Item 2. Management's Discussion and Analysis or Plan of Operation.

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

The Company is in the development stage. The Company received revenues during the fiscal quarter ended March 31, 2004 and at the end of the period its current liabilities exceeded its total assets by approximately $1,760,391. The Company continues, as it has done in recent years, to actively pursue sales of its OTR Tire Disintegrator System, Garbalizer tire shredders and crumb rubber plants. These activities resulted in one sale of tires in fiscal 2002, which were delivered in July 2003, and one sale in the current quarter. The company is currently under contract to construct two shredders which are currently being built and may be delivered in the current fiscal year. The Company has limited financial resources, and it may not be able to continue in business if it does not receive significant additional cash from operations or financing activities. The Company cannot give assurances that its plans to generate cash will be successful.

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

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

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

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

estimates that over 2,600,000 tons of OTR tires of all sizes require disposal in the United States each year. Current methods of disposal include land filling and surface disposal, which are accepted only due to the lack of a viable alternative. Most states have passed laws prohibiting land filling or storage of whole tires.

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

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

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

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

On March 19, 1999, the Company acquired a patented shredding system from its sister company, Garbalizer Machinery Corporation ("GMC"). See "Certain Relationships and Related Transactions". This system became available when GMC merged with a Canadian Internet company, changed its name to RecycleNet, Inc. and ceased its shredder business.

The Company acquired from GMC all of its then existing assets, including the Garbalizer name and logo, patents, machinery designs and contract rights in exchange for assumption of all then existing indebtedness of GMC in the approximate amount of $500,000.

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

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

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

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

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

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

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

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

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

During the third quarter of 2001 the Company began a new marketing strategy to market its products. The Company began, and is still continuing to establish distributorships in the United States and Internationally. As of March 31, 2004 the Company has established Distributorships in New Jersey with National Recycling Corporation that covers a three state area, New Jersey, New York and Delaware, a Distributorship in Virginia with Minority Tire Reclamation, Inc. that covers Virginia, North Carolina and Maryland, and another Distributorship in Virginia which covers other areas in Florida, Georgia, Alabama, South Carolina, North Carolina, Virginia, West Virginia, Kentucky, Ohio, Pennsylvania, Delaware, District of Columbia, New Jersey, New York, Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire and Maine. The Company will continue searching for dependable Companies to establish Distributorships throughout all of North America. Internationally the Company has concluded an Agreement with Micron SA of Odessa, Ukraine to manufacture and market

its Shredders and other Technology throughout Eastern and Western Europe. All Machines and Equipment for the European Market will be manufactured by Micron on a licensed basis and marketed jointly by Garb-Oil and Micron throughout the European market area. The Company has concluded a Distributorship with Representaciones Internacionales of Guadalajara, Mexico for all of South and Central America.

All machines, Equipment and Technology for the South and Central America Distributorship will be manufactured in Mexico on a license basis with the marketing being done jointly by Garb-Oil and Representaciones Internacionales. It is anticipated and planned that all items sold by Garb-Oil Distributorships in the United States and Canada will be manufactured in Mexico. The Company has concluded a Distributorship with The Princeton Group of Alhambra, CA for all of Asia. Machines, Equipment and Technology for the Asian market area will be manufactured in China. Certain Technology and Machinery owned by the Chinese Manufacturer for crumb rubber processing will be manufactured in China and purchased by Garb-Oil to be sold in all of the marketing areas inside and outside of the Asian market area. Because of the NAFTA Agreement and other International Agreements currently existing, the Company is now able to establish these Distributorship agreements and contractually protect its technology and proprietary rights. These Agreements give the Company access to less expensive manufacturing and technology, which Management believes will make the Company more competitive and generate sales on a worldwide basis. As of March 31, 2004, the company management has determined that the company should take advantage of the benefits of such manufacturing and marketing in future Company operations.

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

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

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

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

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

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

Trenergy may not be able to establish the scientific validity or commercial viability of the Trenergy technology. Neither Trenergy nor the Company have the resources necessary to develop or evaluate the Trenergy technology without infusion of substantial capital or the joint venturing with third parties. Neither Trenergy nor the Company have any such arrangements in place. The Company plans to use management time and financial resources pursuing possible transactions with the Trenergy technology for which the Company may receive no revenue. During the years 1998, 1999 and 2000 Trenergy has continued research on the process but at March 31, 2004, had not completed the "hot test" which would further prove if the process could be viable. As of March 31, 2004, the "hot test" had not been completed by Trenergy and no date has been given the Company as to when such test would be completed.

The Company's efforts have historically focused on reducing the environmental problems of disposing of used tires by creating fuel, power or useful by-products from the tires. Although such efforts have not resulted in commercial operations, the Company's management has gained extensive knowledge of the used tire distribution and disposal business through such efforts. On May 20, 1994 the Company formed Utah Truck Tires, Inc. ("UTTI") as a majority owned subsidiary to exploit the perceived demand for repaired and retreaded commercial truck tires. Although UTTI did demonstrate that there was a demand for these used tires, UTTI incurred operating losses due principally to overhead costs and high carcass costs. The Company believes that the repair and resale business could be commercially viable if operated in conjunction with a recycling plant, where overhead costs can be shared with other operations and usable carcasses obtained at relatively low cost. In 1996, UTTI ceased active operations and as of March 31, 2004, both the Company and UTTI have decided that future operations for UTTI probably would not be re-started.

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

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

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

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

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

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

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

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

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

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

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

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

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

The Company believes its relationship with its employees to be good.

The Company is not a party to any collective bargaining agreement.

During the periods ended March 31, 2004 and 2003, the Company has not expended any funds on research and development activities.

Neither the Company nor UTTI believe that any of its activities result in harmful discharge of pollutants in the air, water or soil. Any power plants built by the Company in the future utilizing tires as fuel will be required to comply with state and federal regulations regarding the discharge of pollutants into the atmosphere. The Company believes that the plants can comply with such regulations.

B. Liquidity, Cash Flow and Capital Resources

$12,000 of wages payable to the company's President were accrued, rather than paid, during the period.

At March 31, 2004, the Company had a deficit in working capital of $1,760,391 and a current ratio (current assets to current liabilities) of approximately .02367. At June 30, 2003, the Company had a deficit in working capital of $1,570,940 and a current ratio of approximately .00019.

Other than its short time office lease and accounts payable, the company is not subject to any material commitments for capital expenditures.

Statements made in this Form 10-QSB which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of the Company, including, without limitation, (i) the success of our research and development efforts; our ability to develop acceptable products; our ability to raise capital; and the growth in demand for new and advanced semiconductor materials; and (ii) statements preceded by, followed by or that include the words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets" or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond the Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, in addition to those contained in the Company's reports on file with the Securities and Exchange Commission: general economic or industry conditions, nationally and/or in the communities in which the Company conducts business; changes in the interest rate environment; legislation or regulatory requirements; conditions of the securities markets; the development of materials and/or products that may be superior to the materials and products developed by the Company; demand for the Company's materials and products; competition; changes in the quality or composition of the Company's materials and products; our ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; and other economic, competitive, governmental, regulatory and technical factors affecting the Company's operations, materials, products, services and prices.

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. The Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.