fiscal year ended June 30, 2005 or currently receives any such compensation. The
Company does provide medical insurance to Mr. Brewer.

During the current fiscal year, the Company is paying and it is anticipated that
the Company will continue to pay a salary to Mr. Brewer of $48,000 per annum for
40 hours per week of Mr. Brewer's time. The Company has an employment agreement
with Mr. Brewer. All or substantially all of such compensation is currently
being accrued rather than paid in cash.

Other than as set forth above the Company has no employment agreement with any
of its officers or directors and has no retirement, profit sharing, pension or
insurance plans covering them.

The Company issued no options during the fiscal year, and none were outstanding.

11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock as of June 30, 2005 (i) each
person known by the Company to own more than five percent (5%) of the Company's
outstanding stock, (ii) each director of the Company and (iii) all officers and
directors as a group.


Name and Address                              Amount        Percent of Class
----------------                              ------        ----------------

Garbalizer Corporation                     10,388,291              51.9%
of America (Notes 1, 3 & 4)
Newhouse Office Building, Suite 507
Salt Lake City, Utah

Ralph C. Alexander                            943,343               4.7%
152 Hall Street
Spartanburg, South Carolina

A/S Parkveien 55                            1,050,000               5.2%
c/o Hoegh Invest A/S (Note 2)
P.O. Box 2416 Solli
0202 Oslo 2, Norway

Bill Anderson                                   6,000                *
Newhouse Office Building, Suite 507
Salt Lake City, Utah

All directors and                          10,415,037              52.0%
officers as a group
(3 individuals; notes 1, 3 & 4)

* less than 1%
---------------
(1)      John C. Brewer beneficially owns 98% of the outstanding common stock of
         Garbalizer Corporation of America ("GCA").
(2)      In September, 1988 A/S Parkveien 55 filed a Schedule 13D stating its
         beneficial ownership of 1,800,000 shares owned of record and
         beneficially by it. The Schedule 13D also indicates that an additional
         478,000 shares (3.3% of the class) were beneficially owned by two
         Norwegian corporations having common control or ownership with A/S
         Parkveien 55. During a prior fiscal year, 1,500,000 shares held of
         record by A/S Parkveien 55 at the time of the Schedule 13D filing were
         transferred of record to Christiana Bank, Oslo, Norway and neither A/S
         Parkveien 55 nor the other corporations listed on the Schedule 13D
         currently own shares of record. A/S Parkveien 55 did not inform the
         Company of a change in beneficial ownership as result of such change in
         record ownership and the table therefore reflects beneficial ownership
         stated in the Schedule 13D as adjusted for subsequent sales by
         Christiana Bank.

<PAGE>

(3)      Consists of 10,388,291 shares held by GCA in which Mr. Brewer may be
         deemed to share beneficial ownership as a result of his position as a
         director and principal shareholder of GCA.
(4)      Consists of 10,388,291 shares held by GCA in which Mr. Laver may be
         deemed to share beneficial ownership as a result of his position as a
         director of GCA, and 20,746 shares owned of record by Mr. Laver. The
         Company is unaware of any arrangements which may result in a change in
         control of the Company.

12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company executed an employment agreement with its President (now CFO and
Acting President) on May 1, 1986. The agreement is of a continuing nature and
specifies no date of termination. Under the terms of the agreement, the Acting
President's salary is $48,000 per year and is reviewed by the Board of Directors
annually. As of June 30, 2005 and 2004, the president was owed accrued salary of
$648,000 and $600,000, respectively.

During the years ended June 30, 2005 and 2004, notes payable - related parties
increased $124,116 and $4,501. The changes are due to proceeds from additional
notes payable. Some payments were made on notes payable and additional funds
were borrowed during the years ended June 30, 2005 and 2004.

Accounts payable and notes payable to related parties consisted of the following
at June 30, 2005:

         Accounts payable to a related party, due on demand,
           no interest                                               $ 227,118

         Notes payable to related parties, due on demand, plus
           interest at 12% per annum, unsecured.                       538,805

As of June 30, 2005 and 2004, accrued interest related to the related party
notes payable was $345,168 and $309,237, respectively. Interest expense related
to the related party notes payable for the years ended June 30, 2005 and 2004
was $87,866 and $49,075, respectively.


13. EXHIBITS AND REPORTS ON FORM 8-K

         a. The following financial statements and schedules are filed herewith.
Garb Oil & Power Corporation

         Consolidated Balance Sheet - June 30, 2005.
         Consolidated Statements of Operations - For the Years Ended
           June 30, 2005 and 2004.
         Consolidated Statements of Stockholders' Equity (Deficit) - For the
           Years Ended June 30, 2005 and 2004.
         Consolidated Statements of Cash Flows For the Years Ended June 30, 2005
           and 2004.

         b. During the fourth quarter of the year reported upon the Company
filed one Form 8-K.

         c. The following exhibits are filed herewith or incorporated herein by
reference. The SEC No. refers to the Exhibit Table in Item 601 of Regulation
S-B.

<PAGE>

Section   Exhibit
  No.       No.        Description                            Location
-------  -------  -------------------------         ---------------------------
  3        3.1    Articles of Incorporation         Exhibit 3.1 of Registration
                   (as amended)                     Statement on  Form 10, File
                                                    No. 0-14859

  3        3.2    By-Laws                           Exhibit 3.2 of Registration
                                                    Statement on Form 10, File
                                                    No. 0-14859

 10       10.1    Employment Agreement              Exhibit 10.5 of Registration
                     with John Brewer               Statement on Form 10, File
                                                    No. 0-14859

 10       10.2    Agreement with Giant Tire         Exhibit 10.4 of Form 10-KSB
                     Recyclers, Inc.                for June 30, 1997

 10       10.3    Project Development and          Exhibit 10.1 of Form 8-K
                     Construction Agreement        dated May 11, 1998
                     with Trenergy, Inc.

 10       10.4    Extension Agreement with         Filed EX 10-4 of Form 10-KSB
                     Giant Tire Recyclers, Inc.    for June 30, 2001

 10       10.4    Agreement between                Filed herewith
                     Garbalizer Machinery
                     Corporation and the
                     Company

 21       21.1    List of Subsidiaries             Exhibit 21.1 of Form 10-KSB
                                                   for June 30, 1995

 31       31.1    Certification of Chief           Filed herewith
                  Executive Officer and Chief
                  Financial Officer of Periodic
                  Report pursuant to Rule 13a-14a
                  and Rule 15d-14(a)

 32       32.1    Certification of Chief           Filed herewith
                  Executive Officer and Chief
                  Financial Officer pursuant
                  to 18 U.S.C. - Section 1350


ITEM 14. CONTROLS AND PROCEDURES.

Within 90 days prior to the date of this report, we carried out an evaluation,
under the supervision and with the participation of our Acting CEO and our
Secretary/Treasurer of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on this evaluation, our Acting CEO and
Secretary/Treasurer concluded that our disclosure controls and procedures are
effective in timely alerting them to material information required to be
included in our periodic Securities and Exchange Commission reports. It should
be noted that the design of any system of controls 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, regardless of how remote. In addition, we reviewed our
internal controls, and there have been no significant changes in our internal
controls or in other factors that could significantly affect those controls
subsequent to the date of their last evaluation.

<PAGE>

ITEM 15. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following is a summary of the fees billed to Garb Oil by its principal
accountants during the fiscal years ended June 30, 2005, and June 30, 2004:

Fee category                         2005            2004
--------------                       ----            ----

Audit fees                          $9,567           $7,900
                                    ------           ------

Total fees                          $9,567           $7,900
                                    ======           ======

Audit fees. Consists of fees for professional services rendered by our principal
accountants for the audit of our annual financial statements and the review of
financial statements included in our Forms 10-QSB or services that are normally
provided by our principal accountants in connection with statutory and
regulatory filings or engagements.

Audit-related fees. Consists of fees for assurance and related services by our
principal accountants that are reasonably related to the performance of the
audit or review of our financial statements and are not reported under "Audit
fees."

Tax fees. Consists of fees for professional services rendered by our principal
accountants for tax compliance, tax advice and tax planning.

All other fees. Consists of fees for products and services provided by our
principal accountants, other than the services reported under "Audit fees,"
"Audit-related fees" and "Tax fees" above. The fees disclosed in this category
include due diligence, preparation of pro forma financial statements as a
discussion piece for a Board member, and preparation of letters in connection
with the filing of Current Reports on Form 8-K.

<PAGE>

SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                      GARB OIL & POWER CORPORATION


                                      By: /s/ John C. Brewer
                                          --------------------------------------
                                          John C. Brewer, Acting Chief Executive
                                          Officer and Chief Financial Officer

         DATED this 11th Day of October, 2005

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the date indicated.

         1. By its principal executive officer.


                  Date: Oct. 11th, 2005        /s/ John C. Brewer
                                               ----------------------------
                                               John C. Brewer, Acting Chief
                                               Executive Officer

         2. And by its principal financial officer and principal accounting
officer.


                  Date: Oct. 11th, 2005        /s/ John C. Brewer
                                               -------------------------------
                                               John C. Brewer, Chief Financial
                                               Officer

         3. And by a majority of its Board of Directors.


                  Date: Oct. 11th, 2005         /s/ John C. Brewer
                                                ----------------------------
                                                John C. Brewer, Director


                  Date: Oct. 11th, 2005         /s/ Bill Vee Anderson
                                                ----------------------------
                                                Bill Vee Anderson, Director