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, 2006

         [ ]      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: $318,435

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. $440,422.

<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, 2006, the Issuer had
outstanding 22,371,782 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 $318,435 in the fiscal year ended June 30, 2006
and at the end of the year its current liabilities exceeded its total assets by
$2,040,218. 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 in June 2005. There are continuing negotiations for additional
significant sales but there is no assurance they will materialize during fiscal
2006. 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,

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. 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

<PAGE>

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.

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, 2006
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.

<PAGE>

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, 2006 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. 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.

<PAGE>

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 had 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, 2006 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.

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.

<PAGE>

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                Patent No. 4,361,476

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 CEO and CFO, John C. Brewer, and its Chief Engineer each devote 40
hours, or more, per week to the Company's business, as well as one additional
engineer. The company's President, Matthew G. Shepard, was appointed January 9,
2006, and currently devotes almost no time per week to the Company's business.
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, 2006 and 2005, 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.

<PAGE>

2. DESCRIPTION OF PROPERTY

The Company's executive offices are located at 1588 South Main Street under a
five year lease. The offices consist of approximately 2,400 square feet. 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

None

4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

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, 2006 and 2005, 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

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

            2006
         1st Quarter                                  .33               .07
         2nd Quarter                                  .11               .05
         3rd Quarter                                  .09               .05
         4th Quarter                                  .12               .04

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

<PAGE>

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, 2006, the Company issued 662,500 shares of
common stock for cash and 600,000 shares of common stock for services.

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, 2006 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
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 $2,074,182.
The working capital deficit at June 30, 2005 was $1,764,024. 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 and
non-related parties, 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

<PAGE>

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 one shredder and spare parts of
$318,435 during the current fiscal year and miscellaneous parts sales. The
resulting negative gross profit from these revenues is approximately $(4,615) or
(1.5%).

The Company derived a loss from operations before other income (expense) during
the year ended June 30, 2006 of $333,737 compared to operating income of $64,392
for the year ended June 30, 2005. Total expenses for 2006 were $329,122 compared
to $213,692 in 2005. Salaries, wages, commissions and consulting fees were
$218,420 for 2006 compared to $117,692 for 2005. Rental expenses were $14,400 in
2006 and $13,900 in 2005. Total expenses increased primarily because of
increases in Consulting and Professional fees. These expenses have increased
because of restructuring and settlement of debt and increased accounting costs
associated with Sarbanes Oxley compliance. 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, 2006 was $575,900 compared to a net loss of
$33,947 in 2005. On a per share basis, the net loss for the year ended June 30,
2006 was ($0.03) compared to net loss of ($0.00) in 2005. 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, 2006, the Company had a net decrease in cash of
$54,495. The primary sources of cash were from the sale of a shredder 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, 2006



                                 C O N T E N T S



Report of Independent Registered Public Accounting Firm .................. F-2

Consolidated Balance Sheet................................................ F-3

Consolidated Statements of Operations..................................... F-5

Consolidated Statements of Stockholders' Equity (Deficit)................. F-6

Consolidated Statements of Cash Flows..................................... F-7

Notes to the Consolidated Financial Statements ........................... F-8

                                      F-1
<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, 2006, and the related
     consolidated statements of operations, stockholders' equity (deficit), and
     cash flows for the years ended June 30, 2006 and 2005. 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,
     2006, and the consolidated results of their operations and their cash flows
     for the years ended June 30, 2006 and 2005, 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, LLC


     HJ & Associates, LLC
     Salt Lake City, Utah
     October 6, 2006

                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                                           Consolidated Balance Sheet


                                                     ASSETS

                                                                                                     June 30,
                                                                                                       2006

CURRENT ASSETS
<S>                                                                                            <C>
   Inventory                                                                                   $          20,547
   Prepaid expenses                                                                                          300
                                                                                               -----------------

     Total Current Assets                                                                                 20,847
                                                                                               -----------------

PROPERTY AND EQUIPMENT

   Engineering drawings                                                                                    2,500
   Office equipment                                                                                       11,658
   Tools and equipment                                                                                    31,340
   Building improvements                                                                                   8,022
   Less:  accumulated depreciation                                                                       (52,714)
                                                                                               -----------------

     Total Property and Equipment                                                                            806
                                                                                               -----------------


     TOTAL ASSETS                                                                              $          21,653
                                                                                               =================



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

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


                                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


                                                                                                    June 30,
                                                                                                      2006

CURRENT LIABILITIES
<S>                                                                                            <C>
   Bank overdraft                                                                              $           1,656
   Accounts payable and accrued expenses                                                                  54,150
   Notes payable - Note 7                                                                                515,820
   Notes payable - related parties - Note 3                                                              357,025
   Accrued interest                                                                                      434,440
   Accrued interest - related parties - Note 3                                                            14,738
   Wages payable                                                                                         717,200
                                                                                               -----------------

     Total Current Liabilities                                                                         2,095,029
                                                                                               -----------------

     Total Liabilities                                                                                 2,095,029
                                                                                               -----------------

COMMITMENT & CONTINGENCIES (NOTE 5)

STOCKHOLDERS' EQUITY (DEFICIT)

   Common stock; (no par value) 80,000,000 shares
    authorized; 22,371,782 shares outstanding                                                          2,915,542
   Accumulated deficit                                                                                (4,988,918)
                                                                                               -----------------

     Total Stockholders' Equity (Deficit)                                                             (2,073,376)
                                                                                               -----------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                      $          21,653
                                                                                               =================



               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 Statements of Operations


                                                                                      For the Years Ended
                                                                                         June 30,
                                                                                   2006                 2005
                                                                            ------------------  ------------------
SALES
<S>                                                                         <C>                 <C>
   Shredder sales                                                           $          289,810  $          553,750
   Contract defaults                                                                         -              35,000
   Other sales                                                                          28,625               1,809
                                                                            ------------------  ------------------

     Total Revenues                                                                    318,435             590,559
                                                                            ------------------  ------------------

COST OF SALES
   Cost of shredders                                                                   290,243             311,040
   Other direct costs                                                                   32,807               1,435
                                                                            ------------------  ------------------

     Total Cost of sales                                                               323,050             312,475
                                                                            ------------------  ------------------


GROSS PROFIT (LOSS)                                                                     (4,615)            278,084
                                                                            ------------------  ------------------

EXPENSE
   Salary and wages                                                                    138,302             104,520
   Consulting fees                                                                      78,000                   -
   Sales commissions                                                                     2,118              13,172
   Office                                                                                4,686               4,257
   Rent                                                                                 14,400              13,900
   Telephone                                                                             3,665               3,271
   Professional fees                                                                    38,636              17,699
   Insurance                                                                             8,985               7,978
   Taxes and licenses                                                                    8,698               4,974
   Travel                                                                               10,917              25,138
   Advertising                                                                              30               1,611
   Depreciation                                                                            248                 936
   Repairs and maintenance                                                                 361               5,274
   Other                                                                                20,076              10,962
                                                                            ------------------  ------------------

     Total Expenses                                                                    329,122             213,692
                                                                            ------------------  ------------------

OPERATING INCOME (LOSS)                                                               (333,737)             64,392
                                                                            ------------------  ------------------

OTHER INCOME (EXPENSES)
   Interest expense                                                                   (215,634)            (98,339)
   Stock options expense                                                               (10,326)                  -
   Gain on release of debt                                                              29,152                   -
   Bad debt expense                                                                    (45,355)                  -
                                                                            ------------------  ------------------

     Total Other Income (Expense)                                                     (242,163)            (98,339)
                                                                            ------------------  ------------------

NET LOSS                                                                    $         (575,900) $          (33,947)
                                                                            ==================  ==================
BASIC LOSS PER SHARE                                                        $            (0.03) $            (0.00)
                                                                            ==================  ==================

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                                       20,088,071          19,985,790
                                                                            ==================  ==================




               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 Stockholders' Equity (Deficit)



                                                       Common Stock                                        Treasury Stock
                                                ----------------------------      Accumulated     ---------------------------------
                                                   Shares          Amount           Deficit           Shares            Amount
                                                ------------  --------------    ---------------    -------------   ----------------
<S>                                               <C>         <C>               <C>                      <C>       <C>
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)               -                  -

Shares donated by shareholder                       (600,000)         78,000                  -          600,000            (78,000)

Shares temporarily loaned
   by shareholder                                 (1,599,500)              -                  -        1,599,500           (126,300)

Shares issued for cash                               662,500           3,750                  -         (362,500)            36,250

Shares issued for services                           600,000               -                  -         (600,000)            78,000

Shares issued for loan fees                        1,237,000               -                  -       (1,237,000)            90,050

Shares issued to repay loaned
   shares                                          2,071,782         173,418                  -                -                  -

Stock options issued                                       -          10,326                  -                -                  -

Net loss for the year ended
   June 30, 2006                                           -               -           (575,900)               -                  -
                                                ------------  --------------    ---------------    -------------   ----------------

Balance, June 30, 2006                            22,371,782  $    2,915,542    $    (4,988,918)               -   $              -
                                                ============  ==============    ===============    =============   ================


                          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 Cash Flows


                                                                                          For the Years Ended
                                                                                                 June 30,
                                                                                           2006               2005
                                                                                   -----------------   -----------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                <C>                 <C>
   Net loss                                                                        $        (575,900)  $         (33,947)
    Adjustments to reconcile net loss to net cash provided
    (used) in operating activities:
     Depreciation                                                                                248                 936
     Common stock issued for loan fees                                                        90,050                   -
     Common stock issued for services                                                         78,000                   -
     Options issued for services                                                              10,326                   -
   Changes in current assets and liabilities:
     Prepaid expenses                                                                          1,200                (250)
     Work in progress                                                                        199,164            (118,287)
     Inventory                                                                                 8,250               1,435
     Accounts payable and accrued expenses                                                   (35,605)             42,427
     Customer deposits                                                                      (144,905)            (65,095)
     Accrued payroll                                                                          68,153              49,047
     Accrued interest payable and accrued interest payable
       - related party                                                                        97,586              34,634
                                                                                   -----------------   -----------------

       Net Cash Used by Operating Activities                                                (203,433)            (89,100)
                                                                                   -----------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES

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

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

CASH FLOWS FROM FINANCING ACTIVITIES

   Bank overdraft                                                                              1,656                   -
   Common stock issued for cash                                                               40,000                   -
   Proceeds from notes payable-related party                                                  23,713             171,235
   Proceeds from notes payable                                                                95,000                   -
   Payment of notes payable                                                                  (11,431)            (30,000)
                                                                                   -----------------   -----------------

     Net Cash Provided by Financing Activities                                               148,938             141,235
                                                                                   -----------------   -----------------

NET INCREASE (DECREASE) IN CASH                                                              (54,495)             50,894

NET CASH AT BEGINNING OF PERIOD                                                               54,495               3,601
                                                                                   -----------------   -----------------

NET CASH AT END OF PERIOD                                                          $               -   $          54,495
                                                                                   =================   =================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

   Cash paid for interest                                                          $          27,999   $          45,972
   Cash paid for income taxes                                                      $               -   $               -
   Common stock issued for services                                                $          78,000   $               -
   Options issued for services                                                     $          10,326   4               -


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

                                                              F-7

</TABLE>
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005


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, 2006 and
              2005, the Company has incurred a net loss of $575,900 and $33,947,
              respectively, and as of June 30, 2006, the Company's accumulated
              deficit was $4,988,918. 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
              model is expected to be completed before the end of 2005. In the


                                      F-8
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005

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

              Business Description section of the 10KSB 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, 2006 and 2005, was $248 and $936,
              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 2006 and 2005 were to
              single customers.

              g.  Advertising Costs

              The Company expenses all advertising costs as incurred.
              Advertising expense was $30 and $1,611 for the years ending June
              30, 2006 and 2005, respectively.

              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

                                      F-9
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005

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

              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,
                                                         2006          2005
                                                    ------------- -------------

              Net income (loss) (numerator)         $   (575,900) $     (33,947)

              Weighted average shares outstanding
                (denominator)                         20,088,071     19,985,790
                                                    ------------  -------------

              Basic income (loss) per share         $      (0.03) $       (0.00)
                                                    ============  =============

              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, 2006.
              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.

              l.  Newly Issued Accounting Pronouncements

              In November 2004, the FASB issued SFAS No. 151 "Inventory Costs,
              an amendment of ARB No. 43, Chapter 4. The amendments made by
              Statement 151 clarify that abnormal amounts of idle facility
              expense, freight, handling costs, and wasted materials (spoilage)
              should be recognized as current-period charges and require the
              allocation of fixed production overheads to inventory based on the
              normal capacity of the production facilities. The guidance is
              effective for inventory costs incurred during fiscal years
              beginning after June 15, 2005. Earlier application is permitted
              for inventory costs incurred during fiscal years beginning after
              November 23, 2004. The Company has evaluated the impact of the
              adoption of SFAS 151, and does not believe the impact will be
              significant to the Company's overall results of operations or
              financial position.

                                      F-10
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005

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

              In December 2004, the FASB issued SFAS No.152, "Accounting for
              Real Estate Time-Sharing Transactions--an amendment of FASB
              Statements No. 66 and 67" ("SFAS 152) The amendments made by
              Statement 152 This Statement amends FASB Statement No. 66,
              Accounting for Sales of Real Estate, to reference the financial
              accounting and reporting guidance for real estate time-sharing
              transactions that is provided in AICPA Statement of Position (SOP)
              04-2, Accounting for Real Estate Time-Sharing Transactions. This
              Statement also amends FASB Statement No. 67, Accounting for Costs
              and Initial Rental Operations of Real Estate Projects, to state
              that the guidance for (a) incidental operations and (b) costs
              incurred to sell real estate projects does not apply to real
              estate time-sharing transactions. The accounting for those
              operations and costs is subject to the guidance in SOP 04-2. This
              Statement is effective for financial statements for fiscal years
              beginning after June 15, 2005. The Company has evaluated the
              impact of the adoption of SFAS 152, and does not believe the
              impact will be significant to the Company's overall results of
              operations or financial position.

              In December 2004, the FASB issued SFAS No.153, "Exchanges of
              Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting
              for Nonmonetary Transactions. "The amendments made by Statement
              153 are based on the principle that exchanges of nonmonetary
              assets should be measured based on the fair value of the assets
              exchanged. Further, the amendments eliminate the narrow exception
              for nonmonetary exchanges of similar productive assets and replace
              it with a broader exception for exchanges of nonmonetary assets
              that do not have commercial substance. Previously, Opinion 29
              required that the accounting for an exchange of a productive asset
              for a similar productive asset or an equivalent interest in the
              same or similar productive asset should be based on the recorded
              amount of the asset relinquished. Opinion 29 provided an exception
              to its basic measurement principle (fair value) for exchanges of
              similar productive assets. The Board believes that exception
              required that some nonmonetary exchanges, although commercially
              substantive, be recorded on a carryover basis. By focusing the
              exception on exchanges that lack commercial substance, the Board
              believes this Statement produces financial reporting that more
              faithfully represents the economics of the transactions. The
              Statement is effective for nonmonetary asset exchanges occurring
              in fiscal periods beginning after June 15, 2005. Earlier
              application is permitted for nonmonetary asset exchanges occurring
              in fiscal periods beginning after the date of issuance. The
              provisions of this Statement shall be applied prospectively. The
              Company has evaluated the impact of the adoption of SFAS 153, and
              does not believe the impact will be significant to the Company's
              overall results of operations or financial position.

              In December 2004, the FASB issued SFAS No.123 (revised 2004),
              "Share-Based Payment". Statement 123(R) will provide investors and
              other users of financial statements with more complete and neutral
              financial information by requiring that the compensation cost
              relating to share-based payment transactions be recognized in
              financial statements. That cost will be measured based on the fair
              value of the equity or liability instruments issued. Statement
              123(R) covers a wide range of share-based compensation
              arrangements including share options, restricted share plans,

                                      F-11
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005

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

              performance-based awards, share appreciation rights, and employee
              share purchase plans. Statement 123(R) replaces FASB Statement No.
              123, Accounting for Stock-Based Compensation, and supersedes APB
              Opinion No. 25, Accounting for Stock Issued to Employees.
              Statement 123, as originally issued in 1995, established as
              preferable a fair-value-based method of accounting for share-based
              payment transactions with employees. However, that Statement
              permitted entities the option of continuing to apply the guidance
              in Opinion 25, as long as the footnotes to financial statements
              disclosed what net income would have been had the preferable
              fair-value-based method been used. Public entities (other than
              those filing as small business issuers) will be required to apply
              Statement 123(R) as of the first interim or annual reporting
              period that begins after June 15, 2005. The Company adopted
              Statement 123(R) in December of 2005.

              In December 2004, the Financial Accounting Standards Board issued
              two FASB Staff Positions - FSP FAS 109-1, Application of FASB
              Statement 109 "Accounting for Income Taxes" to the Tax Deduction
              on Qualified Production Activities Provided by the American Jobs
              Creation Act of 2004, and FSP FAS 109-2 Accounting and Disclosure
              Guidance for the Foreign Earnings Repatriation Provision within
              the American Jobs Creation Act of 2004. Neither of these affected
              the Company as it does not participate in the related activities.

              In March 2005, the SEC released Staff Accounting Bulletin No. 107,
              "Share-Based Payment" ("SAB 107"), which provides interpretive
              guidance related to the interaction between SFAS 123(R) and
              certain SEC rules and regulations. It also provides the SEC
              staff's views regarding valuation of share-based payment
              arrangements. In April 2005, the SEC amended the compliance dates
              for SFAS 123(R), to allow companies to implement the standard at
              the beginning of their next fiscal year, instead of the next
              reporting period beginning after June 15, 2005. Management is
              currently evaluating the impact SAB 107 will have on our
              consolidated financial statements.

              In March 2005, the FASB issued FASB Interpretation No. 47,
              "Accounting for Conditional Asset Retirement Obligations" ("FIN
              47"). FIN 47 provides guidance relating to the identification of
              and financial reporting for legal obligations to perform an asset
              retirement activity. The Interpretation requires recognition of a
              liability for the fair value of a conditional asset retirement
              obligation when incurred if the liability's fair value can be
              reasonably estimated. FIN 47 also defines when an entity would
              have sufficient information to reasonably estimate the fair value
              of an asset retirement obligation. The provision is effective no
              later than the end of fiscal years ending after December 15, 2005.
              The Company will adopt FIN 47 beginning the first quarter of
              fiscal year 2006 and does not believe the adoption will have a
              material impact on its consolidated financial position or results
              of operations or cash flows.

              In May 2005, the FASB issued FASB Statement No. 154, "Accounting
              Changes and Error Corrections." This new standard replaces APB
              Opinion No. 20, "Accounting Changes, and FASB Statement No. 3,

                                      F-12
<PAGE>


                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005

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

              Reporting Accounting Changes in Interim Financial Statements," and
              represents another step in the FASB's goal to converge its
              standards with those issued by the IASB. Among other changes,
              Statement 154 requires that a voluntary change in accounting
              principle be applied retrospectively with all prior period
              financial statements presented on the new accounting principle,
              unless it is impracticable to do so. Statement 154 also provides
              that (1) a change in method of depreciating or amortizing a
              long-lived non-financial asset be accounted for as a change in
              estimate (prospectively) that was effected by a change in
              accounting principle, and (2) correction of errors in previously
              issued financial statements should be termed a "restatement." The
              new standard is effective for accounting changes and correction of
              errors made in fiscal years beginning after December 15, 2005.
              Early adoption of this standard is permitted for accounting
              changes and correction of errors made in fiscal years beginning
              after June 1, 2005 . The Company has evaluated the impact of the
              adoption of Statement 154 and does not believe the impact will be
              significant to the Company's overall results of operations or
              financial position.

              In February of 2006, the FASB issued SFAS No. 155, "Accounting for
              Certain Hybrid Financial Instruments", which is intended to
              simplify the accounting and improve the financial reporting of
              certain hybrid financial instruments (i.e., derivatives embedded
              in other financial instruments). The statement amends SFAS No.
              133, "Accounting for Derivative Instruments and Hedging
              Activities", and SFAS No. 140, "Accounting for Transfers and
              Servicing of Financial Assets and Extinguishments of
              Liabilities--a replacement of FASB Statement No. 125." SFAS No.
              155 is effective for all financial instruments issued or acquired
              after the beginning of an entity's first fiscal year that begins
              after September 15, 2006.. The Company is currently evaluating the
              impact SFAS No. 155 will have on its consolidated financial
              statements, if any.

              m. Accounts Receivable

              Trade accounts receivable are carried at original invoice amount
              less an estimate made for doubtful accounts. Management of the
              Company determines the allowance for doubtful accounts by
              identifying potential troubled accounts and by using historical
              experience and future expectations applied to an aging of
              accounts. Trade accounts receivable are written off when deemed
              uncollectible. Recoveries of trade accounts receivable previously
              written off are recorded as income when received. Management
              determined that an allowance for doubtful accounts of $45,355 was
              required at June 30, 2006.

              n. Inventories

              Inventories consist of raw materials and parts and are stated at
              the lower of cost or market, with cost determined using primarily
              the first-in-first-out (FIFO) method. Work-in-process inventories
              consist of shredders which have not been delivered in a completed
              status to customers. As of June 30, 2006 the total inventory
              balance of $20,547 was made up of raw materials and parts.

                                      F-13
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005


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, 2006 and 2005. 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, currently its CEO, on May 1, 1986. The agreement is of
              a continuing nature and specifies no date of termination. Under
              the terms of the agreement, the CEO's salary was stated at $48,000
              per year and is reviewed by the Board of Directors annually. The
              salary amount in the previously executed employment agreement did
              not change after the officer's change in title. As of June 30,
              2006 and 2005, the current CEO was owed accrued salary of $696,000
              and $648,000, respectively.

              The company also executed an employment agreement with its current
              President on January 9, 2006. The agreement is for one year with
              an annual salary of $45,000. As of June 30, 2006 and 2005, the
              current President was owed accrued salary of $21,200 and $0
              respectively.

              During the years ended June 30, 2006 and 2005, notes
              payable-related parties decreased $408,898 and increased $171,234,
              respectively. The changes are due to additional proceeds from,
              payments on, and reclassifications of, notes payable.

              Accounts payable and notes payable to related parties consisted of
              the following at June 30, 2006:
<TABLE>
<CAPTION>
<S>                                                                                            <C>
              Accounts payable to a related party, due on demand,
               no interest, unsecured                                                          $         180,000

              Accounts payable to a related party, due on demand,
               variable interest, unsecured                                                              116,662

              Note payable to a related party, due on demand, plus interest
               at 8% per annum, unsecured                                                                 30,000

              Note payable to a related party, due on demand, plus interest
               at 12% per annum, unsecured                                                                18,000

              Note payable to a related party, due on demand, plus interest
               at 5% per month, unsecured                                                                 12,363
                                                                                               -----------------
                                                                                                         357,025

                                      F-14
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005
<CAPTION>

NOTE 3 -      RELATED PARTY TRANSACTIONS (continued)
<S>                                                                                            <C>
              Less: Current Portion                                                                     (357,025)
                                                                                               -----------------

              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

                                     2007                                                      $         357,025
                                     2008                                                                      -
                                     2009                                                                      -
                                     2010                                                                      -
                              2011 and thereafter                                                              -
                                                                                               -----------------
                                    Total                                                      $         362,025
                                                                                               =================
</TABLE>

              As of June 30, 2006 and 2005, accrued interest related to the
              related party notes payable was $14,738 and $2,319, respectively.
              Interest expense related to the related party notes payable for
              the years ended June 30, 2006 and 2005 was $32,086 and $20,342,
              respectively. Significant reclassifications of related party notes
              occurred during the current year.

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 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, 2006 and 2005.
<TABLE>
<CAPTION>
                                                                                   2006                2005
                                                                           -----------------   -----------------
<S>                                                                        <C>                 <C>
              Deferred tax assets:
                NOL Carryover                                              $        1,074,666  $         949,082
                Related Parties                                                             -            396,800
                Accrued Wages                                                         279,700                  -
                Capital Carryover                                                      38,034                  -

              Deferred tax liabilities:                                                     -                  -

              Valuation allowance                                                 (1,392,400)         (1,354,882)
                                                                           -----------------   -----------------

              Net deferred asset                                           $                -  $               -
                                                                           ==================  =================
</TABLE>
                                      F-15
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005

NOTE 4 -      INCOME TAXES (Continued)

              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, 2006 and 2005 due to the following:
<TABLE>
<CAPTION>
                                                                                   2006            2005
                                                                           -----------------   -----------------
<S>                                                                        <C>                 <C>
              Book income                                                  $         (224,600) $         (13,240)
              Interest                                                                 38,058                  -
              Accrued wages                                                            26,580                  -
              Stock for services                                                       30,420                  -
              Options expense                                                           4,027                  -
              Meals and entertainment                                                     150                149
              Other                                                                         -               (357)
              Valuation allowance                                                     125,365             13,448
                                                                           ------------------  -----------------
                                                                           $                -  $               -
                                                                           ==================  =================
</TABLE>
              At June 30, 2006, the Company had net operating loss carryforwards
              of approximately $2,750,000 that may be offset against future
              taxable income from the year 2006 through 2026. No tax benefit has
              been reported in the June 30, 2006 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.

              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. Development of a pilot model of the
              machine in China has been suspended indefinitely.

                                      F-16
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005

NOTE 5 -      COMMITMENTS (continued)

              The Company executed an employment agreement with its then
              President, currently its CEO, on May 1, 1986. The agreement is of
              a continuing nature and specifies no date of termination. Under
              the terms of the agreement, the CEO's salary was stated at $48,000
              per year and is reviewed by the Board of Directors annually. The
              salary amount in the previously executed employment agreement did
              not change after the officer's change in title. As of June 30,
              2006 and 2005, the current CEO was owed accrued salary of $696,000
              and $648,000, respectively.

              The company also executed an employment agreement with its current
              President on January 9, 2006. The agreement is for one year with
              an annual salary of $45,000. As of June 30, 2006 and 2005, the
              current President was owed accrued salary of $21,200 and $0
              respectively.

NOTE 6 -      OPERATING LEASES

              The Company shares office space with Garbalizer Corporation of
              America and Commodities Trading Corporation 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 $14,400 and $13,900 for the years ended
              June 30, 2006 and 2005, respectively.

NOTE 7 -      NOTES PAYABLE

              During the years ended June 30, 2006 and 2005, notes payable
              increased $485,820 and decreased $30,000. The changes are due to
              payments of and proceeds from additional notes payable, as well as
              reclassifications of note payable balances.
<TABLE>
<CAPTION>
              Notes payable consisted of the following at June 30, 2006:
<S>                                                                                            <C>
              Note payable, due on demand, plus interest
               at 12% per annum, unsecured.                                                    $          68,493

              Note payable, due on demand, plus interest
               at 12% per annum, unsecured.                                                              165,000

              Notes payable, due on demand, plus interest
               at 10% per annum, unsecured.                                                               20,000

              Note payable, due on demand, plus interest at
               $500 per week, secured by sales contract and officer guarantee.                            35,000

              Note payable, due on demand, no interest,
               one time loan fee of $33,000, unsecured, with stock options                                33,000

              Note payable, due on demand, plus interest at 18% per annum, secured
               by company stock owned by stockholder                                                     129,327
</TABLE>
                                      F-17
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005

 NOTE 7 -     NOTES PAYABLE (continued)
<TABLE>
<CAPTION>
<S>                                                                                            <C>
              Note payable, due January 6, 2007, secured by all company assets
               including future sales of cement and urea by a related company                             50,000

              Note payable, due August 1, 2006, no interest,
               one time loan fee of $2,500, secured by all company assets.                                10,000

              Note payable, due July 26, 2006, no interest,
               one time loan fee of $500, unsecured.                                                       5,000
                                                                                               -----------------

                                                                                                         515,820

              Less: Current Portion                                                                     (515,820)
                                                                                               -----------------

              Long-Term Notes Payable                                                          $               -
                                                                                               =================
<CAPTION>
              The aggregate principal maturities of notes payable are as
              follows:

                                Year Ended
                                   June 30,                                                          Amount
<S>                                                                                            <C>
                                     2007                                                      $         515,820
                                     2008                                                                      -
                                     2009                                                                      -
                                     2010                                                                      -
                              2011 and thereafter                                                              -
                                                                                               -----------------

                                    Total                                                      $         515,820
                                                                                               =================
</TABLE>

              As of June 30, 2006 and 2005, accrued interest related to notes
              payable was $434,440 and $350,249, respectively. Interest expense
              related to notes payable for the years ended June 30, 2006 and
              2005 was $109,281 and $74,392, respectively. Significant
              differences are due to reclassifications between related and
              non-related party notes payable.

NOTE 8 -      STOCK OPTIONS

              The Company estimates the fair value of options and warrants using
              the Black-Scholes Option Price Calculation, which requires various
              judgmental assumptions including estimated stock price volatility,
              forfeiture rates, and expected life. Our computation of expected
              volatility is based on a combination of historical and
              market-based implied volatility. Our calculation of the fair
              market value of each option award on the date of grant, using the
              Black-Scholes option-pricing model, used the following assumptions
              for the options granted during October of 2005:

                       Risk-free interest rate                      4.14%
                       Expected life in years                        0.71
                       Dividend yield                                0.00
                       Expected volatility                       195.278%

                                      F-18
<PAGE>

                  GARB OIL & POWER CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                             June 30, 2006 and 2005

NOTE 8 -      STOCK OPTIONS (Continued)

              A summary of the status of the Company's stock option plans as of
              June 30, 2006 and changes during the year is presented below:
<TABLE>
<CAPTION>
                                                                                                Weighted Average
                                                                               Options           Exercise Price
                                                         -----------------------------------------------------------
<S>                                                                            <C>                <C>
              Outstanding option at June 30, 2005                                          -      $            0.00

                   Granted                                                           200,000                   0.25
                   Cancelled / Expired                                                     -                      -
                   Exercised                                                               -                      -
                                                            --------------------------------------------------------
              Outstanding, June 30, 2006                                             200,000      $            0.25
                                                            ========================================================
              Exercisable, June 30, 2006                                             200,000      $            0.25
                                                            ========================================================

<CAPTION>
                                      Outstanding                                           Exercisable
              ------------------------------------------------------------     --------------------------------------
                                               Weighted Average     Weighted
                                 Number           Remaining         Average           Number of        Weighted
                Exercise       Outstanding     Contractual Life     Exercise           Options          Average
                 Prices        at 6/30/06         (in years)         Price           Exercisable    Exercise Price
              -------------- ---------------- ----------------------------------- ----------------------------------
              <S>                <C>                 <C>          <C>                  <C>          <C>
              $      0.25        200,000             .29          $     0.25           200,000      $      0.25
              -------------- ---------------- ------------------- --------------- ----------------------------------

              $      0.25        200,000             .29          $     0.25           200,000      $      0.25
              ===== ======== ================ =================== =============== ==================================
</TABLE>
                                      F-19
<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          83     CEO, CFO, Chairman of the Board of Directors
    Matthew G. Shepard      32     President and Director
    Bill Vee Anderson       54     Vice-President 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 a major 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. Subsequently, Mr. Zant resigned as President and CEO and Mr.
Brewer was again appointed President and CEO. On January 13, 2006, the Board of
Directors appointed Matthew G. Shepard President and director, retaining Mr.
Brewer as its CEO.

<PAGE>

Matthew G. Shepard is 32 years old and graduated from the University of Phoenix
in 2001 with a B.S. degree in marketing. In 2004 and 2005 Mr. Shepard was an
officer in the U.S. Army serving in Germany and Iraq. From 1996 to 2003 Mr.
Shepard was the head of sales for Bigger Faster Stronger, Inc., a Utah company,
engaged in selling and promoting exercise and strength equipment and programs.

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 was Secretary and a director of Garb-Oil Corporation. On June 15,
2005, Mr. Laver resigned as Secretary, Treasurer and director of the Company.

         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, 2006 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, 2006. 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, CEO & CFO             2006                $48,000
                                            2005                 48,000

No officer received any form of non-cash compensation from the Company in the
fiscal year ended June 30, 2006 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. The Company also has a one year employment agreement with Mr.
Shepard for a salary of $45,000. 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.

<PAGE>

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, 2006, (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                            9,788,291              43.8%
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

LTD II Enterprises                                1,000,000               4.5%
1209 W 1800 N
Lehi, Utah

Bill Anderson                                       306,000               1.4%
Newhouse Office Building, Suite 507
Salt Lake City, Utah
--------------------------------------------------------------------------------
All directors and                                10,094,291              45.2%
officers as a group
(2 entities; Garbalizer and Bill Anderson - see notes 1, 3 & 4)


(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.
(3) Consists of 9,788,291 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 9,788,291 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.

<PAGE>

12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company executed an employment agreement with its then President, now CEO
and Vice 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 CEO and
Vice President's salary is $48,000 per year and is reviewed by the Board of
Directors annually. As of June 30, 2006 and 2005, the CEO and Vice President was
owed accrued salary of $696,000 and $648,000, respectively.

During the years ended June 30, 2006 and 2005, notes payable - related parties
decreased $408,898, and increased $171,234, respectively. The changes are due to
reclassifications of notes payable and to proceeds from additional notes
payable. Some payments were made on notes payable and additional funds were
borrowed during the years ended June 30, 2006 and 2005.

Accounts payable and notes payable to related parties consisted of the following
at June 30, 2006:
<TABLE>
<CAPTION>
<S>                                                                                            <C>
              Accounts payable to a related party, due on demand, no interest,
               unsecured                                                                       $         180,000

              Accounts payable to related parties, due on demand, variable
               interest, unsecured                                                                       116,662

              Note payable to a related party, due on demand, plus interest
               at 8% per annum, unsecured.                                                                30,000

              Note payable to a related party, due on demand, plus interest
               at 12% per annum, unsecured.                                                               18,000

              Note payable to a related party, due on demand, plus interest
               at 5% per month, unsecured.                                                                12,363
                                                                                               -----------------
                                                                                               $         357,025
</TABLE>

As of June 30, 2006 and 2005, accrued interest related to the related party
notes payable was $14,738 and $2,319, respectively. Interest expense related to
the related party notes payable for the years ended June 30, 2006 and 2005 was
$32,086 and $20,342, respectively.


13. EXHIBITS AND REPORTS ON FORM 10-KSB

a. The following financial statements and schedules are filed herewith.

   Garb Oil & Power Corporation

                  Consolidated Balance Sheet - June 30, 2006.
                  Consolidated Statements of Operations - For the Years Ended
                    June 30, 2006 and 2005.
                  Consolidated Statements of Stockholders' Equity (Deficit) -
                    For the Years Ended June 30, 2006 and 2005.
                  Consolidated Statements of Cash Flows For the Years Ended
                    June 30, 2006 and 2005.

<PAGE>

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.



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 for
                    Recyclers, Inc.              June 30, 1997

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

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


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.


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, 2006, and June 30, 2005:

<PAGE>

Fee category                       2006              2005
--------------                     ----              ----

Audit fees                        $13,730          $12,955
Audit related fees                      -                -
Tax fees                                -                -
All other fees                          -                -
                                  -------          -------

Total fees                        $13,730          $12,955
                                  =======          =======

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.

<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, Chief Executive Officer
                                         and Chief Financial Officer

         DATED this 13th Day of October, 2006

         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. 13th, 2006         /s/ John C. Brewer
                                                 ----------------------------
                                                 John C. Brewer,
                                                 Chief Executive Officer

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


                  Date:    Oct. 13th, 2006        /s/ John C. Brewer
                                                 ----------------------------
                                                 John C. Brewer,
                                                 Chief Financial Officer

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


                  Date:    Oct. 13th, 2006        /s/ John C. Brewer
                                                 ----------------------------
                                                 John C. Brewer, Director


                  Date:    Oct. 13th, 2006       /s/ Bill Vee Anderson
                                                 ----------------------------
                                                 Bill Vee Anderson, Director