UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
[X]
QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended March 31, 2015
or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ____________ to ______________
Commission
File No. 000-14859
GARB
OIL & POWER CORPORATION
(Exact
name of registrant as specified in its charter)
| Utah
|
|
87-0296694
|
| (State
or other jurisdiction of |
|
(I.R.S.
Employer |
| incorporation
or organization) |
|
Identification.
No.) |
| |
|
|
| 1185
Gooden Xing |
|
|
| Largo,
FL |
|
33778 |
| (Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
Telephone Number, Including Area Code: (888) 573-6622
Indicate
by checkmark 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 [X] No [ ]
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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large
accelerated filer [ ] |
Accelerated filer
[ ] |
| Non-accelerated
filer [ ] |
|
Smaller
reporting company [X] |
| (Do not check
if a smaller reporting company) |
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes [ ] No[X]
The number
of shares of issuer’s common stock outstanding as of May 14, 2015: 47,497,578,456.
FORM
10-Q
FOR
THE THREE MONTHS ENDED MARCH 31, 2015
INDEX
USE
OF CERTAIN DEFINED TERMS
Except
as otherwise indicated by the context, references in this report to “we,” “us,” “our,” “our
Company,” “the Company”, or “Garb” are to the combined business of Garb Oil & Power Corporation
and its consolidated subsidiaries.
In
addition, unless the context otherwise requires and for the purposes of this report only:
| |
● |
“Commission”
refers to the Securities and Exchange Commission; |
| |
|
|
| |
● |
“Exchange
Act” refers to the Securities Exchange Act of 1934, as amended; |
| |
|
|
| |
● |
“Securities
Act” refers to the Securities Act of 1933, as amended; and |
| |
|
|
| |
● |
“management
of the Company” or “management” refers to the following individuals, who represent the directors and executive
officers of the Company as of the date of this quarterly report on Form 10-Q, and those officers and directors that were appointed
on August 21, 2013: |
| |
● |
Tammy
Taylor is the Company’s current Chief Executive Officer, President, Director and Principal Financial Officer, |
| |
|
|
| |
● |
M. Aimee Coleman
is current Corporate Secretary and Principal Accounting Officer. |
CAUTIONARY
STATEMENT RELATED TO FORWARD-LOOKING STATEMENTS
This
report contains forward-looking statements. The Securities and Exchange Commission encourages companies to disclose forward-looking
information so that investors can better understand a company’s future prospects and make informed investment decisions.
This quarterly report on Form 10-Q and other written and oral statements that we make from time to time contain such forward-looking
statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance.
We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” “will”
and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include
statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome
of contingencies, such as legal proceedings, and financial results. A list of factors that could cause our actual results of operations
and financial condition to differ materially is set forth below:
| |
●
|
Our ability to
continue as a going concern. |
| |
|
|
| |
● |
Our ability to
achieve profitability and history of losses. |
| |
|
|
| |
● |
Our need for significant
additional capital to fund our business plan. |
| |
|
|
| |
● |
Our ability to
attract customers to our products. |
| |
|
|
| |
● |
Economic conditions
that have an adverse effect on consumer and corporate spending. |
| |
|
|
| |
● |
Changes in applicable
Federal and State manufacturing laws and regulations that have an adverse effect on our operations. |
| |
|
|
| |
● |
The
market price for shares of our common stock has been and may continue to be highly volatile and the impact of penny stock
rules on the liquidity of our common stock. |
We
caution that the factors described herein and other factors could cause our actual results of operations and financial condition
to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue
reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such
statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess
the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any forward-looking statements.
PART
I – FINANCIAL INFORMATION
Item
1. Financial Statements
Garb
Oil & Power Corporation and Subsidiaries
Consolidated
Balance Sheets
| | |
March
31, 2015 | | |
December
31, 2014 | |
| | |
(Unaudited) | | |
| |
| ASSETS | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash | |
$ | 22 | | |
$ | 196 | |
| Accounts receivable, net | |
| - | | |
| - | |
| Total
current assets | |
| 22 | | |
| 196 | |
| Property and equipment, net | |
| 1,249,670 | | |
| 1,257,802 | |
| | |
| | | |
| | |
| Total
assets | |
$ | 1,249,692 | | |
$ | 1,257,998 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS’
EQUITY (DEFICIT) | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 1,360,238 | | |
$ | 1,189,558 | |
| Related party payable | |
| 2,795 | | |
| 3,947 | |
| Notes payable | |
| 1,510,835 | | |
| 1,454,062 | |
| Derivative liability | |
| 2,482,896 | | |
| 2,250,243 | |
| Notes payable - related party | |
| 175,500 | | |
| 155,645 | |
| Derivative liability - related party | |
| 35,499 | | |
| 33,987 | |
| Capital lease payable | |
| 1,316,587 | | |
| 1,292,571 | |
| Accrued interest | |
| 1,588,856 | | |
| 1,521,067 | |
| Wage and payroll taxes payable | |
| 288,221 | | |
| 254,971 | |
| Total
current liabilities | |
| 8,761,427 | | |
| 8,156,051 | |
| | |
| | | |
| | |
| Total
liabilities | |
| 8,761,427 | | |
| 8,156,051 | |
(Continued
next page)
Garb
Oil & Power Corporation and Subsidiaries
Consolidated
Balance Sheets
(Continued)
| | |
March
31, 2015 | | |
December
31, 2014 | |
| | |
(Unaudited) | | |
| |
| Stockholders’ Deficit: | |
| | | |
| | |
| Class A preferred as of March 31, 2015; ($.0001 par value) 1,000,000 shares authorized, 24 shares outstanding as of March
31, 2015 and 24 shares outstanding as of December 31, 2014 | |
| - | | |
| - | |
| Class B preferred as of March 31, 2015; ($2.50 par value) 10,000,000 shares authorized, 4,419,918 shares
outstanding as of March 31, 2015 and 4,419,918 shares issued and outstanding as of December 31, 2014 | |
| 11,049,795 | | |
| 11,049,795 | |
| Common stock as of March 31, 2015; (no par value) 50,000,000,000 shares authorized, 47,497,578,456 shares outstanding
at March 31, 2015 and 47,497,578,456 shares outstanding at December 31, 2014 | |
| (13,723,527 | ) | |
| (13,723,527 | ) |
| Preferred Class A additional paid in capital | |
| 1,486,010 | | |
| 1,486,010 | |
| Preferred Class B additional paid in capital | |
| 14,093,628 | | |
| 14,093,628 | |
| Subscription Receivable | |
| (403,815 | ) | |
| (403,815 | ) |
| Accumulated deficit | |
| (20,013,826 | ) | |
| (19,400,144 | ) |
| Total
stockholders’ deficit | |
| (7,511,735 | ) | |
| (6,898,053 | ) |
| Total
liabilities and stockholders’ deficit | |
$ | 1,249,692 | | |
$ | 1,257,998 | |
The
accompanying notes are an integral part of these consolidated financial statements.
Garb
Oil & Power Corporation and Subsidiaries
Consolidated
Statements of Operations
| | |
For
the three months ended | |
| | |
March
31, 2015 | | |
March
31, 2014 | |
| | |
(Unaudited) | | |
(Unaudited) | |
| SALES | |
| | | |
| | |
| Sales | |
$ | - | | |
$ | 200,000 | |
| TOTAL SALES | |
| - | | |
| 200,000 | |
| COST OF SALES | |
| - | | |
| 90,000 | |
| GROSS PROFIT | |
| - | | |
| 110,000 | |
| | |
| | | |
| | |
| OPERATING EXPENSES | |
| | | |
| | |
| Selling, general and administrative | |
$ | 198,333 | | |
$ | 350,556 | |
| Total Operating Expenses | |
| 198,333 | | |
| 350,556 | |
| | |
| | | |
| | |
| LOSS FROM OPERATIONS | |
| (198,333 | ) | |
| (240,556 | ) |
| | |
| | | |
| | |
| OTHER INCOME (EXPENSE) | |
| | | |
| | |
| Derivative liability expense | |
| (229,125 | ) | |
| - | |
| Interest expense | |
| (186,224 | ) | |
| (108,358 | ) |
| Total Other Income (Expense) | |
| (415,349 | ) | |
| (108,358 | ) |
| LOSS BEFORE INCOME TAXES | |
$ | (613,682 | ) | |
$ | (348,914 | ) |
| PROVISION (BENEFIT) FOR INCOME TAXES | |
| - | | |
| - | |
| | |
| | | |
| | |
| NET LOSS | |
| (613,682 | ) | |
| (348,914 | ) |
| | |
| | | |
| | |
| BASIC AND DILUTED LOSS PER COMMON SHARE ATTRIBUTABLE TO GARB OIL &
POWER SHAREHOLDERS | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| | |
| | | |
| | |
| WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING | |
| 47,497,578,456 | | |
| 40,460,712,592 | |
The
accompanying notes are an integral part of these consolidated financial statements.
Garb
Oil & Power Corporation and Subsidiaries
Consolidated
Statements of Cash Flows
| | |
For
the three months ended | |
| | |
March
31, 2015 | | |
March
31, 2014 | |
| | |
(Unaudited) | | |
(Unaudited) | |
| Cash flows from operating activities:
| |
| | | |
| | |
| Net loss | |
$ | (613,682 | ) | |
$ | (348,914 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
| Depreciation expense | |
| 8,132 | | |
| - | |
| Common stock issued for services | |
| - | | |
| 10,000 | |
| Amortization of debt discount | |
| 37,448 | | |
| 681 | |
| Loss on derivative liability | |
| 229,125 | | |
| - | |
| Accretion of present value of capital lease | |
| 24,016 | | |
| - | |
| Loan fees | |
| 36,000 | | |
| - | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| - | | |
| - | |
| Accounts payable and accrued expenses | |
| 170,680 | | |
| 300,959 | |
| Accrued interest | |
| 70,969 | | |
| 86,043 | |
| Related party payable | |
| (1,152 | ) | |
| 3,180 | |
| Wages and payroll taxes payable | |
| 33,250 | | |
| 24,250 | |
| Net
cash provided by (used in) operating activities | |
| (5,214 | ) | |
| 76,199 | |
(Continued
next page)
Garb
Oil & Power Corporation and Subsidiaries
Consolidated
Statements of Cash Flows
(Continued)
| | |
For
the three months ended | |
| | |
March
31, 2015 | | |
March
31, 2014 | |
| | |
(Unaudited) | | |
(Unaudited) | |
| | |
| | |
| |
| Net
cash used in investing activities | |
| - | | |
| - | |
| | |
| | | |
| | |
| Cash flows from financing activities:
| |
| | | |
| | |
| Proceeds from notes payable | |
| 5,040 | | |
| - | |
| Payments on notes payable | |
| - | | |
| (10,000 | ) |
| Cash received on issuances of common stock - related
parties | |
| - | | |
| 64,868 | |
| Net
cash provided by financing activities | |
| 5,040 | | |
| 54,868 | |
| Net increase (decrease) in cash | |
| (174 | ) | |
| 131,067 | |
| Cash at beginning of period | |
| 196 | | |
| 3 | |
| Cash at end of period | |
$ | 22 | | |
$ | 131,070 | |
| | |
| | | |
| | |
| Supplemental disclosures of cash flow
information: | |
| | | |
| | |
| | |
| | | |
| | |
| Cash paid for: | |
| | | |
| | |
| Interest | |
$ | - | | |
$ | - | |
| Income taxes | |
$ | - | | |
$ | - | |
| | |
| | | |
| | |
| Non-cash financing activities: | |
| | | |
| | |
| Accrued interest reclassified to note principal | |
$ | 3,180 | | |
$ | - | |
| Subscription receivable | |
$ | - | | |
$ | 403,815 | |
| Debt discount | |
$ | 5,040 | | |
$ | - | |
The
accompanying notes are an integral part of these consolidated financial statements.
Garb
Oil & Power Corporation and Subsidiaries
Notes
to Consolidated Financial Statements
(Unaudited)
For
the Three months ended March 31, 2015 and 2014
Note
1 – Organization, Nature of Business, and Basis of Presentation
Organization
and Nature of Business to Date
Garb
Oil & Power Corporation (the “Company” or “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 and to Garb-Oil Corporation
of America in 1981, which marked the start of the Company’s development state in the energy and recycling industries. The
Company changed its name to Garb Oil & Power Corporation in 1985 and then to Garb Corporation in May 2013. In February 2014,
the Company changed its name back to Garb Oil & Power Corporation.
On
October 27, 2009, the Company entered into an agreement to purchase Resource Protection Systems GmBH, a company organized and
currently active under the laws of Germany (“RPS”). The purchase was for all outstanding shares, as well as for specified
RPS assets and liabilities. The RPS specified assets were not transferred to the Company and therefore the purchase was not fully
consummated. On January 15, 2010, RPS purchased 80% of the issued and outstanding stock of Newview S.L., a company organized under
the laws of Spain (“Newview”). The Company, RPS and Newview were considered entities under common control.
Effective
August 21, 2013, all of the Company’s executive officers and directors at the time resigned and therefore the Company, RPS
and Newview were no longer considered to be entities under common control. Also effective August 21, 2013, following the resignation
of the Company’s management at the time, Ms. Tammy Taylor was appointed as the Company’s Chief Executive Officer,
President and Principal Financial Officer, and Ms. M. Aimee Coleman was appointed as the Company’s Corporate Secretary and
Principal Accounting Officer. Ms. Taylor was also appointed as the Company’s sole director.
On
January 24, 2014 the Company signed a letter of intent (the “LOI”) and a collaborative effort agreement (the “CE
Agreement”) with Shredderhotline.com Company (“Shredderhotline”) and Dan Scott Burda, Shredderhotline’s
President/Owner. In general, the CE Agreement provided that the two ranking executive officers of both companies’ will collaborate
on future sales and operations within a newly formed wholly owned subsidiary of the Company, Garb Global Services, Inc. (“Garb
Global”). On November 18, 2014, the Company and Shredderhotline mutually determined that their
business interests had diverged and the Company and Shredderhotline released one another from their rights and obligations under
the LOI and CE Agreement both dated January 24, 2014. Garb Global continues as an operating subsidiary of the Company.
Basis
of Presentation
The
unaudited interim financial statements included herein have been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission (“SEC”). The financial statements and notes are presented as permitted on Form 10-Q and do
not contain information included in the Company’s annual statements and notes. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States
of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be
read in conjunction with the December 31, 2014 audited financial statements and the accompanying notes thereto included in our
annual report on Form 10-K. While management believes the procedures followed in preparing these unaudited financial statements
are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that
will be accomplished by the Company later in the year.
These
consolidated unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion
of management, are necessary to present fairly the operations and cash flows for the periods presented.
Fair
Value of Financial Instruments
The
Company’s financial instruments include accounts receivable, accounts payable and accrued expenses, related party payable,
notes payable, related party notes payable and derivative liabilities. The principal balance of accounts receivable, accounts
payable and accrued expenses, related party payable, notes payable and related party notes payable approximate fair value because
current interest rates and terms available to the Company for similar instruments are substantially the same.
Derivative
liabilities are recorded at fair value. The Company uses a framework for measuring fair value with a three-tier fair value hierarchy
which prioritizes the inputs used in measuring fair value as follows:
Level
1. Observable inputs such as quoted prices in active markets;
Level
2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level
3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its
own assumptions.
The
fair value hierarchy for recurring fair value measurements is as follows:
| | |
Fair Value | | |
Fair Value Measurements
at March 31, 2015 |
| | |
as
of | | |
Using
Fair Value Hierarchy | |
| | |
March
31, 2015 | | |
Level
1 | | |
Level
2 | | |
Level
3 | |
| Liabilities: | |
| | | |
| | | |
| | | |
| | |
| Derivative liability | |
$ | 2,482,896 | | |
$ | - | | |
$ | 2,482,896 | | |
$ | - | |
| Derivative liability - related party | |
$ | 35,499 | | |
$ | - | | |
$ | 35,499 | | |
$ | - | |
(Also see
Note 5 – Derivative Liability and Note 7 – Derivative Liability – Related Party)
Note
2 – Going Concern
The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the ordinary course of business. As shown in the consolidated financial statements,
the Company has incurred a net loss of $(613,682) for the three months ended March 31, 2015 and has a net accumulated deficit
of $(20,013,826). 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 consolidated financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company’s ability to continue as a going concern is dependent
upon its ability to generate sufficient cash flows to meet its obligations on a timely basis, to obtain additional financing as
may be required, and its ability to continue its implementation of operations. Management is continuing its efforts to obtain
the necessary financing as may be required to generate sufficient cash flows for current and future operations. Management is
pursuing avenues of generating cash or revenues during the next twelve months. The Company is also attempting to interest purchasers,
or potential purchasers, of shredders, recycling equipment and new tires, and establishing manufacturing plants. The Company also
continues to pursue financing to build and operate its own waste refinement and recycling industrial manufacturing plants.
There
is no assurance that the Company will be able to obtain additional cash flow from operations or to obtain additional financing.
If these are not available to the Company, the Company may not be able to continue operations. While management remains confident
that transactions will proceed, no assurances can be expressed as to the Company’s continuing viability in the absence of
revenues. Current funding has come from operations and sales and the Company is currently in negotiations with several investment
sources for equity investment in the company, which if successful, will satisfy long-term operations and capital expenditures.
There are no guarantees that such negotiations will be successful.
Note
3 – Related Party Transactions
Related
party payable consisted of the following at March 31, 2015:
| | |
March 31, 2015 | |
| | |
| |
| Accounts payable to related parties, due on demand, no interest,
unsecured | |
$ | 2,795 | |
| Total | |
$ | 2,795 | |
As
of March 31, 2015, accounts receivable related to cash received by former management without supportive cash receipts was $249,051.
As of March 31, 2015, allowances for bad debt was $249,051, resulting in net accounts receivable from related party balances as
of March 31, 2015 as $0.
Note
4 – Notes Payable
Both
secured and unsecured notes payable balance net of discounts as of March 31, 2015 and December 31, 2015 were $1,510,835, net of
debt discounts of $35,137 and $1,454,062, net of debt discounts of $48,189, respectively.
January
1, 2003 Note
A
$68,493 unsecured promissory note was entered into on January 1, 2003, is due on demand and plus interest of 12%. The balance
of the Note as of March 31, 2015 and December 31, 2014 was $68,493, net of debt discounts of $0.
January
1, 2003 Note
A
$165,000 unsecured promissory note was entered into on January 1, 2003, is due on demand and plus interest of 12%. The balance
of the Note as of March 31, 2015 and December 31, 2014 was $165,000, net of debt discounts of $0.
January
21, 2003 Note
A
$20,000 unsecured promissory note was entered into on January 21, 2003, is due on demand and plus interest of 10%. The balance
of the Note as of March 31, 2015 and December 31, 2014 was $20,000, net of debt discounts of $0.
June
24, 2006 Note
A
$53,000 promissory note was entered into on June 24, 2006 secured by sales contract and officer guarantee, is due on demand, plus
interest of 12% and plus a $5,000 default interest penalty per week. During the year ended December 31, 2013, the Company and
the note holder entered into a debt settlement agreement on this note and the January 3, 2002 Note that resulted in forgiveness
of the June 24, 2006 Note principal over $35,000 and all accrued interest. During the year ended December 31, 2014, the Company
paid $20,000 cash payments toward the June 24, 2006 Note that was settled as a principal only note. The balance of the Note as
of March 31, 2015 and December 31, 2014 was $15,000, net of debt discounts of $0.
July
5, 2006 Note
A
$2,250 unsecured promissory note was entered into on July 5, 2006, was due September 5, 2006, plus interest of 5% per month and
is in default. The balance of the Note as of March 31, 2015 and December 31, 2014 was $2,250, net of debt discounts of $0.
July
5, 2006 Note
A
$2,750 unsecured promissory note was entered into on July 5, 2006, was due September 5, 2006, plus interest of 5% per month and
is in default. The balance of the Note as of March 31, 2015 and December 31, 2014 was $2,750, net of debt discounts of $0.
October
11, 2007 Note
A
$129,327 unsecured promissory note was entered into on October 11, 2007, is due on demand, plus interest of 18% from October 7,
2005 through January 6, 2006 then $500 per week through April 1, 2009, then $5,000 per month. During the year ended December 31,
2012, the Company issued a total of 15,250,000,000 shares of common stock at an average conversion price of $.000001, or $15,250
as repayment to the original debt holder for principal and accrued interest. During the year ended December 31, 2013 the original
debt holder assigned $6,000 worth of note’s accrued interest. During the year ended December 31, 2012 the original debt
holder assigned $49,000 worth of note’s principle and accrued interest. The balance of the October 11, 2007 Note owed to
the original debt holder as of March 31, 2015 and December 31, 2014 was $327, net of debt discounts of $0.
During
the year ended December 31, 2012, the Company issued a total of 6,350,000,000 shares of common stock at an average conversion
price of $.000006, or $35,750, as repayment for a portion of the year ended December 31, 2012 Assigned October 11, 2007 Note.
The Assigned October 11, 2007 Notes balances total $13,250 as of March 31, 2015 and December 31, 2014, net of debt discounts of
$0.
December
31, 2009 Note
A
$6,000 unsecured promissory note was entered into on December 31, 2009, is due on demand and plus interest of 36%. The balance
of the Note as of March 31, 2015 and December 31, 2014 was $6,000, net of debt discounts of $0.
December
31, 2009 Note
A
$7,500 unsecured promissory note was entered into on December 31, 2009, is due on demand and plus interest of 10%. The balance
of the Note as of March 31, 2015 and December 31, 2014 was $7,500, net of debt discounts of $0.
December
31, 2009 Note
A
$3,000 unsecured promissory note was entered into on December 31, 2009, is due on demand and plus interest of 36%. The balance
of the Note as of March 31, 2015 and December 31, 2014 was $3,000, net of debt discounts of $0.
June
23, 2010 Note
On
June 23, 2010 the Company converted $43,217 of accounts payable into an unsecured promissory note. The note bears interest at
6% per annum and is due on demand. The balance of the June 22, 2010 Note as of March 31, 2015 and December 31, 2014 was $43,217,
net of debt discounts of $0.
June
29, 2010 Note
On
June 29, 2010 the Company issued an unsecured promissory note to a professional services provider for $300,000 related to consulting
services rendered. The note bears interest at 18% per annum and has a maturity date of July 1, 2010. The note agreement contains
a 10% penalty clause if the Company fails to make payment at the maturity date. On July 2, 2010 the Company was in default of
the note and recorded penalties of $30,296 to interest expense. During the year ended December 31, 2011, the professional services
provider (“Assignor”) entered into $309,250 worth of certain assignment of debt agreements with several investors
(“Assignees”) pursuant to which the Assignor granted, transferred and set over until the Assignees its right, title
and interest in the June 29, 2010 Note including, without limitation, all rights, interest terms, benefits and advantages of the
Assignor to be derived here from and burdens, obligations and liabilities to be derived thereunder. The balance of the June 29,
2010 Note owed to the professional services provider as of March 31, 2015 and December 31, 2014 was $21,046, net of debt discounts
of $0.
During
the year ended December 31, 2012, the Company issued a total of 324,285,714 shares of common stock at an average conversion price
of $.00012, or $39,000, as repayment for several of the year ended December 31, 2011 Assigned June 29, 2010 Note. The Assigned
June 29, 2010 Notes balances as of March 31, 2015 and December 31, 2014 was $57,000, net of debt discounts of $0.
December
29, 2010 Note
On
December 29, 2010 the Company issued an unsecured promissory note to a professional services provider for $50,000 related to consulting
services rendered. The note bears interest at 18% per annum and has a maturity date of December 31, 2010. The note agreement contains
a 10% penalty clause if the Company fails to make payment at the maturity date. On December 31, 2010 the Company was in default
of the Note and recorded penalties of $5,049 to interest expense. The balance of the December 29, 2010 Note as of March 31, 2015
and December 31, 2014 was $55,049, net of debt discounts of $0.
September
22, 2011 Note
On
September 22, 2011 the Company issued an unsecured convertible note in the principal amount of $20,000 in exchange for $20,000
in cash consideration. The note bears interest at 8% per annum, has a maturity date of September 22, 2012 and has a 24% default
interest rate should the note go into default. On September 23, 2012 the Company defaulted on the note and the note interest per
annum increased to 24%. The balance of the September 22, 2011 Note as of March 31, 2015 and December 31, 2014 was $20,000, both
net of debt discounts of $0.
October
1, 2011 Note
On
October 1, 2011 the Company issued an unsecured promissory note to a professional services provider for $40,700 related to consulting
services rendered. The note bears interest at 10% per annum and has a maturity date of April 1, 2012. On April 2, 2012 the Company
defaulted on the note. The balance of the October 1, 2011 Note as of March 31, 2015 and December 31, 2014 was $40,700, both net
of debt discounts of $0.
November
2, 2011 Note
On
November 2, 2011 the Company issued an unsecured convertible note in the principal amount of $33,000 in exchange for $33,000 in
cash consideration. The note bears interest at 8% per annum, has a maturity date of November 2, 2012 and has a 24% default interest
rate should the note go into default. On November 3, 2012 the Company defaulted on the note and the note interest per annum increased
to 24%. The balance of the November 2, 2011 Note as of March 31, 2015 and December 31, 2014 was $33,000, both net of debt discounts
of $0.
December
30, 2011 Note 3
On
December 30, 2011 the Company issued an unsecured promissory note in the principal amount of $22,000 in exchange for $22,000 in
cash consideration. The note bears interest at 10% per annum and has a maturity date of June 30, 2012. On July 1, 2012 the Company
defaulted on the note. The balance of the December 30, 2011 Note 3 as of March 31, 2015 and December 31, 2014 was $22,000, both
net of debt discounts of $0.
March
7, 2012 Note
On
March 7, 2012 the Company borrowed $10,000 pursuant to an unsecured convertible note. The note bears interest at 7% per annum
and has a maturity date of January 24, 2013. The note agreement contains a change in the interest rate to 20% default interest
rate should the note go into default. On January 25, 2013 the Company defaulted on the note and the note interest per annum increased
to 20%. The balance of the March 7, 2012 Note as of March 31, 2015 and December 31, 2014 was $10,000, net of debt discounts of
$0.
May
16, 2012 Note
On
May 16, 2012 the Company borrowed $20,000 pursuant to an unsecured convertible note. The note bears interest at 15% per annum,
has a maturity date of February 16, 2013, and unpaid accrued interest is added to the note’s principal balance at the end
of each quarter. The note agreement contains a change in the interest rate to $500 per day default interest rate (or the highest
rate allowed by law) should the note go into default. On February 17, 2013 the Company defaulted on the note and the note interest
increased to $500 per day. During the three months ended March 31, 2015, $1,084 accrued interest was added to the note’s
principal balance. During the year ended December 31, 2014, $8,901 accrued interest was added to the note’s principal balance.
The balance of the May 16, 2012 Note as of March 31, 2015 was $29,985 including added accrued interest to date of $9,985 and December
31, 2014 was $28,901 including added accrued interest to date of $8,901, both net of debt discounts of $0.
May
23, 2012 Note
On
May 23, 2012 the Company borrowed $15,000 pursuant to an unsecured convertible note. The note bears interest at 15% per annum,
has a maturity date of May 23, 2013, and unpaid accrued interest is added to the note’s principal balance at the end of
each quarter. The note agreement contains a change in the interest rate to $500 per day default interest rate (or the highest
rate allowed by law) should the note go into default. On May 24, 2013 the Company defaulted on the note and the note interest
increased to $500 per day. During the three months ended March 31, 2015, $813 accrued interest was added to the note’s principal
balance. During the year ended December 31, 2014, $6,676 accrued interest was added to the note’s principal balance. The
balance of the May 23, 2012 Note as of March 31, 2015 was $22,489 including added accrued interest to date of $7,489 and December
31, 2014 was $21,676 including added accrued interest to date of $6,676, both net of debt discounts of $0.
June
16, 2012 Note
On
June 16, 2012 the Company issued a $700,000 unsecured convertible note in exchange for consolidating and paying in full the unsecured
notes’ outstanding principal and accrued interest that are identified below. The principal total of the notes consolidated
into the June 16, 2012 Note was $544,787 with the Company recognizing the additional $155,213 principal as consulting services
expense. The note bears interest at 6% per annum and has a maturity date of June 16, 2014. The note agreement contains a change
in the interest rate to 24% default interest rate should the note go into default. On June 17, 2014 the Company defaulted on the
note and the note interest per annum increased to 24%. During the year ended December 31, 2014, the Company issued a total of
1,428,571 429 shares of common stock at an average conversion price of $0.0007, or $100,000 as partial repayment of the June 16,
2012 Note. The balance of the June 16, 2012 Note as of March 31, 2015 and December 31, 2014 was $600,000, net of debt discounts
of $0.
Notes
consolidated into the June 16, 2012 Note
June
29, 2010 Note for consulting services, an assignee – $19,000 remaining assigned principal plus accrued interest
June
29, 2010 Note for consulting services, an assignee – $12,500 remaining assigned principal plus accrued interest
October
15, 2010 Note 1 for consulting services, an assignee – $25,000 assigned principal plus accrued interest
October
15, 2010 Note 2 for consulting services, an assignee – $25,000 assigned principal plus accrued interest
December
14, 2010 Note for cash received – $3,902 remaining principal plus accrued interest
January
24, 2011 Note for consulting services – $615 principal plus accrued interest
February
2, 2011 Note for consulting services – $500 principal plus accrued interest
February
24, 2011 Note for consulting services, an assignee – $16,000 remaining assigned principal plus accrued interest
April
1, 2011 Note 1 for consulting services – $1,336 principal plus accrued interest
April
1, 2011 Note 2 for consulting services, an assignee – $50,000 assigned principal plus accrued interest
May
12, 2011 Note for consulting services – $100,000 principal plus accrued interest
July
1, 2011 Note 1 for consulting services, an assignee – $10,500 assigned principal plus accrued interest
July
1, 2011 Note 2 for consulting services, an assignee – $30,000 assigned principal plus accrued interest
October
7, 2011 Note for cash received – $25,000 principal plus accrued interest
December
13, 2011 Note for consulting services – $7,000 principal plus accrued interest
January
13, 2012 Note for cash received – $25,000 principal plus accrued interest
February
15, 2012 Note for consulting services, an assignee – $22,500 assigned principal plus accrued interest
February
20, 2012 Note for consulting services, an assignee – $40,000 assigned principal plus accrued interest
July
2, 2012 Note
On
July 2, 2012 the Company borrowed $15,000 pursuant to an unsecured convertible note. The note bears interest at 15% per annum,
has a maturity date of July 2, 2013, and unpaid accrued interest is added to the note’s principal balance at the end of
each quarter. The note agreement contains a change in the interest rate to $500 per day default interest rate (or the highest
rate allowed by law) should the note go into default. During the three months ended March 31, 2015, $784 accrued interest was
added to the note’s principal balance. During the year ended December 31, 2014, $5,892 accrued interest was added to the
note’s principal balance. The balance of the July 2, 2012 Note as of March 31, 2015 was $21,676 including added accrued
interest to date of $6,676 and December 31, 2014 was $20,892 including added accrued interest to date of $5,892, both net of debt
discounts of $0.
March
12, 2013 Note
On
March 12, 2013 the Company borrowed $14,000 pursuant to an unsecured convertible note. The note bears interest at 10% per annum,
has a maturity date of March 12, 2014, and accrues liquidating damages of $250 per day added to the principal balance of the note
that may be settled to some lower amount at the time of payment in full. The note agreement contains a change in the interest
rate to 20% default interest rate should the note go into default. On March 13, 2014 the Company defaulted on the note and the
note interest per annum increased to 20%. During the three months ended March 31, 2015, $22,500 of accrued liquidating damages
was added to the note’s principal. During the year ended December 31, 2014, $73,250 of accrued liquidating damages was added
to the note’s principal balance. The balance of the March 12, 2013 Note as of March 31, 2015 was $109,750 including $95,750
of accrued liquidating damages to date and December 31, 2014 was $87,250 including $73,250 of accrued liquidating damages to date,
both net of debt discounts of $0.
April
17, 2013 Note
On
April 17, 2013 the Company borrowed $3,000 pursuant to an unsecured promissory note. The note bears interest at 10% per annum
and has a maturity date of June 15, 2013. On June 16, 2013 the Company defaulted on the note. The balance of the April 17, 2013
Note as of March 31, 2015 and December 31, 2014 was $3,000, net of debt discounts of $0.
April
27, 2013 Note
On
April 27, 2013 the Company borrowed $700 pursuant to an unsecured promissory note. The note bears interest at 10% per annum and
has a maturity date of August 25, 2013. On August 26, 2013 the Company defaulted on the note. The balance of the April 27, 2013
Note as of March 31, 2015 and December 31, 2014 was $700, net of debt discounts of $0.
May
19, 2014 Note
On
May 19, 2014 the Company entered into a $60,000 unsecured convertible note for $50,000 cash to be borrowed during the year ended
December 31, 2014 plus a total of $10,000 in loan fees the Company recorded as an administrative expense as cash was borrowed.
The note bears interest at 8% per annum and has a maturity date 12 months after cash is borrowed. The note agreement contains
a change in the interest rate to 20% default interest rate should the note go into default and required 300,000,000 shares of
Company’s common stock to be reserved, but was cancelled on October 8, 2014. During the year ended December 31, 2014 the
Company borrowed $50,000 cash and incurred $10,000 in loan fees. $12,000 of the note has a maturity date of May 19, 2015, $6,000
of the note has a maturity date of July 3, 2015, and $42,000 of the note has a maturity date of September 18, 2015.
The
balance of the May 19, 2014 Note as of March 31, 2015 was $35,654, net of debt discounts of $24,346 and December 31, 2014 was
$22,339, net of debt discounts of $37,661.
June
3, 2014 Note
On
June 3, 2014 the Company entered into a $6,250 unsecured convertible note for a $5,000 cash loan plus $1,250 in documentation
fees the Company recorded as an administrative expense. The note bears interest at 0% per annum and has a maturity date of June
3, 2015. The note agreement contains a change in the interest rate to 10% default interest rate should the note go into default,
interest accruing from the June 3, 2014 Note date. The balance of the June 3, 2014 Note as of March 31, 2015 was $4,932, net of
debt discounts of $1,318 and December 31, 2014 was $3,613, net of debt discounts of $2,637.
August
13, 2014 Note
On
August 13, 2014 the Company borrowed $33,000 pursuant to a discounted unsecured convertible note amount of $46,500 when the note
matures. The $13,500 discount will be an administrative expense once the note matures. The note bears interest at 0% per annum,
has a maturity date of February 13, 2015 and has a 12% default interest rate should the note go into default. The note agreement
required 3,000,000,000 shares of Company’s common stock to be reserved, but was cancelled on September 23, 2014. On February
14, 2015 the Company defaulted on the note and the note interest per annum increased to 12%. The balance of the August 13, 2014
Note as of March 31, 2015 was $41,239, net of debt discounts of $5,261 and December 31, 2014 was $25,109, net of debt discounts
of $7,891.
September
10, 2014 Note
On
September 10, 2014 the Company entered into a $29,000 unsecured convertible note for $25,000 cash borrowed during the six months
ended June 30, 2012 plus $4,000 in loan fees the Company recorded as an administrative expense. The note bears interest at 8%
per annum and has a maturity date of September 10, 2015. The note agreement contains a change in the interest rate to 20% default
interest rate should the note go into default. The balance of the September 10, 2014 Note as of March 31, 2015 and December 31,
2014 was $29,000, net of debt discounts of $0.
January
30, 2015 Note
On
January 30, 2015 the Company borrowed $4,200 pursuant to a discounted unsecured convertible note amount of $5,040. The Company
recorded the $840 discount as an administrative expense. The note bears interest at 8% per annum and has a maturity date of January
30, 2016. The note agreement contains a change in the interest rate to 20% default interest rate or the highest allowed by law
should the note go into default and requires the Company to reserve 100,000,000 shares of the Company’s common stock. The
balance of the January 30, 2015 Note as of March 31, 2015 was $828, net of debt discounts of $4,212.
Note
5 - Derivative Liability
The
Company’s derivative liability consists of the embedded conversion feature of its convertible notes payable. As the notes
payable have conversion rates that prevent calculating the number of shares into which they can convert, the conversion feature
has been separated from the underlying notes and valued as a derivative liability.
Prior
to 2014, it was believed that previous management could cause the counterparties to overlook this conversion feature, and settle
for the value of the notes themselves. So they estimated the fair value of the derivative liability was zero. In 2014, new management
reassessed the nature of the notes payable and determined that a possibility exists that the conversion feature could be utilized
by holders of the notes. As a result, the Company estimated the fair value of the derivative liability as of March 31, 2015 was
$2,482,896 and December 31, 2014 was $2,250,243.
Following
is a table showing activity in the derivative liability account.
| Balance January 1, 2014 | |
$ | - | |
| Additions | |
| - | |
| Deletions | |
| - | |
| Change in derivative liability | |
| 2,250,243 | |
| Balance December 31, 2014 | |
| 2,250,243 | |
| Additions | |
| 5,040 | |
| Deletions | |
| - | |
| Change in derivative liability | |
| 227,613 | |
| Balance December 31, 2015 | |
$ | 2,482,896 | |
The derivative
liability was valued using the Black Scholes option valuation model with the following inputs.
| Expected life in years | |
| 0.75 | |
| Stock price volatility | |
| 159.0 | % |
| Discount rate | |
| 0.20 | % |
| Expected dividends | |
| None | |
Note
6 - Notes Payable - Related Party
Unsecured
related party notes payable balance net of discounts as of March 31, 2015 was $175,500, net of debt discounts of $0 and December
31, 2014 was $155,645, net of debt discounts of $19,355.
September
26, 2013 Note
On
September 26, 2013 the Company issued an unsecured promissory note to Corporate Business Advisors, Inc. for $150,000 as part of
a non-cash select assets and liabilities purchase agreement. The note bears no interest and has a maturity date of August 31,
2014. On September 1, 2014 the Company defaulted on the note. The balance of the September 26, 2013 Note as of March 31, 2015
and December 31, 2014 was $150,000, net of debt discounts of $0.
December
17, 2014 Note
On
December 17, 2014 the Company entered into a $25,000 unsecured convertible note with Corporate Business Advisors, Inc. for $24,500
in total cash loans to date plus $500 in documentation fees the Company recorded as an administrative expense. The note bears
interest at 18% per annum, has a maturity date of February 17, 2015, and has a 24% default compound interest rate should the note
remain in default after a five day grace period. On February 22, 2015 the Company remained defaulted on the note and the note
interest increased to 24% compound interest. During the three months ended March 31, 2015, $500 accrued interest was added to
the note’s principal balance. The balance of the December 17, 2014 Note as of March 31, 2015 was $25,500 including added
accrued interest to date of $500, net of debt discounts of $0 and December 31, 2014 was $5,645, net of debt discounts of $19,355.
Note
7 - Derivative Liability – Related Party
The
Company’s derivative liability – related party consists of the embedded conversion feature of its convertible notes
payable to a related party. As the notes payable to a related party have conversion rates that prevent calculating the number
of shares into which they can convert, the conversion feature has been separated from the underlying notes and valued as a derivative
liability – related party. During the year ended 2014, the Company entered into one convertible note payable to a related
party. The estimated fair value of derivative liability – related party as of March 31, 2015 was $35,499 and December 31,
2014 was $33,987.
Following
is a table showing activity in the derivative liability – related party account.
| Balance January 1, 2014 | |
$ | - | |
| Additions | |
| - | |
| Deletions | |
| - | |
| Change in derivative liability – related party | |
| 33,987 | |
| Balance December 31, 2014 | |
| 33,987 | |
| Additions | |
| - | |
| Deletions | |
| - | |
| Change in derivative liability – related party | |
| 1,512 | |
| Balance December 31, 2015 | |
$ | 35,499 | |
The derivative
liability – related party was valued using the Black Scholes option valuation model with the following inputs.
| Expected life in years | |
| 0.75 | |
| Stock price volatility | |
| 159.0 | % |
| Discount rate | |
| 0.20 | % |
| Expected dividends | |
| None | |
Note
8 – Capital Lease
On
September 1, 2014, the Company entered into a lease to own lease agreement for an office and warehouse’s 16,838 square foot
portion of the property’s total 55,785 square foot space. The lease is considered a capital lease, therefore the building
asset and an offsetting note payable has been recorded on the Company’s books. Lease payments are $7,000 per month with
$5,000 per month being applied to the $1,385,000 purchase price. The balance of the capital lease as of March 31, 2015 was $1,316,587
and December 31, 2014 was $1,292,571.
Note
9 – Capital Stock
During
the three months ended March 31, 2015, no shares of Capital Stock were issued.
Stock
Options/Stock-Based Compensation and Warrants
Changes
in stock options for the three months ended March 31, 2015 consisted of the following:
| | |
Number of
shares | | |
Weighted
Average
Exercise Price | | |
Remaining
Contractual
Term (in years) | | |
Intrinsic
Value | |
| Beginning balance January 1, 2015 | |
| 500,000 | | |
$ | 0.45 | | |
| 0.04 | | |
| | |
| Granted | |
| - | | |
$ | - | | |
| - | | |
| | |
| Exercised | |
| - | | |
$ | - | | |
| - | | |
| | |
| Forfeited/expired | |
| (500,000 | ) | |
$ | - | | |
| - | | |
| | |
| Outstanding at March 31, 2015 | |
| - | | |
$ | - | | |
| - | | |
| | |
| Exercisable | |
| - | | |
$ | - | | |
| - | | |
$ | - | |
| Weighted average fair value of options granted during three months ended March 31, 2015 | |
| | | |
$ | - | | |
| | | |
| | |
The following
table summarizes information about stock options outstanding at March 31, 2015:
| | | | |
Options Outstanding | | |
Options Exercisable | |
| | Range
of
Exercise Prices | | |
Number
Outstanding | |
| Weighted
Average
Remaining
Contractual Life
(in years) | | |
| Weighted
Average
Exercise Price | | |
Number
Exercisable | |
| Weighted
Average
Exercise Price | |
| | (None)
| | |
- | |
| - | | |
$ | - | | |
- | |
$ | - | |
Note
10 – Subsequent Events
The
Company has evaluated subsequent events pursuant to ASC Topic 855 from the balance sheet date through the date of this filing
and determined that there are no events to disclose.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The
Company has a long history in the fast growing industry of waste recycling and specifically related to waste-to-energy, upon which
the Company is building. Garb is organized to utilize both next-generation machines and new technologies to vertically integrate
into the waste refinement, recycling and energy industries. The company emphasis is in profitable new and “green”
solutions for waste-to-energy, alternate energy sources, gas drilling, fuel enhancements, improving energy usage efficiency and
utilizing recycled material in producing both useful and desirable products manufactured in its own plants. The Company’s
use of its first industrial manufacturing property and equipment will be to manufacture wood pellets to be used as an alternate
power fuel and for farm and agricultural applications. In addition, this manufacturing facility will utilize power saving technology
including the use of recycled materials as fuel that will result in lower operating costs. Also, excess electricity will be generated
that may be sold back to the power company, thereby generating an additional source of revenue.
Garb
Oil & Power Corporation (the “Company” or “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 and to Garb-Oil Corporation
of America in 1981, which marked the start of the Company’s development state in the energy and recycling industries. The
Company changed its name to Garb Oil & Power Corporation in 1985 and then to Garb Corporation in May 2013. In February 2014,
the Company changed its name back to Garb Oil & Power Corporation. The Company’s activities have consisted of raising
capital and developing technology related to waste-to-energy electricity production, pyrolysis (extraction of oil, carbon, and
steel from used tires), and recovery of used rubber from large off-the-road tires, repair and sale of used truck tires, sale of
new truck tires and sale of industrial shredders.
On
January 24, 2014, the Company signed a letter of intent (the “LOI”) and a collaborative effort agreement (the “CE
Agreement”) with Shredderhotline.com Company (“Shredderhotline”) and Dan Scott Burda, Shredderhotline’s
President/Owner. In general, the CE Agreement provides that the two ranking executive officers of both companies will collaborate
on future sales and operations within a newly formed wholly owned subsidiary of the Company, Garb Global Services, Inc. (“Garb
Global”). On November 18, 2014, the Company and Shredderhotline mutually determined that their business interests had diverged
and the Company and Shredderhotline released one another from their rights and obligations
under the LOI and CE Agreement both dated January 24, 2014. Garb Global continues as an operating subsidiary of the Company.
Our
Industry
The
industry in which Garb is operating is still in its maturing stages. Technological developments, the economic climate and the
growing global awareness of waste as a possible raw material resource, have changed the recycling industry, placing demands on
the industry for new products and for new solutions. Garb is dedicated to creating products that increases energy efficiency and
reduces the carbon footprint while helping to preserve the environment. With its knowledge of solutions, its comprehensive product
portfolio, its experience and, above all, with personnel and advisors who understand the industry, Garb will provide superior
products and services into profitable solutions that will provide the Company with a competitive advantage in the market and do
our part in making the world a greener place while passing cost savings on tour customers.
Our
Markets
Tires
and Commercial Waste Shredders: Garb’s past has been resurrected by current management, new truck tires and commercial
waste shredders. In addition, Garb is currently in the development stage to enter into the retread truck tire production and sales
market.
Waste-to-Energy:
Waste-to-energy is considered a renewable resource since its fuel source, garbage and other materials that have been destined
to landfills, is sustainable and non-depletable. According to the U.S. Environmental Protection Agency, waste-to-energy is a “clean,
reliable, renewable source of energy.”
In 2012,
Americans generated about 251 million tons of trash and recycled and composted almost 87 million tons of this material, equivalent
to a 34.5 percent recycling rate.
Opportunities
abound in the recycling industry to produce power and Garb is developing this area.
Biomass
and Alternate Fuels: The United States has been moving towards greater energy independence and the increase of clean renewable
fuels. Biofuel is simple to use, biodegradable, nontoxic, and essentially free of sulfur and aromatics. Alternate energy sources
can produce more net energy for less money than current technologies. Garb is currently pursuing multiple avenues in this growing
arena.
Useful
products manufactured from recycled materials: Garb is developing the potential for recycled materials to be utilized as raw
materials in the production of useful products, alternate fuels, and energy. Products to produce include those made from recovered
rubber, wood, and glass to produce retread tires, wood pellets, and medical marijuana paraphernalia, respectively.
Patents,
Trademarks and Proprietary Data
The
Company has received United States Patent No. 5,299,748 on the OTR Tire Disintegrator System design which expired April 5, 2011,
Patent No. 5,590,838 which expired January 7, 2014 and patent number 6,015,105 which expires January 18, 2018. An additional patent
improvement was granted in Canada on July 6, 1999 as Canadian Patent No. 2,178,326 which expired March 23, 2015.
Management
Overview
The
Company is pursuing avenues of generating cash or revenues during the next twelve months. The Company is pursuing sales of new
truck tires and commercial waste shredders and is developing waste-to-energy, biomass alternate fuels, and manufacturing operations
utilizing recycled materials. The Company continues to pursue financing to build and operate its own manufacturing plants. We
believe that our current Company personnel and advisors have the necessary industry expertise and marketing skills to implement
our business model.
Results
of Operations
Comparison
of the Three Months Ended March 31, 2015 and March 31, 2014
Revenues
During
the three months ended March 31, 2015 the Company recognized no revenues from sales. During the three months ended March 31, 2014
the Company recognized $200,000 revenues from sale of equipment.
General
and Administrative Expenses
General
and administrative expenses decreased $152,223 to $198,333 for the three months ended March 31, 2015, from $350,556 for the three
months ended March 31, 2014. The decrease was related to commissions decreasing $110,000 and consulting fees decreasing $100,000.
The decreases were offset with professional fees increasing $47,469 and depreciation expense increasing $8,132.
Other
Income (Expense)
Other
income (expense) decreased by $306,991 to $(415,349) for the three months ended March 31, 2015, from a loss of $(108,358) for
the three months ended March 31, 2014. The increase in derivative liability expense of $229,125 was due to the change in the fair
value of the derivative liability after first recognizing the derivative liability at December 31, 2014. The increase in interest
expense of $77,866 was primarily due to recognizing certain notes payables default interest amounts during the three months ended
March 31, 2015 and the same certain notes payables did not incur default interest amounts during the three months ended March
31, 2014.
Net
Loss
Net
loss was $613,682 and $348,914 for the three months ended March 31, 2015 and March 31, 2014, respectively. Net loss was due to
a lack of consistent revenues. While the Company has substantially decreased general and administrative expenses, we expect to
continue to incur losses until such time as we can begin to generate consistent revenue from operations.
Liquidity
and Capital Resources
Liquidity
is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. The Company is not
generating significant revenues. Operating expenses for the Company have been paid in part from short-term unsecured notes and
the issuance of Company stock. The Company also has a stockholders’ deficit of $7,511,735 at March 31, 2015.
The
Company has incurred indebtedness in order to finance its operations. As of March 31, 2015, the Company’s total liabilities
were $8,761,427, with a working capital deficit of $8,761,405. See Note 4 – Notes Payable, Note 5 - Derivative Liability,
Note 6 – Notes Payable –Related Party, Note 7 – Derivative Liability –Related Party, and Note 8 –
Capital Lease of the Company’s financial statements appearing elsewhere in this quarterly report on Form 10-Q.
Net
cash provided by (used in) operating activities was $(5,214) and $76,199 for the three months ended March 31, 2015 and March 31,
2014, respectively. Cash was primarily used to fund our net losses from operations.
Net
cash provided by (used in) investing activities was $0 for the three months ended March 31, 2015 and March 31, 2014.
Net
cash provided by financing activities was $5,040 and $54,868 for the three months ended March 31, 2015 and March 31, 2014, respectively.
During the three months ended March 31, 2015, we received cash of $5,040 from the issuance of a note payable, of which $0 cash
was used as repayment of financing activities.
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 of March 31, 2015, our Company has accumulated
losses of $20,013,826. 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, 2014, the Company’s 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
our ability to raise additional financial support. The issuance of additional equity securities by the Company 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.
Item
3. Quantitative and Qualitative Disclosures about Market Risk
Not
applicable
Item
4. Controls and Procedures
Under
the supervision and with the participation of our current management, including our Principal Executive Officers and Principal
Financial Officer (the “Certifying Officers”), we evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”))
as of March 31, 2015. Based upon that evaluation, the Certifying Officers concluded that, as of the end of the period covered
by this report, our disclosure controls and procedures were not effective.
We
believe that our consolidated financial statements contained in this quarterly report on Form 10-Q fairly present our financial
position, results of operations and cash flows for the three months ended March 31, 2015 in all material respects.
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even
those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation
and presentation.
Changes
in Internal Control Over Financial Reporting.
There
have been no changes in our internal control over financial reporting during the last fiscal quarter covered by this quarterly
report on Form 10-Q that have materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
Other
Controls and Procedures Information
In
order for the Company to have effective and strong internal controls over financial reporting, we believe the Company needs to
be able to financially support bringing in-house the accounting and financial reporting functions. Management will be bringing
in-house the accounting and financial reporting functions once we have consistent revenues to justify adding additional employees.
This will include the Company obtaining a full time Chief Financial Officer.
PART
II – Other Information
Item
1. Legal Proceedings
We
are not a party to any material litigation, nor to the knowledge of management, is any litigation threatened against us that may
materially affect us.
Item
1A. Risk Factors
Not
required for smaller reporting companies.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item
3. Defaults Upon Senior Securities
None.
Item
4. Mine Safety Disclosures
Not
applicable.
Item
5. Other Information
None.
Item
6. Exhibits
| Exhibit
No. |
|
Description
|
|
Location |
|
|
|
|
|
| 31.1 |
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Executive Officer and Principal Financial Officer. |
|
Filed
herewith. |
| 31.2 |
|
Rule 13a-14(a)/15d-14(a)
Certification of Principal Accounting Officer. |
|
Filed
herewith. |
| 32.1 |
|
Certification
of Chief Executive Officer, Principal Financial Officer and Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
Filed
herewith. |
| 101.INS |
|
XBRL Instance Document |
Filed herewith. |
| 101.SCH |
|
XBRL Taxonomy Extension Schema Document |
Filed herewith. |
| 101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase Document |
Filed herewith. |
| 101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase Document |
Filed herewith. |
| 101.LAB |
|
XBRL Taxonomy Extension Label Linkbase Document |
Filed herewith. |
| 101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document |
Filed herewith. |
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) 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 CORPORATION |
| |
|
|
| Date: May 14,
2015 |
By: |
/s/
Tammy Taylor |
| |
|
Tammy Taylor,
Chief Executive Officer |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Tammy Taylor |
|
Chief
Executive Officer and Director (principal executive officer and principal financial officer) |
|
May 14, 2015 |
| Tammy Taylor |
|
|
|
|
| |
|
|
|
|
| /s/
M. Aimee Coleman |
|
Corporate
Secretary (principal accounting officer) |
|
May 14, 2015 |
| M. Aimee Coleman |
|
|
|
|
Exhibit
31.1
Certifications
I,
Tammy Taylor, certify that:
1.
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2015 of Garb Oil & Power
Corporation (the “registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
| Date:
May 14, 2015 |
|
| |
|
|
| By: |
/s/ Tammy Taylor
|
|
| |
Tammy Taylor,
Chief Executive Officer |
|
| |
(Principal Executive
Officer and Principal Financial Officer) |
|
Exhibit
31.2
Certifications
I,
M. Aimee Coleman, certify that:
1.
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2015 of Garb Oil & Power
Corporation (the “registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
| Date:
May 14, 2015 |
|
| |
|
|
| By: |
/s/
M. Aimee Coleman |
|
| |
M. Aimee Coleman,
Corporate Secretary |
|
| |
(Principal Accounting
Officer) |
|
Exhibit
32.1
Section
1350 Certification
In
connection with the Quarterly Report on Form 10-Q of Garb Oil & Power Corporation (the “Company”) for the
quarterly period ended March 31, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Tammy
Taylor, Chief Executive Officer and I, M. Aimee Coleman, Corporate Secretary of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our my knowledge:
| |
1. |
The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| |
|
|
| |
2. |
The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company. |
| Date:
May 14, 2015 |
/s/
Tammy Taylor |
| |
Tammy
Taylor, Chief Executive Officer |
| |
(Principal
Executive Officer and Principal Financial Officer) |
| |
|
| Date:
May 14, 2015 |
/s/
M. Aimee Coleman |
| |
M.
Aimee Coleman, Corporate Secretary (Principal Accounting Officer) |
A
signed original of the written statements above required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to
Garb Oil & Power Corporation and will be retained by Garb Oil & Power Corporation and furnished to the U.S. Securities
and Exchange Commission or its staff upon request. The forgoing certifications are being furnished to the Securities and Exchange
Commission as an exhibit to the Quarterly Report on Form 10-Q for the three months ended March 31, 2015, and they shall
not be considered filed as part of such report.
Garb Oil and Power (CE) (USOTC:GARB)
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Garb Oil and Power (CE) (USOTC:GARB)
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