SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB





[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



FOR THE QUARTERLY PERIOD ENDED: September 30, 2003



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 Number 1-15497



RecycleNet Corporation

(Exact name of small business issuer in its charter)



Utah

87-0301924

(State or other jurisdiction of

(IRS Employer Identification No.)

incorporation or organization)



175 East 400 South, Suite 900, SALT LAKE CITY, UTAH 84111

(Address of principal executive offices, including Zip Code)



801-531-0404

(Issuer's telephone number,)



State the number of shares outstanding of the issuers classes of common equity, as of the latest practicable date:



The number of common shares outstanding at November 7, 2003: 76,421,792

The number of class N shares outstanding at   November 7, 2003: 61,175,681









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RECYCLENET CORPORATION AND SUBSIDIARIES

FORM 10-QSB

QUARTER ENDED September 30, 2003



TABLE OF CONTENTS



Page

PART I  FINANCIAL INFORMATION



Item 1.

Financial Statements



Unaudited Condensed Consolidated Balance Sheets as September 30, 2003 and

December 31, 2002

3



Unaudited Condensed Consolidated Statements of Operations for the Three and Nine

Months Ended September 30, 2003 and 2002

4



Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months

Ended September 30, 2003 and 2002

5



Notes to Unaudited Condensed Consolidated Financial Statements

6



Item 2.

Managements Discussion and Analysis of Financial Condition

and Results of Operations

8



Item 3.

Controls and Procedures

10



PART II  OTHER INFORMATION



Item 6.

Exhibits and Reports on Form 8-K

11



Signatures

11









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PART I  FINANCIAL INFORMATION



|RECYCLENET CORPORATION AND SUBSIDIARIES                     |                         |  |                   
|----------------------------------------------------------- | ----------------------- |  | ------------------
|UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS             |                         |  |                   
|                                                            |                         |  |                   
|                                                            | September 30,           |  | December 31,      
|                                                            | 2003                    |  | 2002              
|ASSETS                                                      |                         |  |                   
|Current Assets                                              |                         |  |                   
|Cash                                                        | $         223,781       |  | $         212,196 
|Trade accounts receivable, net of $2,685 and $1,659         |                         |  |                   
|allowance for bad debt, respectively                        | 10,754                  |  | 11,268            
|Other receivables                                           | 8,917                   |  | 6,560             
|Prepaid expenses                                            | 3,035                   |  | 4,028             
|Advances to related party - current                         | 5,830                   |  | 5,658             
|Total Current Assets                                        | 252,317                 |  | 239,710           
|                                                            |                         |  |                   
|Property and Equipment                                      |                         |  |                   
|Computer equipment                                          | 29,138                  |  | 21,372            
|Less: Accumulated depreciation                              | (22,238)                |  | (21,372)          
|Net Property and Equipment                                  | 6,900                   |  | -                 
|Advances to Related Party - Net of Current Portion          | 6,068                   |  | 10,462            
|Total Assets                                                | $         265,285       |  | $         250,172 
|                                                            |                         |  |                   
|LIABILITIES AND STOCKHOLDERS' EQUITY                        |                         |  |                   
|Current Liabilities                                         |                         |  |                   
|Trade accounts payable                                      | $                     - |  | $           25,660
|Accrued liabilities                                         | 11,496                  |  | 19,923            
|Deferred revenue                                            | 89,029                  |  | 63,433            
|Total Current Liabilities                                   | 100,525                 |  | 109,016           
|                                                            |                         |  |                   
|Stockholders' Equity                                        |                         |  |                   
|Class N convertible shares (and Class X shares of Amalco) - |                         |  |                   
|$0.01 par value; 70,896,789 shares authorized; 61,175,681   |                         |  |                   
|shares issued and outstanding                               | 611,757                 |  | 611,757           
|Common shares - $0.01 par value; 179,103,211 shares         |                         |  |                   
|authorized; 72,421,791 shares issued and outstanding        | 724,218                 |  | 724,218           
|Par value in excess of paid-in capital                      | (46,435)                |  | (46,435)          
|Accumulated deficit                                         | (1,124,780)             |  | (1,148,384)       
|Total Stockholders' Equity                                  | 164,760                 |  | 141,156           
|Total Liabilities and Stockholders' Equity                  | $         265,285       |  | $         250,172 
|                                                            |                         |  |                   



See the accompanying notes to the condensed consolidated financial statements.



3





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RECYCLENET CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS





|                                       | For the Three Months  |  | For the Nine Months  
|-------------------------------------- | --------------------- |  | ---------------------
|                                       | Ended September 30,   |  | Ended September 30,  
|                                       | 2003                  |  | 2002                 
|                                       |                       |  |                      
|Sales                                  | $         496,267     |  | $         495,682    
|Cost of Sales                          | 319,400               |  | 386,081              
|Gross Profit                           | 176,867               |  | 109,601              
|                                       |                       |  |                      
|General and administrative expenses    | (148,663)             |  | (107,130)            
|Foreign currency exchange gain (loss)  | (383)                 |  | (6,317)              
|Net Income (Loss)                      | $           27,821    |  | $            (3,846) 
|Basic Income (Loss) Per Common Share   | $                   - |  | $                   -
|Diluted Income (Loss) Per Common Share | $                   - |  | $                   -
|                                       |                       |  |                      

See the accompanying notes to the condensed consolidated financial statements.



4

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|RECYCLENET CORPORATION AND SUBSIDIARIES                                           |  |                    |  |                    
|--------------------------------------------------------------------------------- |  | ------------------ |  | -------------------
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                         |  |                    |  |                    
|                                                                                  |  |                    |  |                    
|For the Nine Months Ended September 30                                            |  | 2003               |  | 2002               
|Cash Flows From Operating Activities                                              |  |                    |  |                    
|Net income                                                                        |  | $           23,604 |  | $             9,011
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                    |  |                    
|Depreciation                                                                      |  | 866                |  | 3,707              
|Provision for losses on accounts receivable                                       |  | 1,000              |  | -                  
|Foreign currency exchange (gain) loss                                             |  | 662                |  | (1,126)            
|Changes in operating assets and liabilities:                                      |  |                    |  |                    
|Accounts and other receivables                                                    |  | (1,665)            |  | (17,620)           
|Inventory                                                                         |  | -                  |  | 61,452             
|Prepaid expenses                                                                  |  | 992                |  | -                  
|Accounts payable                                                                  |  | (25,660)           |  | -                  
|Accrued liabilities                                                               |  | (9,052)            |  | (7,595)            
|Deferred revenue                                                                  |  | 24,589             |  | 6,511              
|Net Cash Provided by Operating Activities                                         |  | 15,336             |  | 54,340             
|                                                                                  |  |                    |  |                    
|Cash Flows From Investing Activities:                                             |  |                    |  |                    
|Collection of advances to related party                                           |  | 4,222              |  | -                  
|Purchase of property and equipment                                                |  | (7,914)            |  | -                  
|Net Cash Used in Investing Activities                                             |  | (3,692)            |  | -                  
|                                                                                  |  |                    |  |                    
|Effect of Exchange Rate Changes on Cash                                           |  | (59)               |  | 1,126              
|Net Increase in Cash                                                              |  | 11,585             |  | 55,466             
|Cash at Beginning of Period                                                       |  | 212,196            |  | 190,245            
|Cash at End of Period                                                             |  | $         223,781  |  | $         245,711  
|                                                                                  |  |                    |  |                    



See the accompanying notes to the condensed consolidated financial statements.



5

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RECYCLENET CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





NOTE 1ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES



Basis of Presentation  The accompanying unaudited condensed consolidated financial statements have been prepared by RecycleNet Corporation and are prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for fair presentation.



The accompanying unaudited interim financial statements have been condensed pursuant to the rules and regulations of the Securities and Exchange Commission; therefore, certain information and disclosures generally included in financial statements have been condensed or omitted. These financial statements should be read in conjunction with the Company's annual financial statements included in the Company's annual report on Form 10-KSB as of December 31, 2002. The financial position and results of operations of the interim periods presented are not necessarily indicative of the results to be expected for the year ended December 31, 2003.



Advances to Related Party  At December 31, 2001, the Company had a $17,500 receivable from a related party through common ownership. The loan was unsecured and due on demand. During 2002 the receivable was converted to a loan bearing interest at 4% per annum, repayable in 36 equal monthly payments commencing in October 2002 and remained unsecured. At Sept 30, 2003 and December 31, 2002, $5,602 and $1,380 had been repaid leaving an unpaid balance of $11,898 and $16,120, respectively.



NOTE 2BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE



Basic income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding. Diluted income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of Class N (and Class X) shares and common shares outstanding to give effect to potentially issuable common shares except during loss periods when those potentially issuable shares are anti-dilutive.



The following data shows the amounts used in computing basic and diluted income (loss) per share for the three months and nine months ended September 30, 2003 and 2002:



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|                                                            |  |  | For the Three Months  |  | For the Nine Months  
|----------------------------------------------------------- |  |  | --------------------- |  | ---------------------
|                                                            |  |  | Ended September  30,  |  | Ended September  30, 
|                                                            |  |  | 2003                  |  | 2002                 
|                                                            |  |  |                       |  |                      
|Net income (loss)                                           |  |  | $           27,821    |  | $            (3,846) 
|                                                            |  |  |                       |  |                      
|Weighted-average number of common shares used in basic      |  |  |                       |  |                      
|income (loss) per common share calculation                  |  |  | 72,421,791            |  | 72,305,692           
|                                                            |  |  |                       |  |                      
|Incremental potentially issuable common shares from assumed |  |  |                       |  |                      
|conversion of Class N common shares                         |  |  | 61,175,681            |  | -                    
|                                                            |  |  |                       |  |                      
|Weighted-average number of common shares and dilutive       |  |  |                       |  |                      
|potential common shares used in diluted income (loss) per   |  |  |                       |  |                      
|common share calculation                                    |  |  | 133,597,472           |  | 72,305,692           
|Basic Income (Loss) Per Common Share                        |  |  | $                   - |  | $                   -
|Diluted Income (Loss) Per Common Share                      |  |  | $                   - |  | $                   -
|                                                            |  |  |                       |  |                      

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RECYCLENET CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





NOTE 3SEGMENT INFORMATION



The Company has operations in two segments of its Internet business, namely: Internet Portal Services and Sales of Equipment. Information regarding the operations of these reportable business segments follows:



|                  |  | Three Months Ended        |  | Nine Months Ended  
|----------------- |  | ------------------------- |  | -------------------
|                  |  | September 30,             |  | September 30,      
|                  |  | 2003                      |  | 2002               
|Revenues          |  |                           |  |                    
|Equipment Sales   |  | $             319,400     |  | $        386,081   
|Portal Services   |  | 176,867                   |  | 109,601            
|Total revenues    |  | $             496,267     |  | $        495,682   
|                  |  |                           |  |                    
|                  |  |                           |  |                    
|Net income (loss) |  |                           |  |                    
|Equipment Sales   |  | $                   (250) |  | $             (166)
|Portal Services   |  | 28,071                    |  | (3,680)            
|Net income (loss) |  | $               27,821    |  | $          (3,846) 
|                  |  |                           |  |                    



NOTE 4  PURCHASES OF WEBSITES



On February 5, 2003, the Company acquired the RecycleXchange website and the domain names RecycleXchange.com and RecycleXchange.net and all rights to the name RecycleXchange for a cash payment of $5,000.



On March 12, 2003, the Company acquired the Palletbuyersguide website and the domain name Palletbuyersguide.com and all rights to the name for a cash payment of $500.



The entire purchase price for these websites were allocated to the respective websites purchased, which were accounted for as marketing and advertising costs in accordance with Statement of Position No. 98-02. Accordingly, the advertising costs were expensed on the dates of acquisition.



NOTE 5  SUBSEQUENT EVENTS



On October 14, 2003, the Company entered into an investor relations agreement with a public relations firm to provide corporate branding and investor relations awareness. Upon signing the agreement, the Company paid $5,000 and issued 3,500,000 shares of restricted common stock valued at $105,000 or $0.03 per share. These amounts were expensed immediately as consulting expense. Going-forward, the Company is to pay $2,750 a month for two years. The agreement can be cancelled at any time with a 30 day written notice by either party.



Also, on October 14, 2003 the Company entered into an investor relations agreement with a different public relations firm.  Upon signing the agreement, the Company issued 250,000 shares of restricted common stock valued at $7,500 or $0.03 per share which was expensed immediately as consulting expense.  Another 250,000 shares of common stock were placed into an escrow account to be released as follows: 125,000 on March 31, 2004 and 125,000 on August 31, 2004. These shares were valued at $7,500 or $0.03 per share and will be amortized as consulting expense from the date of grant through the dates the shares are released. The agreement is for one year and can be cancelled with 60 days written notice by either party.  In the event of early termination of the agreement, any escrowed shares are forfeited by the public relations firm and will be returned to the Company.



On October 22, 2003, the Company acquired the waste.net website and the domain name waste.net and all rights to the name for a cash payment of $4,500.  The entire purchase price for this website was allocated to the website which was accounted for as marketing and advertising costs in accordance with Statement of Position No. 98-02.  Accordingly, the advertising costs were expensed at the date of acquisition.





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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION





Cautionary Statement Regarding ForwardLooking Statements



Certain statements contained in this Section and elsewhere in this Form 10-QSB regarding matters that are not historical facts are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995).  Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. All statements that address operating performance, events or developments that management expects or anticipates to occur in the future, including statements relating to sales and earnings growth or statements expressing general optimism about future operating results, are forward-looking statements. The forward-looking statements are based on management's current views and assumptions regarding future events and operating performance. Many factors could cause actual results to differ materially from estimates contained in management's forward-looking statements.  The differences may be caused by a variety of factors, including but not limited to adverse economic conditions, competitive pressures, inadequate capital, unexpected costs, lower revenues, net income and  forecasts, the possibility of fluctuation and volatility of our operating results  and financial condition, inability to carry out marketing  and  sales plans and loss of key executives, among other things.



Overview



The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and notes related thereto, included elsewhere in this report.



RecycleNet Corporation provides "Global Access to  Recycling  Markets"  (GARM) with its unique trading system for secondary commodities. We operate the trading system that generators, brokers, dealers, processors and consumers use to buy/sell/trade recyclable materials or used items. We are continuously developing our physical clearinghouse and electronic trading services to facilitate the trade of secondary commodities. A detailed description of our business is described in full in the Company's annual report on form 10-KSB as of December 31, 2002.





Results of Operations



RecycleNet Corporation (an Ontario Private Corporation) was incorporated on December 22, 1997 and purchased the ongoing business proprietorship of Mr. Paul Roszel. The Company operated its business activities and continued to expand its operations throughout the following period.



Sales Revenues



For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,



2003                 2002

2003

2002





Sales Revenues

$  496,300          $ 495,700

$

1,506,000

$

1,231,500



Sales revenues for the three month period ended September 30, 2003 increased slightly from $495,700 to $496,300 in comparison to the same period in 2002.  However our Portal sales revenue increased $67,300 or 61% while Andela Product sales declined by the corresponding $66,700.  The second and third quarters of 2003 in our Portal sales have recorded strong revenue increases that we hope will continue in the remainder of the year.



Sales revenues recorded for the nine months ended September 30, 2003 of $1,506,000 increased $274,500 from $1,231,500 during the similar period of 2002. Revenues from our Portal web site services of $483,200 were $105,900 or 28% above the $377,300 recorded in 2002 and as reported above, our second and third quarter business sales revenues are showing stronger results than our first quarter sales.



8

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Although sales at Andela Products in the current quarter were lower than last years same quarter, sales for the year to date of $1,022,800 have increased 20% in 2003 compared to the $854,200 recorded in 2002. Opportunities to quote on new business and general business activities at Andela have increased from the last quarter of 2002 resulting in a higher level of new equipment shipments in 2003. Repair parts shipments have also been favorable this year compared to the similar period of 2002.



Gross Profit



For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,



2003                          2002

2003

2002







Gross Profit                                $  176,900                $  109,600

$

483,200

$

377,300



An increase of $67,300 in gross profit was recorded in the third quarter of 2003 in comparison to the same period in 2002. As this gross profit is derived entirely from the sales revenues in our Portal services business, the sales revenue increase resulted directly in the improvement of gross profit.



Year to date gross profit of $483,200 at the end of the third quarter of 2003 was 28% higher than the $377,300 recorded in the similar period of 2002.  Gross Profit is a direct result of our revenue associated with our Portal web site activities, consequently as these sales revenues increase, our gross profit increases accordingly.



Although sales revenues at Andela Tool have increased, our gross profit has not matured and this business, as yet, is not contributing to our gross profit.



Operating Expenses

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,



2003                       2002

2003

2002



General and Administrative



Expenses                                        $  148,700             $  107,100         $

458,900

$

369,400



Expenses in this area of our operations increased $41,600 to $148,700 compared to the same period of 2002. The expenses that recorded the largest increases were office and administration, professional fees, general labor costs and bad debts, accounting for  $37,200 of the total increase. As our Portal business increases in volume, we need to support these activities and also continue to expand our services.



For the first nine months, General and Administrative Expenses increased to $458,900 in 2003 from $369,400 for the similar period of 2002, an increase of $89,500. Higher sales commissions expense directly related to our higher sales revenue accounted for $17,400 of this increase. Professional fees, office and administration, travel and labor costs have increased by $74,300 to reflect our increased business activity level.



On February 5, 2003, the company acquired the assets of RecycleXchange consisting of the website and the domain names RecycleXchange.com and RecycleXchange.net and all the rights to the name RecycleXchange, including all attendant intellectual property rights therein. The entire purchase price of $5,000 was paid by cash and was allocated to the website of RecycleXchange.com which was accounted for as marketing and advertising costs. Accordingly, the advertising costs were expensed at the date of acquisition.



Net Income (Loss)



For the Three Months Ended

For the Nine Months End

September 30,

September 30,



2003                  2002

2003

2002







Net Income (loss)                             $  27,800           $   (3,800)

$  23,600

$     9,000



9

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Net income for the third quarter of 2003 increased $31,600 to $27,800 compared to the loss in 2002.  This is directly attributable to the increase of revenue in the Portal business of $105,900.  However, with the increase in our business activities, we must increase our expenses to support these new business levels. Management continues to invest in the improvement of this business in order to serve our customer needs more professionally.



Liquidity and Capital Resources



The Companys cash position recorded at September 30, 2003 of $223,800 has increased from the December 31, 2002 cash position of $212,200 by $11,600. Cash outlays have consisted of purchasing new equipment amounting to $7,900 and reducing the company liabilities by $34,700. The increase in cash offsetting these expenditures results primarily from the company profit for the nine months ended September 30, 2003 of $23,600 and an increase in the deferred revenue balance by $24,600. Management continues to operate this business without any bank indebtedness and is closely monitoring the companys cash flow. New or additional spending is only implemented after a careful review of our cash sustainability.



Deferred Revenue



Deferred revenue results from RecycleNet customers who pay for their service purchases in advance, such as quarterly, semi-annually, or annually. RecycleNet records the initial payment in deferred revenue and then recognizes in each subsequent month that proportion which is provided in services. As at September  30, 2003, deferred revenue of $89,000 was higher than the December 31, 2002 balance of $63,400 reflecting directly the higher sales revenue levels this year  compared to  2002.





ITEM 3. CONTROLS AND PROCEDURES



(a)

Evaluation of disclosure controls and procedures  Based on their evaluation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)) the Companys chief executive officer and chief financial officer have concluded that as of the end of the period covered by this Quarterly Report of Form 10-QSB such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.



(b)

Changes in internal control over financial reporting  During the quarter under report, there was no change in the Companys internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



10

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PART II.

OTHER INFORMATION





ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



Exhibits:



31.

Certification by the Chief Executive and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



32

Certification by the Chief Executive and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



Reports on Form 8-K:



None.





SIGNATURES





Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





RecycleNet Corporation





November 12, 2003

/s/  Paul Roszel



Paul Roszel, President and Chairman of the Board

of Directors





November 12, 2003

/s/  Richard Ivanovick



Richard Ivanovick, C.A., Chief Financial and

Accounting Officer









12