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EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT SECTION 906 CERTIFICATIONS UNDER SARBANES-OXLEY ACT OF 2002 - GARB CORPex321qa093010.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - GARB CORPex311qa093010.htm
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q/A
 
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2010

[  ] 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: 000-14859

GARB OIL & POWER CORPORATION
(Exact name of registrant as specified in its charter)

Utah
87-0296694
(State or other jurisdiction of incorporation organization)
(I.R.S. Employer Identification No.)
 
5248 South Pinemont Dr. Suite C-110
Murray, UT 84123
 (Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code:   801- 738-1355

 
_______________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [   ]  No [ X ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [  ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
[  ]
 
Accelerated filer
[ ]
Non-accelerated filer
[  ]
(Do not check if a smaller reporting company)
Smaller reporting company
[X]
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [  ] No [ X ]

 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes [  ] No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS:Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  The number of shares of common stock outstanding as of January 21, 2011 was 123,946,842.

 
 

 

EXPLANATORY NOTE
 
Garb Oil & Power Corporation (the “Company”) is filing this Amendment to its Quarterly Report on Form 10-Q for the period ended September 30, 2010 originally filed with the Securities and Exchange Commission (the “SEC”) on January 21, 2011 (the “Original filing”). This Amendment is being filed primarily in order to amend and restate the Company’s financial statements in Item 1 and related information in Item 2.
 
Except where specifically indicated, this Amendment to Form 10-Q does not reflect events occurring after the filing of the Original Filing or modify or update those disclosures affected by subsequent events. Consequently, all other information is unchanged and reflects the disclosures made at the time of the filing of the Original Filing. Except as expressly set forth in this Form 10-Q/A, the Original Filing has not been amended, updated or otherwise modified.
 
2

 
 

 
 

PART I-FINANCIAL INFORMATION
 
Item 1. Financial Statements.
 
Forward Looking Statements
 
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risks and Uncertainties” beginning on page 16 and the risks set out below, any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:
 
 
·
the uncertainty that we will not be able to successfully identify and evaluate a suitable business opportunity;
 
 
·
risks related to the large number of established and well-financed entities that are actively seeking suitable business opportunities;
 
 
·
risks related to the failure to successfully manage or achieve growth of a new business opportunity; and
 
 
·
other risks and uncertainties related to our business strategy.
 
This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.
 
Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
 
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common shares in our capital stock.
 
As used in this quarterly report, the terms “we”, “us”, “our”, “our company” and “Garb” mean Garb Oil & Power Corporation, unless otherwise stated.
 
 3

 
 

 

 
 
GARB OIL & POWER CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

 
September 30, 2010
 
December 31, 2009
ASSETS
(re-stated and unaudited)
   
Current assets:
     
Cash
 $                        4,018
 
 $                    19,657
Accounts receivable-trade
                         15,894
 
                       25,105
Due from related party
                                  -
 
                     515,084
Prepaid expenses
                       135,928
 
                         1,702
Total current assets
155,840
 
561,548
       
Property and equipment, net
                         31,946
 
                       39,131
       
Other assets:
     
Investments
                                  -
 
                                 1
Deposits
                                  -
 
                             300
Total Other assets
                                  -
 
                             301
Total assets
 $                    187,786
 
 $                  600,980
 
 
Refer to Notes to Condensed Consolidated Financial Statements
 
4


 
 

 

GARB OIL & POWER CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Continued)

 
 
 
September 30, 2010
 
December 31, 2009
 
(re-stated and unaudited)
   
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
     
Current liabilities:
     
Bank overdraft
 $                      61,090
 
 $                    70,903
Accounts payable and accrued expenses
                       640,173
 
                     179,753
Related party payable
                       343,581
 
                     104,951
Notes payable
                    1,301,866
 
                     570,979
Notes payable-related parties
                         69,269
 
                     401,939
Accrued interest
                       917,262
 
                     842,393
Accrued interest-related parties
                                    -
 
                     124,055
Wages payable and other accrued liabilities
                       618,027
 
                     459,732
Income taxes payable
                       110,947
 
                     117,060
Common stock payable
                                    -
 
                         4,000
Stock options payable
                                    -
 
                  3,150,000
Total current liabilities
                    4,062,215
 
6,025,765
       
Deferred tax liabilities
                         16,712
 
                       17,244
Total long-term liabilities
                         16,712
 
                       17,244
       
Total liabilities
                    4,078,927
 
                  6,043,009
       
Stockholders’ equity(deficit):
     
        Class A preferred; ($.0001 par value) 1,000,000 shares authorized      
          2 and 0 shares issued and oustanding as of September 30, 2010      
   and December 31, 2009, respectively
                                    -
 
                                  -
        Class B preferred; ($.0001 par value) 30,000,000 shares authorized      
          205,394 and 0 shares issued and oustanding as of September 30, 2010      
   and December 31, 2009, respectively
                                 21
 
                                  -
        Class C preferred; ($.0001 par value) 19,000,000 shares authorized      
           no shares issued and oustanding as of September 30, 2010      
    and December 31, 2009, respectively
                                    -
 
                                  -
        Common stock; ($.001 par value) 50,000,000,000 shares authorized,      
           118,383,342 and 79,250,000 shares issued and oustanding at      
    September 30, 2010 and December 31, 2009, respectively
                       118,383
 
                       79,250
Additional paid in capital
                     (447,339)
 
                (4,660,949)
Accumulated other comprehensive income
                         97,902
 
                       51,389
Accumulated deficit
                  (3,639,757)
 
                   (897,409)
Total Garb Oil & Power stockholders' equity (deficit)
                  (3,870,790)
 
                (5,427,719)
Non-controlling interest
                       (20,351)
 
                     (14,310)
Total  stockholders' equity (deficit)
                  (3,891,141)
 
                (5,442,029)
Total liabilities and stockholders' equity (deficit)
 $                    187,786
 
 $                  600,980

Refer to Notes to Condensed Consolidated Financial Statements
 
5

 
 

 



GARB OIL & POWER CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations 
 
 
For the three month periods ended
 
For the nine month periods ended
 
September 30, 2010
 
September 30, 2009
 
September 30, 2010
 
September 30, 2009
 
(re-stated and unaudited)
 
(unaudited)
 
(re-stated and unaudited)
 
(unaudited)
SALES
             
Sales
 $                                    -
 
 $                                -
 
 $                                    -
 
 $                     81,764
Sales-related party
                                        -
 
                                    -
 
                                        -
 
                                 -
TOTAL SALES
                                        -
 
                                    -
 
                                        -
 
                        81,764
COST OF SALES
                                        -
 
                                    -
 
                                        -
 
                                 -
GROSS PROFIT
                                        -
 
                                    -
 
                                        -
 
                        81,764
               
OPERATING EXPENSES
             
Selling, general and administrative
406,115
 
57,328
 
2,004,608
 
175,767
Total Operating Expenses
406,115
 
57,328
 
2,004,608
 
175,767
               
INCOME (LOSS) FROM OPERATIONS
                           (406,115)
 
                         (57,328)
 
                       (2,004,608)
 
                      (94,003)
               
OTHER INCOME(EXPENSE)
             
Loss on extinguishment of debt
                                        -
 
                                    -
 
                           (360,921)
 
                                 -
Gain on sale of investments
                                        -
 
                                    -
 
                             190,589
 
                                 -
Other income
                                        -
 
                                    -
 
                               12,947
 
                          1,920
Interest expense
                           (121,503)
 
                         (51,759)
 
                           (586,030)
 
                      (53,855)
Total Other Income(Expense)
                           (121,503)
 
                         (51,759)
 
                           (743,415)
 
                      (51,935)
LOSS BEFORE INCOME TAXES
                           (527,618)
 
                       (109,087)
 
                       (2,748,023)
 
                    (145,938)
PROVISION(BENEFIT) FOR INCOME TAXES
                                        -
 
                                    -
 
                                    366
 
                          1,620
               
NET LOSS BEFORE NON-CONTROLLING INTEREST
                           (527,618)
 
                       (109,087)
 
                       (2,748,389)
 
                    (147,558)
Net Income (loss) attributable to non-controlling interest
                               (2,013)
 
                             8,339
 
                               (6,041)
 
                        18,197
NET LOSS ATTRIBUTABLE TO GARB OIL & POWER
                           (525,605)
 
                       (117,426)
 
                       (2,742,348)
 
                    (165,755)
               
OTHER COMPREHENSIVE INCOME(LOSS):
             
Foreign currency translation adjustment
                               69,590
 
                             5,261
 
                             (46,513)
 
                        11,444
TOTAL COMPREHENSIVE INCOME (LOSS)
                           (456,015)
 
                       (112,165)
 
                       (2,788,861)
 
                    (154,311)
Comprehensive income(loss) attributable to non-controlling interest
                               13,918
 
                             1,052
 
                               (9,303)
 
                          2,289
COMPREHENSIVE INCOME(LOSS) ATTRIBUTABLE TO GARB OIL & POWER
 $                       (469,933)
 
 $                   (113,217)
 
 $                    (2,779,558)
 
 $                 (156,600)
               
BASIC AND DILUTED LOSS PER COMMON SHARE ATTRIBUTABLE TO GARB OIL & POWER SHAREHOLDERS
 $                              (0.00)
 
 $                          (0.00)
 
 $                              (0.03)
 
 $                       (0.00)
               
WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING
116,134,342
 
                   79,250,000
 
98,213,076
 
79,250,000

 
Refer to Notes to Condensed Consolidated Financial Statements
 
6

 
 

 

 
GARB OIL & POWER CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows

    For the nine months ended
    September 30, 2010     September 30, 2009
    (re-stated and unaudited)     (unaudited)
Cash Flows from Operating Activities:
         
Net loss
                     (2,742,348)
 
                 (165,755)
Adjustments to reconcile net loss to net cash from operating activities:
         
Net loss attributable to non-controlling interest
 
                               (6,041)
   
                        18,197
Depreciation
 
                                 4,909
   
                          9,561
Debt issued for services
 
                             450,000
   
                      165,347
Shares issued for services
 
                             333,086
   
                                 -
Loan fees
 
                             151,129
   
                                 -
Contributed services
 
                               19,373
   
                                 -
Interest expense on beneficial conversion of debt
 
                             245,000
   
                                 -
Gain on sale of investment
 
                           (190,590)
   
                                 -
Stock Option Expense
 
                               14,900
   
                                 -
Loss on forgiveness of debt
 
                             360,921
   
                                 -
Changes in assets and liabilities:
         
Accounts recievable
 
                                 9,211
   
                        (1,299)
Related party receivable
 
                                        -
   
                      (20,772)
Prepaid expenses
 
                             (52,981)
   
                            (571)
Accounts Payable
 
                             470,717
   
                      (50,095)
Accrued interest
 
                             135,182
   
                                 -
Accrued interest-related party
 
                               12,541
   
                                 -
Income taxes payable
 
                               (6,645)
   
                                 -
Other accrued expenses
 
                             409,074
   
                        28,357
Net cash flows from operating activities
 
                           (382,562)
   
                      (17,030)
Cash flows from investing activities:
         
Proceeds from sale of investment
 
                             109,645
   
                                 -
Net cash flows from investing activities
 
                             109,645
   
                                 -
Cash flows from financing activities:
         
Net Proceeds from convertible debentures
 
                             127,000
   
                                 -
Bank overdraft
 
                               (9,813)
   
                                 -
Proceeds from issuance of Common stock
 
                               32,500
   
                                 -
Proceeds from issuance of Series B preferred shares
 
                               63,433
   
                                 -
Net cash flows from financing activities
 
                             213,120
   
                                 -
Net Increase(Decrease) in cash and cash equivalents
 
                             (59,797)
   
                      (17,030)
Effect of exchange rates on cash
 
                               44,158
   
                        13,243
Beginning Cash and Cash equivalents
 
                               19,657
   
                          4,810
Ending Cash and Cash equivalents
                              4,018
 
                        1,023
           
Supplemental Disclosures of Cash flow information:
         
Cash paid for inerest
                           43,035
 
                     1,745
Cash paid for income taxes
                                     -
 
                              -
Supplemental Disclosures of Non-cash Investing and Financing Activities          
Series A Preferred shares issued to relieve debt
                        134,790
 
                             -
Stock options granted as partial consideration for acquisition of RPS GmbH Resource Protection Systems
                      3,150,000
 
                             -
Series B Preferred shares issued to relieve debt
                         375,656
 
                             -
Common stock issued for debt
                         353,100
 
                             -
Accounts payable converted to notes payable
                            43,217
 
                              -
Decrease in Due from related party due to acquisition of NewView
                         515,084
 
                              -
Increase in Notes payable related party due to acquisition of NewView
                         355,636
 
                             -
 
Refer to Notes to Condensed Consolidated Financial Statements
 
7

 
 

 

Garb Oil & Power Corporation
Notes to the Unaudited Condensed Consolidated Financial Statements
  For the nine months ended September 30, 2010 and 2009

1.
Nature of Operations and Going Concern

Garb Oil & Power, Corporation (the “Company”) was incorporated in the State of Utah in 1972 under the name Autumn Day, Inc.  The Company changed its name to Energy Corporation International in 1978, to Garb-Oil Corporation of America in 1981 and finally to Garb Oil & Power Corporation in 1985.  The Company is a provider of high-quality equipment to waste processing and recycling industries.  Garb supplies enabling technologies that allow its clients to push their waste processing and recycling goals forward.  Whether the need is for single machines or an entire plant, Garb provides innovative, profitable ideas and comprehensive value-added solutions providing for a high rate of return on investment.

The Company has designed a system intended to recover 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 accompanying consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern; accordingly, they do not give effect to adjustment that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and retire its liabilities in other than the normal course of business and at amounts different from those in the accompanying financial statements. As shown in the accompanying condensed consolidated financial statements, the Company incurred a net loss of $2,742,348 for the nine months ended September 30, 2010, and has an accumulated deficit of $3,639,757.  Management plans to raise cash from public or private debt or equity financing, on an as needed basis and in the longer term, to generate revenues from the sale of equipment and technology, development and installation of, and engineering and site development.  The Company's ability to continue as a going concern is dependent upon achieving profitable operations and/or upon obtaining additional financing. The outcome of these matters cannot be predicted at this time.  

2.
Basis of Presentation and Restatement
          
These interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2010 are not necessarily indicative of the results that may be expected for any interim period or an entire year. The Company applies the same accounting policies and methods in its interim financial statements as those in the most recent audited annual financial statements.  The financial statements and notes included herein should be read in conjunction with the annual financial statements and notes for the year ended December 31, 2009 included in the Company’s filing of Form 10K.
 
On January 15, 2010, RPS GmbH Resource Protection Systems (“RPS”), a corporation organized under the laws of Germany, and a wholly-owned subsidiary of the Company, purchased 80% of the issued and outstanding stock of Newview S.L., a company organized under the laws of Spain (“Newview”). The transaction is accounted for as entities under common control. As the transaction combines two commonly controlled entities that historically have not been presented together, the resulting financial statements are, in effect, considered those of a different reporting entity. This resulted in a change in reporting entity, which requires retrospectively combining the entities for all periods presented as if the combination had been in effect since inception of common control. The financial information of previously separate entities, prior to the acquisition date, is now shown as combined. The assets and liabilities of the combined entities are shown at historical cost. Subsequent to the filing of the original September 30, 2010 10-Q, the December 31, 2009 consolidated financial statements, including the retrospective combining of Newview, have now been audited and are no longer reflected as unaudited.

 3.
Summary of Significant Accounting Policies

a)   Accounting Principles

The accounting and reporting policies of the Company conform to United States generally accepted accounting principles applicable to exploration stage enterprises.

b)   Foreign Currency Translation
 
The Company's functional and reporting currency is the U.S. Dollar. All transactions initiated in foreign currencies are translated into U.S. dollars in accordance with guidelines issued by the FASB as follows:
 
 
i)      monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;
 
8
 
 

 


 
ii)     non-monetary assets at historical rates; and
 
 
iii)    revenue and expense items at the average rate of exchange prevailing during the period.
 
Gains and losses from foreign currency transactions are included in the stockholders equity section of the balance sheet as “other comprehensive income”.
 
As of September 30, 2010, the Company operates in the United States, Spain and Germany.
 
c)   Cash and Cash Equivalents

For purposes of the statement of cash flows, cash includes demand deposits, saving accounts and money market accounts. The Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents.
 
d)  Use of Estimates

The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those reported.

e)   Accounts receivable and concentration of credit risk

The Company has $15,894 and $25,105 accounts receivable at September 30, 2010 and December 31, 2009 respectively.  The Company does not currently foresee a concentrated credit risk associated with trade receivables.  When the Company generates significant ongoing revenue, the Company will evaluate the receivable in light of the collectability in the normal course of business.
 
f)   Fair Value Measurements

The Company adopted FASB ASC 820-Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
  
Level 1:    
Observable inputs such as quoted market prices in active markets for identical assets or liabilities
   
Level 2:    
Observable market-based inputs or unobservable inputs that are corroborated by market data
   
Level 3:    
Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
 
The Company did not have any Level 2 or Level 3 assets or liabilities as of September 30, 2010 and December 31, 2009.

The Company discloses the estimated fair values for all financial instruments for which it is practicable to estimate fair value. As of September 30, 2010 and December 31, 2009, the fair value short-term financial instruments, approximates book value due to their short-term duration. Cash and cash equivalents include money market securities and commercial paper that are considered to be highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within the fair value hierarchy.
 
In addition, the Financial Accounting Standards Board (“FASB”) issued, “The Fair Value Option for Financial Assets and Financial Liabilities,” effective for January 1, 2008. This guidance expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value option for any of its qualifying financial instruments.
 
9

 
 

 
g)   Loss per Common Share

Net loss per common share is based on the weighted average number of shares outstanding. Potential common shares includable in the computation of fully diluted per share results are not presented in the financial statements as their effect would be anti-dilutive.

h)   Reclassifications

Certain prior year financial statement balances have been reclassified to conform to the current year presentation. These reclassifications had no effect on the recorded net loss.

i)   Recently Adopted Accounting Pronouncements

There are several new accounting pronouncement issued or proposed by the Financial Accounting Standards Board (“FASB”).  Each of these pronouncements, as applicable, has been or will be adopted by the Company.  Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or operating results.

 4.
Related party transactions

From time to time, our CEO, John Rossi incurred expenses in behalf of the Company.  At September 30, 2010 the balance owed to Mr. Rossi was $69,269. The balance has been accrued in notes payable related parties. In addition, in conjunction with the purchase of Niewview for $870,720 the Company relieved amounts owed by Igor Plahuta to the Company of $515,084 and recorded a payable to Mr. Plahuta of $355,636. As of September 30, 2010 the amount owed to Mr.Plahuta was $343,581, which was recorded in related party payables.

On March 22, 2010, the Company entered into a Stock Purchase Agreement with John Rossi and Igor Plahuta for the sale and issuance of one (1) share of Class A Preferred Stock to each of Mr. Rossi and Mr. Plahuta (the “Class A Issuance”).  The shares were issued in satisfaction of $134,790 (€100,000) owed by the Company to Mr. Rossi and Mr. Plahuta.
 
On May 12, 2010, the Company issued an aggregate of 23,198 shares of Class B Preferred Stock to former officers of the Company in satisfaction of accrued wages totaling $115,988.
 
On May 12, 2010, the Company issued 11,715 shares of Class B Preferred Stock to an officer and director of the Company, in satisfaction of $29,286 owed for expense reimbursement.
 
On May 12, 2010, the Company issued 7,389 shares of Class B Preferred Stock to former officers of the Company, for forgiveness of $36,943 of debt.
 
On May 12, 2010, the Company issued 10,625,000 shares of Common Stock to the President and CEO of the Company. 2,625,000 shares were for replacement of shares of Common Stock sold to third parties to raise capital for the Company, 7,000,000 shares was for interest expense of $245,000 and 1,000,000 shares were for services valued at $42,000.
 
On May 17, 2010, the Company issued 18,290,155 shares of Common Stock to an entity owned by a former Officer and Director of the Company for forgiveness of $274,352 of debt. Because the Company issued the shares at a discount to the market price on the date of issuance it recognized $274,352 as a loss on forgiveness of debt.
 
On May 20, 2010, the Company issued 50,000 shares of Class B Preferred Stock to a related party of the Company for forgiveness of $222,734 of debt.
 

5.
Capital Stock
                   
a)     Authorized
                
On March 1, 2010, the Company amended Article IV of its Articles of Incorporation (the “Amendment”) to, among other things increase its authorized common shares from 80,000,000 to 500,000,000 with a par value of $0.001 and create three new classes of preferred stock, class A preferred (“Class A Preferred Stock”), consisting of 150,000,001 authorized shares with a par value of $.0001, Class B Preferred Stock, consisting of 1,200,000 authorized shares with a par value of $.0001 and class C preferred (“Class C Preferred Stock”), consisting of 1,000,000 authorized shares with par value of $.0001. A summary of the pertinent rights and privileges of the new classes of preferred stock is as follows:
 
10

 
 

 
    Class A Preferred Stock
Conversion Rights-Each outstanding share of Class A Preferred Stock shall be convertible, at the option of the older into shares of Common Stock equal to (i) four times the total number of shares of Common Stock which are issued and outstanding at the time of such conversion plus (ii) the total number of shares of Class B Preferred Stock and Class C Preferred Stock which are issued and outstanding at the time of such conversion minus (iii) the number of other shares of Class A Preferred Stock issued and outstanding immediately prior to the time of such conversions.
Voting Rights-The total aggregate issued shares of Class A Preferred Stock shall have aggregate right to a number of votes equal to (i) four times the total number of shares of Common Stock which are issued and outstanding at the time of voting, plus (ii) the total number of shares of Class B and Class C Preferred Stocks which are issued and outstanding at the time of voting minus (iii) the number of shares of Class A Preferred Stock issued and outstanding at the time of voting.
    Class B Preferred Stock
Dividends-Class B shareholders shall be entitled to receive dividends, when, as and if declared by the Board of Directors.
Conversion Rights-Each outstanding share of Class B Preferred Stock shall be convertible, at the option of the holder, into the number of shares of Common Stock equal to the price of the Class B Preferred Stock, $2.50 divided by the par value of the Common Stock, $0.001. The shares may not be converted into shares of Common Stock for a period of six months after purchase.
Voting Rights-Each share of Class B Preferrd Stock shall have ten votes.
    Class C Preferred Stock
Dividends-Class C shareholders shall be entitled to receive dividends, when, as and if declared by the Board of Directors.
Conversion Rights-Each outstanding share of Class C Preferred Stock shall be convertible into 500 shares of Common Stock.
  
On June 23, 2010 the Company filed an amendment with the Utah Secretary of State amending Article IV of the Corporation Articles of Incorporation such that the Authorized capital stock of the Company is as stated below.

           Authorized capital stock consists of:
 
·  
50,000,000,000 common shares with a par value of $0.001 per share; and
·  
1,000,000 preferred series A shares with a par value of $0.0001 per share; and
·  
 30,000,000 preferred series B shares with a par value of $0.0001 per share; and
·  
19,000,000 preferred series C shares with a par value of $0.0001 per share
 
b)    Share Issuances
                   
In January 2010, the Company approved the issuance of 50,000 common shares to LeRoy Jackson for cash at a price per share of $0.10 for aggregate gross proceeds of $5,000 in an unregistered sale of securities.
 
In January  2010, the Company approved the issuance of 500,000 shares of Common Stock to Premier Media Services, Inc. (“PMS”) pursuant to that certain Agreement by and between the Company and PMS dated February 27, 2010 (the “PMS Agreement”), at a per share price of $0.035 for $17,500 for services provided.  The PMS Agreement provides, among other things, that Company will pay PMS for the first three months of the PMS Agreement, a monthly fee of $7,500 cash or $12,500 in stock, and that Company also will issue options to PMS to purchase the following number of shares of Common Stock at the following exercise prices per share (i) 100,000 shares at $0.15, (ii) 100,000 shares at $0.25, (iii) 100,000 at $0.35, (iv) 100,000 shares at $0.50 and (v) 100,000 shares at $1.00, each with a exercise period of five (5) years from the date of the Agreement (collectively, the “ PMS Options ”).  The Company recognized an expense of $14,900 related to the issuance of these stock options.
 
In January 2010, the Company approved the issuance of 50,000 shares of Common Stock to Premier Funding & Financial Marketing Service LLC (“PFFM”) pursuant to that certain Agreement by and between the Company and PFFM dated January 14, 2010 for $1,750 for services provided. The services were valued at the market price of the stock.
 
In January 2010, the Company approved the issuance of 500,000 shares of Common Stock to Richard Papaleo pursuant to that certain Consulting Agreement by and between the Company and Mr. Papaleo dated April 1, 2010 for $22,500 for services provided. The services were valued at the market price of the stock.  
 
In April 2010, the Company approved the issuance of an aggregate of 1,219 shares of Class B Preferred Stock for an aggregate of $3,048 of services provided. The services were valued at the market price of the stock.
 
In May 2010, the Company approved the issuance of an aggregate of 75,000 shares of Class B Preferred Stock to a consultant for an aggregate of $187,500 of services provided. The services were valued at the market price of the stock.
 
In May 2010, the Company approved the issuance of 6,469,187 shares of Common Stock to Greg Shepard for forgiveness of $103,507 of debt and $4,000 worth of common stock payable. Because the Company approved the issuance of the shares at a discount to the market price on the date of issuance it recognized $86,569 as a loss on forgiveness of debt.
 
11
 
 
 

 
In May 2010, the Company approved the issuance of an aggregate of 150,000 shares of Common Stock to various consultants for an aggregate of $4,500 of services provided. The services were valued at the market price of the stock.
 
In May 2010, the Company approved the issuance of an aggregate of 10,000 shares of Class B Preferred Stock to various consultants for an aggregate of $25,000 of services provided. The services were valued at the market price of the stock.
 
In May 2010, the Company approved the issuance of an aggregate of 13,480 shares of Class B Preferred Stock to various purchasers for aggregate gross proceeds of $33,700.
 
In May 2010, the Company approved the issuance of 11,404 shares of Class B Preferred Stock for aggregate gross proceeds of $25,732.
 
In June 2010, the Company approved the issuance of 2,500,000 shares of Common stock for $10,000 in cash.
 
In July 2010, the Company approved the issuance of 1,600 shares of Class B Preferred Stock at a price for aggregate gross proceeds of $4,000. 
 
6.
Debt Issuance

On March 11, 2010 the Company borrowed $50,000 from Asher Enterprises Inc. (“Asher”) pursuant to a convertible promissory note (the “Asher Note”). The Asher Note bears interest at 8% per annum and has a maturity date of December 5, 2010. Asher has the right to immediately convert the Asher Note before the maturity date, into shares of the Company’s common stock (“Common Stock”) at a discount of 42% of the average of the lowest 3 days’ trading prices of Common Stock of the 10 days prior to the conversion date. Since the notes are immediately convertible into a variable number of shares based on a fixed monetary value we followed the guidance in ASC 480-10-25-14. This requires the note to be classified as a liability and reported at its full fair value, which is the fixed monetary value of shares into which the debt is convertible. The excess of the amount recognized as a liability for the convertible debt over the proceeds received upon issuance, $36,207 was recognized as interest expense on the date of issuance, As of September 30, 2010, no portion of the Asher Note has been converted to common stock. The balance of the note as of September 30, 2010 is $86,207.

On May 11, 2010 the Company borrowed $40,000 from Asher Enterprises Inc. (“Asher”) pursuant to a convertible promissory note under the same terms and conditions as stated in the previous paragraph. . The excess of the amount recognized as a liability for the convertible debt over the proceeds received upon issuance, $28,966 was recognized as interest expense on the date of issuance. As of September 30, 2010, no portion of the Asher Note has been converted to common stock. The balance of the note as of September 30, 2010 is $68,966.

On June 8, 2010 the Company borrowed $45,000 from Asher Enterprises Inc. (“Asher”) pursuant to a convertible promissory note under the same terms and conditions as stated in the previous paragraph. The excess of the amount recognized as a liability for the convertible debt over the proceeds received upon issuance, $32,586 was recognized as interest expense on the date of issuance, As of September 30, 2010, no portion of the Asher Note has been converted to common stock. The balance of the note as of September 30, 2010 is $77,586.

On June 29, 2010 the Company issued a note to Outsourced Associates (“Outsourced”) for $300,000 related to consulting services. The Outsourced Note bears interest at 18% per annum and has a maturity date of July 1, 2010. The Outsourced Note agreement contains a 10% penalty clause if the Company fails to make payment at the maturity date. As of July 2, 2010 the Company was in default of the Note and recorded a $30,296 interest expense penalty related to this note.

On September 29, 2010 the Company issued a note to Outsourced Associates (“Outsourced”) for $150,000 related to consulting services. The Outsourced Note bears interest at 18% per annum and has a maturity date of September 30, 2010. The Outsourced Note agreement contains a 10% penalty clause if the Company fails to make payment at the maturity date. As of October 1, 2010 the Company was in default of the Note and recorded a $15,074 interest expense penalty related to this note.

7.
Acquisitions

Newview

On January 15, 2010, RPS purchased, through a business combination, 80% of the issued and outstanding stock of Newview S.L. (the “Newview Acquisition” or “Newview”). The Company purchased Newview because it holds certain prorietary information and other technology relating to the Company’s e-waste recycling and processing business. At the time of the purchase, Igor Plahuta, Director of the Company, was the 100% owner of Newview.  Mr. Plahuta had previously sold a 20% interest in Newview to an unrelated third party.  Mr. Plahuta has requested the cancellation of the agreement for non-payment and a final decision is pending.  The Company believes that this remaining 20% of Newview will be cancelled by year end and it will then be 100% owned by the Company.
 
12

 
 

 
The total maximum consideration that may be paid to Mr. Plahuta for the Newview Acquisition is €600,000 ($870,000), including cancellation of indebtedness owed by Mr. Plahuta to RPS of €300,000 ($435,000), cash up to €150,000 ($217,000) from the sale of a 47% participation in Sistema Proteccion Recursos, a company organized under the laws of Spain when RPS consummates such sale and receives payment, and cash up to €150,000 ($217,000) from profits of RPS based on a percent of gross sales of RPS during a certain period. Other than the cancellation of indebtedness, none of the consideration for the purchase has been paid as of September 30, 2010.

The transaction is accounted for as entities under common control. As the transaction combines two commonly controlled entities that historically have not been presented together, the resulting financial statements are, in effect, considered those of a different reporting entity. This resulted in a change in the reporting entity, which requires retrospectively combining the entities for all periods presented as if the combination had been in effect since inception of common control. 
 
The Company recorded the combination of Newview as a transaction between entities under common control, which is accounted for similar to a “pooling of interests” transaction. The balance sheet of Newview at December 31, 2009 was as follows:
 
   
December 31, 2009
 
Cash
$
19,657
 
Accounts Receivable
 
16,866
 
Prepaid expenses
 
676
 
Property Plant and Equipment
 
33,197
 
Accounts Payable
 
(6,683
)
Other current liabilities
 
(4,550
)
Due to related party
 
(126,495
)
Non-controlling interest
 
(14,310
)
Equity
 
67,333
 

eWaste

On March 24, 2010, the Company, along with Soil Remediation Inc. (“SRI”), Steel Valley Design Inc., LMW Holding Company Inc., Odyssey Environmental LLC, Robert D. Carcelli, Inc., Liberian Holding Corporation, Inc., and Three C’s Distributing, Inc. (collectively, the “eWaste Founders”) formed eWaste USA, Inc., a Delaware corporation, (“eWaste”) with the intent of building, owning and managing ten e-scrap (e-waste) plants on the East Coast of the United States with total value of $135,000,000.  John Rossi, the President and Chief Executive Officer of the Company, is the Chairman and Chief Executive Officer of eWaste.  As of the end of the three-month period ending March 31, 2010 there was no activity in eWaste.  eWaste will be consolidated with the Company in future periods once it has activity. After March 31, 2010, the eWaste Founders contributed to the formation and initial expenses of the Company in exchange for their proportionate ownership in eWaste. The Company contributed 51% of all expenses and the other members contributed 49% as per their assigned shareholding.  Accordingly, the Company owns 51% of eWaste and the other eWaste Founders own the remaining 49% among themselves. In September 2010 per the mutual agreement of the eWaste founders, eWaste USA, Inc. was dissolved. There was very minimal activity in the entity prior to its dissolution.
 
8.
Sale of investment in SPR

RPS reported on its balance sheet its 47% ownership in Sistema Proteccion Recursos (“SPR”), a sister company located in Madrid, Spain that was acquired to capitalize on the Spanish recycling industry. On May 17, 2010 RPS sold its interest in SPR to an unrelated party and recognized a gain on sale in the amount of $190,619.

9.
Subsequent Events

In October 2010, the Company issued 6,500,000 shares of common stock to an unaffiliated consulting group under a consulting agreement to provide public relations support.  The shares were issued at an average price of $0.00385 per share.

In October 2010, the Company issued 1,612,500 shares of common stock on conversion of $5,000 of convertible debentures.  The issuance price of the shares was $0.0031 per share.

10.
Re-statement of September 30, 2010 unaudited financial statements

The Company determined that it had incorrectly accounted for its convertible debt transaction for the period ended September 30, 2010. The Company originally recorded a discount to the liability balance for a beneficial conversion feature of $97,759, which was accreted over the life of the note payable. However, since the notes are immediately convertible into a variable number of shares based on a fixed monetary value the Company determined it should be accounted for under the guidance in ASC 480-10-25-14. This requires the note to be classified as a liability and reported at its full fair value, which is the fixed monetary value of shares into which the debt is convertible. The excess of the amount recognized as a liability for the convertible debt over the proceeds received upon issuance, $97,759 was recognized as interest expense and recorded in notes payable on the date of issuance.  Also, in conjunction with the audit of our 2010 financial statements we determined that our valuation of stock issuances was incorrect. In addition to these changes, the Company also made various re-classification changes throughout the financial statements and related notes to the financial statements to conform to changes made to the annual financial statements. The following table shows the effect of the changes on the unaudited financial statements.
 
13
 
 
 

 
 
Balance Sheets          
 
September 30, 2010
 
September 30, 2010
 
Change
ASSETS
(re-stated )
 
(as originally filed)
   
Current assets:
         
Cash
 $                      4,018
 
 $                            183
 
 $                  3,835
Accounts receivable-trade
                       15,894
 
                          15,994
 
                      (100)
Prepaid expenses
                     135,928
 
                       133,662
 
                     2,266
Total current assets
155,840
 
149,839
 
6,001
           
Property and equipment, net
                       31,946
 
                          31,946
 
                           -
           
Total assets
 $                 187,786
 
 $                    181,785
 
 $                  6,001
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
         
Current liabilities:
         
Bank overdraft
 $                    61,090
 
 $                         2,004
 
 $               59,086
Accounts payable and accrued expenses
                     640,173
 
                       685,211
 
                 (45,038)
Related party payable
                     343,582
 
                            4,194
 
                339,388
Convertible notes payable
                                  -
 
                          70,528
 
                 (70,528)
Notes payable
                 1,301,866
 
                       634,827
 
                667,039
Derivative liability
                                  -
 
                                    -
 
                             -
Notes payable-related parties
                       69,269
 
                          69,269
 
                             -
Accrued interest
                     917,262
 
                                    -
 
                917,262
Wages payable and other accrued liabilities
                     618,027
 
                                    -
 
                618,027
Income taxes payable
                     110,946
 
                                    -
 
                110,946
Accrued expenses
                                  -
 
                    1,614,609
 
           (1,614,609)
Derivative liability
                                  -
 
                          55,473
 
                 (55,473)
Total current liabilities
                 4,062,215
 
3,136,115
 
926,100
           
Deferred tax liabilities
                       16,712
 
                          16,712
 
                             -
Total long-term liabilities
                       16,712
 
                          16,712
 
                             -
           
Total liabilities
                 4,078,927
 
                    3,152,827
 
                926,100
           
Stockholders’ equity(deficit):
         
Class A preferred
                                  -
 
                                    -
 
                             -
Class B preferred
                               21
 
                                 31
 
                        (10)
Class C preferred
                                  -
 
                                    -
 
                             -
Common stock
                     118,383
 
                       115,834
 
                     2,549
Common stock payable
                                  -
 
                            4,000
 
                   (4,000)
Additional paid in capital
                   (447,339)
 
                    1,670,418
 
           (2,117,757)
Accumulated other comprehensive income
                       97,902
 
                        (47,904)
 
                145,806
Accumulated deficit
               (3,639,757)
 
                  (4,705,824)
 
             1,066,067
Total Garb Oil & Power stockholders' equity (deficit)
               (3,870,790)
 
                  (2,963,445)
 
              (907,345)
Non-controlling interest
                     (20,351)
 
                          (7,597)
 
                 (12,754)
Total  stockholders' equity (deficit)
               (3,891,141)
 
                  (2,971,042)
 
              (920,099)
Total liabilities and stockholders' equity (deficit)
 $                 187,786
 
 $                    181,785
 
 $                  6,001
           

14

 
 

 

Statements of Operations
For the three month periods ended
     
For the nine month periods ended
   
 
September 30, 2010
 
September 30, 2010
 
Change
 
September 30, 2010
 
September 30, 2010
 
Change
 
(re-stated)
 
(as originally filed)
     
(re-stated)
 
(as originally filed)
   
SALES
                     
Sales
 $                             -
 
 $                            (421)
 
 $           421
 
 $                              -
 
 $                      (6,274)
 
 $           6,274
Sales-related party
                                 -
 
                                    -
 
                  -
 
                                 -
 
                                 -
 
                     -
TOTAL SALES
                                 -
 
                               (421)
 
               421
 
                                 -
 
                         (6,274)
 
              6,274
COST OF SALES
                                 -
 
                            15,190
 
       (15,190)
 
                                 -
 
                                 -
 
                     -
GROSS PROFIT
                                 -
 
                          (15,611)
 
         15,611
 
                                 -
 
                         (6,274)
 
              6,274
                       
OPERATING EXPENSES
                     
Selling, general and administrative
406,115
 
800,546
 
     (394,431)
 
2,004,608
 
1,821,424
 
          183,184
Total Operating Expenses
406,115
 
800,546
 
     (394,431)
 
2,004,608
 
1,821,424
 
          183,184
                       
INCOME (LOSS) FROM OPERATIONS
                    (406,115)
 
                       (816,157)
 
       410,042
 
                 (2,004,608)
 
                 (1,827,698)
 
        (176,910)
                       
OTHER INCOME(EXPENSE)
                     
Loss on extinguishment of debt
                                 -
 
                                    -
 
                  -
 
                    (360,921)
 
                                 -
 
        (360,921)
Gain on sale of investments
                                 -
 
                                    -
 
                  -
 
                      190,589
 
                                 -
 
          190,589
Other income
                                 -
 
                            18,040
 
       (18,040)
 
                        12,947
 
                      181,156
 
        (168,209)
Mark to Market-Derivative instrument liability
                                 -
 
                                    -
 
                  -
 
                                 -
 
                         76,386
 
          (76,386)
Interest expense
                    (121,503)
 
                              5,387
 
     (126,890)
 
                    (586,030)
 
                       (95,520)
 
        (490,510)
Total Other Income(Expense)
                    (121,503)
 
                            23,427
 
     (144,930)
 
                    (743,415)
 
                      162,022
 
        (905,437)
LOSS BEFORE INCOME TAXES
                    (527,618)
 
                       (792,730)
 
       265,112
 
                 (2,748,023)
 
                 (1,665,676)
 
    (1,082,347)
PROVISION(BENEFIT) FOR INCOME TAXES
                                 -
 
                                      5
 
                 (5)
 
                              366
 
                              348
 
                    18
                       
NET LOSS BEFORE NON-CONTROLLING INTEREST
                    (527,618)
 
                       (792,735)
 
       265,117
 
                 (2,748,389)
 
                 (1,666,024)
 
    (1,082,365)
Net Income (loss) attributable to non-controlling interest
                        (2,013)
 
                                    -
 
         (2,013)
 
                        (6,041)
 
                                 -
 
            (6,041)
NET LOSS ATTRIBUTABLE TO GARB OIL & POWER
 $                (525,605)
 
 $                    (792,735)
 
 $    267,130
 
 $             (2,742,348)
 
 $              (1,666,024)
 
 $ (1,076,324)
                       
OTHER COMPREHENSIVE INCOME(LOSS):
                     
Foreign currency translation adjustment
                        69,590
 
                                    -
 
         69,590
 
                      (46,513)
 
                                 -
 
          (46,513)
TOTAL COMPREHENSIVE INCOME (LOSS)
                    (456,015)
 
                       (792,735)
 
       336,720
 
                 (2,788,861)
 
                 (1,666,024)
 
    (1,122,837)
Comprehensive income(loss) attributable to non-controlling interest
                        13,918
 
                                    -
 
         13,918
 
                        (9,303)
 
                                 -
 
            (9,303)
COMPREHENSIVE INCOME(LOSS) ATTRIBUTABLE
  TO GARB OIL & POWER
 
$                (469,933)
 
 $                    (792,735)
 
 $    322,802
 
 $             (2,779,558)
 
 $              (1,666,024)
 
 $ (1,113,534)
                       
BASIC AND DILUTED LOSS PER COMMON SHARE ATTRIBUTABLE TO GARB OIL & POWER SHAREHOLDERS
 $                       (0.00)
 
 $                           (0.01)
 
 $        (0.01)
 
 $                       (0.03)
 
 $                        (0.02)
 
 $             0.01
                       
WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING
116,134,342
 
                  115,834,342
 
       300,000
 
98,213,076
 
103,639,561
 
    (5,426,485)
                       
 
15

 
 

 

Statements of Cash Flows
For the nine months ended
   
 
September 30, 2010
 
September 30, 2010
 
Change
 
(re-stated)
 
(as originally filed)
   
Cash Flows from Operating Activities:
         
Net Income (loss)
 $                  (2,742,348)
 
 $             (1,666,024)
 
 $      (1,076,324)
Adjustments to reconcile net loss to net cash from operating activities:
         
Net loss attributable to non-controlling interest
                             (6,041)
 
                          6,842
 
              (12,883)
Depreciation
                               4,909
 
                          4,852
 
                        57
Debt issued for services
                          450,000
 
                                 -
 
              450,000
Shares issued for services
                          333,086
 
                                 -
 
              333,086
Loan fees
                          151,129
 
                                 -
 
              151,129
Contributed services
                            19,373
 
                                 -
 
                19,373
Interest expense on beneficial conversion of debt
                          245,000
 
                                 -
 
              245,000
Gain on sale of investment
                        (190,591)
 
                                 -
 
            (190,591)
Stock Option Expense
                            14,900
 
                                 -
 
                14,900
Loss on forgiveness of debt
                          360,921
 
                                 -
 
              360,921
Stock issued for compensation
                                     -
 
                      150,000
 
            (150,000)
Derivative liability expensed
                                     -
 
                        55,473
 
              (55,473)
Changes in assets and liabilities:
         
Accounts recievable
                               9,211
 
                          9,111
 
                      100
Related party receivable
                                     -
 
                      142,986
 
            (142,986)
Prepaid expenses
                          (52,981)
 
                    (131,660)
 
                78,679
Accounts Payable
                          470,718
 
                      701,279
 
            (230,561)
Accrued interest
                          135,182
 
                                 -
 
              135,182
Accrued interest-related party
                            12,541
 
                                 -
 
                12,541
Income taxes payable
                             (6,645)
 
                                 -
 
                 (6,645)
Other accrued expenses
                          409,074
 
                                 -
 
              409,074
Net cash flows from operating activities
                        (382,562)
 
                    (727,141)
 
              344,579
Cash flows from investing activities:
         
Proceeds from sale of investment
                          109,645
 
                                 -
 
              109,645
Net cash flows from investing activities
                          109,645
 
                                 -
 
              109,645
Cash flows from financing activities:
         
Proceeds from related party loan
                                     -
 
                        69,269
 
              (69,269)
Bank overdraft
                             (9,813)
 
                                 -
 
                 (9,813)
Net Proceeds from convertible debentures
                          127,000
 
                      135,000
 
                 (8,000)
Proceeds from notes payable
                                     -
 
                      516,039
 
            (516,039)
Proceeds from private placement
                            32,500
 
                      100,474
 
              (67,974)
Increase in deferred finance costs
                                     -
 
                      (64,472)
 
                64,472
Proceeds from issuance of Series B preferred shares
                            63,433
 
                                 -
 
                63,433
Net cash flows from financing activities
                          213,120
 
                      756,310
 
            (543,190)
Net Increase(Decrease) in cash and cash equivalents
                          (59,797)
 
                        29,169
 
              (88,966)
Effect of exchange rates on cash
                            44,158
 
                      (48,643)
 
                92,801
Beginning Cash and Cash equivalents
                            19,657
 
                        19,657
 
                         -
Ending Cash and Cash equivalents
 $                           4,018
 
 $                         183
 
 $               3,835
Supplemental Disclosures of Cash flow information:
         
Cash paid for inerest
 $                         43,035
 
 $                              -
 
 $             43,035
Cash paid for income taxes
 $                                    -
 
 $                              -
 
 $                        -
Supplemental Disclosures of Non-cash Investing and Financing Activities
         
Series A Preferred shares issued to relieve debt
 $                       134,790
 
 $                              -
 
 $           134,790
Stock options granted as partial consideration for acquisition of
         
RPS GmbH Resource Protection Systems
 $                    3,150,000
 
 $                              -
 
 $        3,150,000
Series A Preferred shares issued to relieve debt
 $                       375,656
 
 $                              -
 
 $           375,656
Common stock issued for debt
 $                       353,100
 
 $                              -
 
 $           353,100
Accounts payable converted to Notes payable
 $                         43,217
 
 $                              -
 
 $             43,217
Decrease in due from related party due to acquisition of NewView
 $                       515,084
 
 $                              -
 
 $           515,084
Increase in Notes payable related party due to acquisition of NewView
 $                       355,636
 
 $                              -
 
 $           355,636
Stock to be issued in connection with private placement
 $                                    -
 
 $                      4,000
 
 $             (4,000)
Common stock to be issued in connection with settlements
 $                                    -
 
 $                 777,392
 
 $         (777,392)
Unamortized beneficial conversion
 $                                    -
 
 $                   64,472
 
 $           (64,472)
 
16
 
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The financial data presented below should be read in conjunction with the more detailed financial statements and related notes, which are included elsewhere in this report. Information discussed herein, as well as elsewhere in this quarterly report on Form 10-Q, includes forward-looking statements or opinions regarding future events or the future financial performance of the Company, and are subject to a number of risks and other factors which could cause the actual results to differ materially from those contained in forward-looking statements. Among such factors are general business and economic conditions, and risk factors as listed in its Annual Report on Form 10-K or listed from time to time in documents filed by the Company with the Securities and Exchange Commission.
 
Further Information
 
The reports we file with the SEC are available, free of charge, on the Investor Relations page of our Web site www.ir-site.com/garb/sec.asp, as soon as reasonably practicable after we electronically file such material with the SEC.  Information on our Web site does not constitute a part of this quarterly report on Form 10-Q.
 
Our Current Business
 
Garb is a fast-growing provider of high-quality equipment to the waste processing and recycling industries.  Garb supplies enabling technologies that allow its clients to push their waste processing and recycling goals forward. Whether the need is for single machines or an entire plant, Garb provides innovative, profitable ideas and comprehensive value-added providing for a high rate of return on investment.
 
Garb was incorporated in the State of Utah in 1972 under the name Autumn Day, Inc.  The Company changed its name to Energy Corporation International in 1978, to Garb-Oil Corporation of America in 1981 and finally to Garb Oil & Power Corporation in 1985.
 
The Company has designed a system intended to recover 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.
 
Recent Developments
 
On October 27, 2009, the Company consummated the acquisition of RPS.  RPS provides equipment and products to the waste processing, energy and recycling industries. It supplies the enabling technologies for waste processing and recycling, from the single machines to entire plants, specializing but not limited to, waste rubber, municipal waste, domestic waste, waste to energy, electronic scrap and all derivatives relating to these industries, including rubber power, fine rubber particles, alloys of rubber, TPE-V and rubber, elastomers, compounds and technical rubber products from raw material, to processing, manufacturing and wholesaling available to both the recycling industry and original product manufacturers and producers.
 
On January 15, 2010, RPS, acquired 80% of the issued and outstanding stock of Newview S.L.  Newview holds certain proprietary information and other technology we believe will help complete our e-waste processing business and processes.  This technology has now become integrated into our sales network.

On March 24, 2010, the Company acquired a 51% interest in a newly formed entity, eWaste USA, Inc., a Delaware corporation (“eWaste”).  The Company along with its partners intends on building, owning and managing ten e-scrap (e-waste) plants on the East Coast of the United States.  John Rossi, the President and Chief Executive Officer of the Company, is also the Chairman and Chief Executive Officer of eWaste.  
 
Results of Operations
 
The following summary of our results of operations should be read in conjunction with our unaudited financial statements for the nine month periods ended September 30, 2010 and 2009 which is included herein.
 
Our operating results for the three and nine month periods ended September 30, 2010 and 2009 are summarized as follows:
 
    Three months ended     Nine months ended
    September 30,     September 30,
    2010     2009     2010     2009
 Operating expenses $  406,115   $  57,328   $  2,004,608   $  175,767
 Net loss $  (525,605)   $  (117,426)   $  (2,742,348)   $  (165,755)
 
Revenues
 
We did not earn any revenues for the nine months ended September 30, 2010, compared to revenues of $81,764 for the comparable period of 2009. We anticipate that we will begin to record significant revenue in the second half of 2012 as projects that have been proposed and signed for are funded.
 
17
 
 
 

 
Expenses
 
General and Administrative
 
Our general and administrative expenses increased $348,787, or 608% to $406,115 for the three-months ended September 30, 2010 when compared to the three months ended September 30, 2009 amount of $57,328. This increase is primarily attributable to an increase in consulting fees of approximately $36,000, professional fees of approximately $126,000, and salaries and wages of $164,000 when compared to the nine months period ended September 30, 2009. These increases are all attributable to our acquisition of RPS and our SEC reporting requirements.

For the nine-months ended September 30, 2010 our general and administrative expenses increased $1,828,841, or 1040% to $2,004,608 when compared to the nine-months ended September 30, 2009 amount of $175,767. This increase is primarily attributable to an increase in consulting fees of approximately $901,000, professional fees of $298,000, salaries and wages of $370,000, and travel expenses of $327,000 when compared to the nine months period ended September 30, 2009. These increases are all attributable to our acquisition of RPS and our SEC reporting requirements.

Other income (expense)
 
Other income (expense) increased by 69,744, or 135%, from $(51,759) to $(121,503) for the three months ended September 30, 2010 when compared to the three months ended June 30, 2009. The increase is a result of an increase in interest expense of approximately $70,000 related to the Company’s increase in notes payable.

For the nine months ended September 30, 2010 our other income (expense) increased by $691,480, or 1331%, from $(51,935) to $(743,415) when compared to the nine months ended September 30, 2009. The increase is a result of an increase in interest expense of approximately $532,000 related to the Company’s increase in notes payable and a loss on extinguishment of debt of $360,921. This increase is offset by the $190,589 gain on sale of investments recognized in the nine months ended September 30, 2010.
 
Liquidity and Capital Resources
 
Working Capital
 
             
Percentage
 
September 30,
   
Dec. 31
   
Increase
 
2010
   
2009
   
(Decrease)
Current Assets
$
155,840
   
$
561,548
     
(72.2)%
Current Liabilities
$
4,062,215
   
$
6,025,765
     
(32.6)%
Working Capital (Deficiency)
$
(3,906,375
)
 
$
(5,464,217
)
   
(28.5)%
 
Cash Flows
 
 
Nine Months Ended September 30,
   
Percentage Increase /
 
2010
   
2009
   
(Decrease)
Cash Used in Operating Activities
$
(382,562
)
 
$
(17,030
)
 
2204%
Cash Used in Investing Activities
$
109,645
   
$
-
   
N/A
Cash Provided by Financing Activities
$
213,120
   
$
-
   
N/A
Net Decrease in Cash
$
(59,797)
   
$
(17,030
)
 
(251)%
 
We anticipate that we will incur approximately $300,000 for operating expenses, including professional, legal and accounting expenses associated with our reporting requirements under the Securities Exchange Act of 1934 and our legal representation during the next twelve months. We do not have sufficient working capital to provide for the anticipated expenses over the next twelve months. Accordingly, we will need to obtain additional financing in order to complete our business plan.
 
Cash Used in Operating Activities
 
We used cash in operating activities in the amount of $392,375 during the nine month period ended September 30, 2010 compared to $17,030 during the nine month period ended September 30, 2009. Cash used in operating activities was mostly funded by cash from financing activities.
 
Cash Used in Investing Activities
 
Cash provided by investing activities during the nine month period ended September 30, 2010 was proceeds of $109,645 from the sale of investments. There were no cash flows from investing activities during the nine months ended September 30, 2009.
 
18
 
 
 

 
Cash Provided by Financing Activities
 
During the nine month period ended September 30, 2010:
 
The Company raised $127,000 net funds from the sale of a nine month convertible debenture to an unaffiliated, accredited investor.  The debentures are convertible at a 42% discount to the lowest 3 day trading price in the 10 day period prior to conversion.
 
The Company raised $63,433 from the private placement of Class B Preferred Stock to non-affiliated accredited investors at an average price of $2.77 per share.
 
The Company raised $32,500 through the issuance of 5,175,000 shares of common stock to a non-affiliated investor. 
 
 
Disclosure of Outstanding Share Data
 
As at the date of this quarterly report, we had 118,383,342 shares of Common Stock; 2 shares of Class A Preferred Stock; and 205,394 shares of Class B Preferred Stock issued and outstanding.
 
We have a five year option outstanding for the purchase of 100,000,000 shares of the Company’s common stock at an exercise price equal to one-tenth of the closing ask price for the ten trading days prior to the exercise of the option.  The options were issued in connection with the acquisition of RPS and became effective only upon the increase in authorized shares of common stock which took place on March 5, 2010.  The options expire in January 2015.
 
 Going Concern
 
The financial statements accompanying this report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has not generated sufficient revenues in the last two years to cover all operating and overhead costs, and has never paid any dividends and is unlikely to pay dividends in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As at September 30, 2010, our company has accumulated losses of $3,639,757. We do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.
 
Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above in their report on the financial statements for the year ended December 31, 2009, our independent auditors have included an explanatory paragraph regarding concerns about our ability to continue as a going concern. The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current shareholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
 
Future Financings
 
We anticipate continuing to rely on equity sales of shares of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned activities.
 
Off-Balance Sheet Arrangements
 
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to shareholders.
 
Risks and Uncertainties
 
History of net losses/Going Concern
 
We have a history of incurring losses, minimal revenue and an accumulated deficit. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. 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.  
 
Limited internal controls

We currently have five directors and four of these directors are also officers of the company, so we rely on computer and manual systems without independent officers and employees to implement full, formal, internal control systems. Accordingly, we do not have separate personnel that provide dual signatures on checks, separate accounts receivable and cash receipts, accounts payable and check writing, or other functions that frequently are divided among several individuals as a method of reducing the likelihood of improper activity. This reliance on a few individuals and the lack of comprehensive internal control systems may impair our ability to detect and prevent internal waste and fraud.
 
19

 
 

 
Inadequate disclosure controls and procedures

The Company does not have adequate personnel to review day-to-day financial transactions, review of financial statement disclosures, or record, process, summarize and report within the time periods specified in SEC rules and forms for the period covered by this Report on Form 10-K. To remediate the control deficiencies, one of several specific additional steps is that the Company plans to undertake is to employ a fulltime CFO to implement adequate systems of accounting and financial statement disclosure controls to comply with the requirements of the SEC and implement internal processes and controls for all day-to-day financial transactions.  Our efforts to comply with disclosure controls and procedures are likely to continue to result in increased expenses and the commitment of significant financial and personnel resources.  We can give no assurance that in the future such efforts will be successful.
 
Need for additional capital
 
We will need additional funds to cover expenditures in the completion, publications and marketing of our products. We will fund any additional amounts required for such expenditures through additional debt or equity financing, which may dilute the economic interest of existing stockholders, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Our Board can approve the sale of additional equity securities from our authorized share capital without stockholder consent.
 
Our common stock is illiquid and shareholders may be unable to sell their shares
 
There is currently a limited market for our common stock and we can provide no assurance to investors that a market will develop. If a market for our common stock does not develop, our shareholders may not be able to re-sell the shares of our common stock that they have purchased and they may lose all of their investment in the company. Public announcements regarding our company, changes in government regulations, conditions in our market segment or changes in earnings estimates by analysts may cause the price of shares of our common stock to fluctuate substantially. These fluctuations may adversely affect the trading price of shares of our common stock.
 
Need for additional capital
 
We will need additional funds to cover expenditures in the completion, publications and marketing of our products. We will fund any additional amounts required for such expenditures through additional debt or equity financing, which may dilute the economic interest of existing stockholders, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Our Board can approve the sale of additional equity securities from our authorized share capital without stockholder consent.

Inability to obtain additional financing
 
There can be no assurance that any proceeds we receive from additional debt or equity financing will satisfy our capital needs. There is no assurance that additional financing will be available when needed on terms favorable to us or at all. The unavailability of adequate financing on acceptable terms could have a material adverse effect on our financial condition and on our continued operation. 
 
Control of Company by officers and directors
 
As of December 31, 2009, John Rossi, Igor Plahuta, Bill Anderson, Matthew Shepard and John Brewer collectively owned 80.37% of all issued and outstanding common shares of the Company.  Accordingly, by virtue of their ownership of shares, the stockholders referred to above acting together may effectively have the ability to influence significant corporate actions, even if other shareholders oppose them. Such actions include the election of our directors and the approval or disapproval of fundamental corporate transactions, including mergers, the sale of all or substantially all of our assets, liquidation, and the adoption or amendment of provisions in our articles of incorporation and bylaws. Such actions could delay or prevent a change in our control. See “Security Ownership of Certain Beneficial Owners and Management.”

 Audit compliance costs

An immediate and specific risk relates to the our ability to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act the failure of which could lead to loss of investor confidence in our reported financial information. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we will be required to furnish a report by our management on our internal control over financial reporting. If we cannot provide reliable financial reports or prevent fraud, then our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly. In order to achieve compliance with Section 404 of the Act, we will need to engage in a process to document and evaluate our internal control over financial reporting, which will be both costly and challenging. In this regard, management will need to dedicate internal resources, engage outside consultants and adopt a detailed work plan.
 
Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations and FINRA’s sales practice requirements, which may limit a shareholder’s ability to buy and sell our stock
 
20
 
 
 

 
Our stock is a penny stock. The Securities and Exchange Commission (“SEC”) has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.
 
In addition to the “penny stock” rules promulgated by the SEC, the Financial Industry Regulatory Authority (“FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock. 
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
 
Not Applicable.
 
Item 4. Controls and Procedures.
 
As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officers evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, these officers concluded that as of the end of the period covered by this report our disclosure controls and procedures were not effective. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States Generally Accepted Accounting Principles and the Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
 
We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2010: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
 
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
 
Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file with the SEC under the Exchange Act 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 our management, including our principal executive and financial officers, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure control procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of controls and procedures.
 
21

 
 

 
Management’s Report on Internal Control Over Financial Reporting

As of the date of this report, The Company’s management, including the Principal Executive Officer who is also currently the Principal Accounting Officer, and the independent consultant engaged to assist in the evaluation of the Company’s disclosure controls, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a – 15(b).  Based upon the evaluation, the Principal Executive Officer / Principal Accounting Officer and the independent consultant concluded that the Company’s disclosure controls and procedures are not effective in timely alerting them to material information required to be included in periodic SEC filings.

Our management, with the participation of our Principal Executive Officer / Principal Accounting Officer and the independent consultant, have assessed the effectiveness of our internal control over financial reporting as of September 30, 2010, based on the control criteria established in a report entitled Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  That framework defines a material weakness as a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.  Based on such evaluation, we have concluded that our internal control over financial reporting was not effective and contained significant deficiencies which represent a material weakness in the Company’s internal control over financial reporting as of September 30, 2010. 

Management’s Discussion of Material Weakness

Management has identified the following groups of control deficiencies, each of which, in the aggregate, represents a material weakness in the Company’s internal control over financial reporting as of September 30, 2010:

·
The Company’s accounting records, policies and procedures were not adequately maintained or documented, and the accounting and finance department lacked resources and sufficient technical accounting knowledge.
·
The Company did not analyze financial and operating results in a timely manner, including expenditures by certain management and others.  Additionally, the company did not proactively review legal contracts and sales orders entered into for financial implications.
·
Departments did not always work cohesively, particularly in regards to required disclosures, due diligence and acquisitions.
·
The Company has engaged in a number of related-party transactions.  Additionally, certain of the Company’s executive, directors and shareholders have outside business interests that could conflict with the priorities of the Company.
·
The Company has not widely circulated a code of ethics beyond the Company’s directors and officers.
·
The Company did not design and implement controls to communicate and monitor corporate strategy and objectives or compliance with policies and procedures, including expenditure policies at its operation in Spain and Germany.
·
The Company has only one independent director on the Board of Directors.

Management of the Company takes very seriously the strength and reliability of the internal control environment for the Company.  During the third quarter of 2010 and continuing through this year and next, the Company has undertaken steps necessary to improve the control environment that include:

·
Engaged consultants to provide the necessary accounting and finance function providing staff with experience and skills more appropriate for a publicly traded company.
·
The Company has plans to implement a new accounting system to more effectively manage expenditures and analyze results against budgets and plans.
·
Engaged Sherb & Co. as independent auditors to provide audit and quarterly review of the Company’s financial statements.
·
More actively engaging the Board of Directors.

Management acknowledges its responsibility for internal controls over financial reporting and seeks to continually improve these controls.  In order to achieve compliance with Section 404 of the Sarbanes Oxley Act, we are performing system and process documentation and evaluation needed to comply with Section 404, which is both costly and challenging.  We believe our process for documenting, evaluating and monitoring our internal control over financial reporting is consistent with the objectives of Section 404 of the Act.

 Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting implemented during the third quarter of 2010, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.  The Company anticipates implementing additional internal controls and procedures to address material weaknesses as soon as it is financially and logistically able to do so.
 
22
 
 
 

 

 PART II-OTHER INFORMATION
 
Item 1. Legal Proceedings.

None

Item 1A. Risk Factors.
 
Not Applicable.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 
Purchaser
 
Shares
 
Price Per Share
 
Consideration
 
Date
 
Class/Series
Outsourced Associates
1,600
@$2.50
Cash
7/2010
Preferred B
 
Item 3. Defaults Upon Senior Securities
 
None.
 
Item 4. (Removed and Reserved)
 
None.
 
Item 5. Other Information
 
None.
 
Item 6. Exhibits
 
The following exhibits are filed or furnished herewith or are incorporated herein by reference to exhibits previously filed with the SEC.
 
No.
 
Description
 
Location
31.1
 
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
Filed herewith
32.1
 
Certification of Chief Executive Officer and Chief  Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
Filed herewith
 
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SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
GARB OIL & POWER, INC.
 
By
 
By: /s/ John Rossi
 
John Rossi
 
Chief Executive Officer, President, and  Director
 
(Principal Executive Officer and Principal Financial Officer)
 
Date: March 7, 2012  
 
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