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: March 31, 2004



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 April 30, 2004: 76,296,792

The number of class N shares outstanding at April 30, 2004: 61,175,681







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RECYCLENET CORPORATION AND SUBSIDIARIES

FORM 10-QSB

QUARTER ENDED MARCH 31, 2004



TABLE OF CONTENTS



Page

PART I  FINANCIAL INFORMATION



Item 1.

Financial Statements



Condensed Consolidated Balance Sheets  March 31, 2004 and December 31, 2003 (Unaudited)

3



Condensed Consolidated Statements of Operations for the Three Months Ended

March 31, 2004 and 2003 (Unaudited)

4



Condensed Consolidated Statements of Cash Flows for the Three Months Ended

March 31, 2004 and 2003 (Unaudited)

5



Notes to Condensed Consolidated Financial Statements

6



Item 2.

Managements Discussion and Analysis of Financial Condition and

Results of Operation

8



Item 3.

Controls and Procedures

10





PART II  OTHER INFORMATION



Item 1.

Legal Proceedings

11



Item 2.

Changes in Securities and Small Business Issuer Purchases of Equity Securities

11



Item 3.

Defaults Upon Senior Securities

11



Item 4.

Submission of Matters to a Vote of Security Holders

11



Item 5.

Other Information

11



Item 6.

Exhibits and Reports on Form 8-K

11





Signatures

12











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PART I  FINANCIAL INFORMATION



ITEM 1.   FINANCIAL STATEMENTS





|RECYCLENET CORPORATION AND SUBSIDIARIES                       
|--------------------------------------------------------------
|CONDENSED CONSOLIDATED BALANCE SHEETS                         
|(UNAUDITED)                                                   
|                                                              
|                                                              
|                                                              
|ASSETS                                                        
|Current Assets                                                
|Cash                                                          
|Trade accounts receivable, net of $2,691 and $2,693 allowance 
|for bad debt, respectively                                    
|Other receivables                                             
|Prepaid expenses                                              
|Advances to related party  current                           
|Total Current Assets                                          
|Property and Equipment                                        
|Computer equipment                                            
|Less: Accumulated depreciation                                
|Net Property and Equipment                                    
|Advances to Related Party - Net of Current Portion            
|Total Assets                                                  
|                                                              
|LIABILITIES AND STOCKHOLDERS' EQUITY                          
|Current Liabilities                                           
|Accrued liabilities                                           
|Deferred revenue                                              
|Total Current Liabilities                                     
|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                                 
|Common shares - $0.01 par value; 179,103,211 shares           
|authorized; 76,296,792 and 76,171,792 shares issued           
|and outstanding, net 125,000 and 250,000 shares held in escrow
|Additional paid-in capital                                    
|Accumulated deficit                                           
|Total Stockholders' Equity                                    
|Total Liabilities and Stockholders' Equity                    
|                                                              



See the accompanying notes to the condensed consolidated financial statements.



3





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|RECYCLENET CORPORATION AND SUBSIDIARIES         |  |  |                      |                       |  |                      
|----------------------------------------------- |  |  | -------------------- | --------------------- |  | ---------------------
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |  |  |                      |                      
|(UNAUDITED)                                     |  |  |                      |                       |  |                      
|                                                |  |  |                      |                       |  |                      
|                                                |  |  | For the Three Months
|                                                |  |  | Ended March 31,     
|                                                |  |  |                      | 2004                  |  | 2003                 
|                                                |  |  |                      |                       |  |                      
|Sales                                           |  |  |                      | $         526,630     |  | $         427,819    
|Cost of Sales                                   |  |  |                      | 335,495               |  | 325,176              
|Gross Profit                                    |  |  |                      | 191,135               |  | 102,643              
|                                                |  |  |                      |                       |  |                      
|General and administrative expenses             |  |  |                      | (174,413)             |  | (136,950)            
|Foreign currency exchange gain (loss)           |  |  |                      | (612)                 |  | 11,058               
|Net Income (Loss)                               |  |  |                      | $           16,110    |  | $          (23,249)  
|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                               |                      |  |                    
|--------------------------------------------------------------------- | -------------------- |  | -------------------
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                       |                      |  |                    
|(UNAUDITED)                                                           |                      |  |                    
|                                                                      |                      |  |                    
|                                                                      | For the Three Months
|                                                                      | Ended March 31,     
|                                                                      | 2004                 |  | 2003               
|Cash Flows From Operating Activities:                                 |                      |  |                    
|Net income (loss)                                                     | $       16,110       |  | $     (23,249)     
|Adjustments to reconcile net income (loss) to net cash                |                      |  |                    
|provided by (used in) operating activities:                           |                      |  |                    
|Depreciation                                                          | 545                  |  | 251                
|Foreign currency exchange (gain) loss                                 | 612                  |  | (11,058)           
|Amortization of shares held in escrow                                 | 3,078                |  | -                  
|Changes in assets and liabilities:                                    |                      |  |                    
|Accounts and other receivables                                        | 18,571               |  | (131)              
|Prepaid expenses                                                      | -                    |  | 478                
|Accounts payable and accrued liabilities                              | 8,132                |  | (32,686)           
|Deferred revenue                                                      | 3,604                |  | (3,793)            
|Net Cash Provided By (Used In) Operating Activities                   | 50,652               |  | (70,188)           
|Cash Flows From Investing Activities:                                 |                      |  |                    
|Collection of advances to related party                               | 1,550                |  | 1,393              
|Purchase of property and equipment                                    | (1,342)              |  | (6,600)            
|Net Cash Provided By (Used In) Investing Activities                   | 208                  |  | (5,207)            
|Effect of Exchange Rate Changes on Cash                               | (809)                |  | 11,058             
|Net Increase (Decrease) in Cash                                       | 50,051               |  | (64,337)           
|Cash at Beginning of Period                                           | 213,296              |  | 212,196            
|Cash at End of Period                                                 | $     263,347        |  | $     147,859      
|                                                                      |                      |  |                    
|Non-Cash Investing and Financing Activities:                          |                      |  |                    
|Release of common stock through a consulting agreement and settlement |                      |  |                    
|of accrued liability                                                  | $         3,750      |  | $                 -
|                                                                      |                      |  |                    

See the accompanying notes to the condensed consolidated financial statements.



5







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RECYCLENET CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES



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



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, 2003. 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, 2004.



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 March 31, 2004 $8,488 had been repaid leaving an unpaid balance of $9,012.



NOTE 2STOCKHOLDERS EQUITY



As part of the consulting agreement that the Company entered into in October 2003, the Company placed 250,000 shares of common stock into escrow.  On March 31, 2004, 125,000 shares were released and the remaining 125,000 shares are to be released on August 31, 2004.  For accounting purposes, the 250,000 shares held in escrow are considered unvested stock.  The fair value of which is measured at the market price of unrestricted stock on the grant date.  These shares have been valued at $7,500 or $0.03 per share.  In accordance with EITF D-90:  Grantor Balance Sheet Presentation of Unvested, Forfeitable Equity Instruments Granted to a Nonemployee, these shares will be treated as un-issued shares until such time as they are released from escrow.  The value of the shares will be amortized as consulting expense over the period from the date of grant to the date released from escrow.  The amortization of consulting expense will be recorded as an accrued liability.  At such time as the shares are released from escrow, the accrued liability will be reclassed to equity.  On March 31, 2004 the Company reclassed $3,750 from the accrued liability to equity.



NOTE 3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 per share for the three months ended March 31, 2004 and 2003:





6





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|                                                            |  |  | For the Three Months    
|----------------------------------------------------------- |  |  | ------------------------
|                                                            |  |  | Ended March 31,         
|                                                            |  |  | 2004                    
|                                                            |  |  |                         
|Net income (loss)                                           |  |  | $               16,110  
|                                                            |  |  |                         
|Weighted-average number of common shares used in basic      |  |  |                         
|income per common share calculation                         |  |  | 76,171,792              
|                                                            |  |  |                         
|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 per          |  |  |                         
|common share calculation                                    |  |  | 137,347,473             
|                                                            |  |  |                         
|Basic Income (Loss) Per Common Share                        |  |  | $                      -
|                                                            |  |  |                         
|Diluted Income (Loss) Per Common Share                      |  |  | $                      -
|                                                            |  |  |                         



NOTE 4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 and assets of these reportable business segments follows:



|                                          | Portal                |  | Equipment             |  |                      
|----------------------------------------- | --------------------- |  | --------------------- |  | ---------------------
|                                          | Services              |  | Sales                 |  | Total                
|                                          |                       |  |                       |  |                      
|For the Three Months Ended March 31, 2004 |                       |  |                       |  |                      
|Sales                                     | $             191,135 |  | $             335,495 |  | $             526,630
|Net Income (loss)                         | 18,339                |  | (583)                 |  | 17,756               
|Assets                                    | 302,098               |  | 5,660                 |  | 307,758              
|                                          |                       |  |                       |  |                      
|For the Three Months Ended March 31, 2003 |                       |  |                       |  |                      
|Sales                                     | $             102,643 |  | $             325,176 |  | $             427,819
|Net income (loss)                         | (22,851)              |  | (398)                 |  | (23,249)             
|Assets                                    | 183,499               |  | 6,945                 |  | 190,444              
|                                          |                       |  |                       |  |                      



7







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

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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) through Internet portals that facilitate e-commerce trading. The Company's web sites are described in "Description of Business" above.



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.



Throughout the reporting periods shown previously, common stock was issued for various items (ie. business & start-up costs; merger costs; professional fees and marketing expenses). Accounting principles generally accepted in the United States of America require that we value these shares at reasonable current values when issued. Consequently, the paid-in-capital of the Company recorded has received a substantial paid-in capital and the consolidated statement of Accumulated Deficit recorded a correspondingly large deficit.



Sales Revenues



For the Three Months Ended

March 31,



2004

2003







Sales Revenues

$

526,600

$

427,800



Sales revenues recorded for the three months ended March 31, 2004 of $526,600 have increased $98,800 from $427,800 during the similar period of 2003. Revenues from our Portal web site services of $191,100 were $88,500 above the $102,600 recorded in 2003, a significant 86% increase. Starting with the second quarter of 2003, portal sales increased by 41% over the same period the previous year, 61% in the third quarter and 52% in the forth quarter.  With the economy improving and with other internet companies  now charging  fees  for access to their  web sites and  for advertising images on these web sites, the consumer is realizing that they will now  have to pay a fee to continue to use these sites. RecycleNet is also experiencing more customers willing to subscribe to our Portal services and this is reflected in our favorable revenue increases.





8





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Sales at Andela Products Ltd. of $335,500 were quite strong and stayed comparable to the $325,200 recorded in 2003. Opportunities to quote on new business and general business activities at Andela have matured from the last quarter of 2003 resulting in new equipment shipments in this quarter. Repair parts shipments were also favorable in this quarter compared to the similar quarter of 2003.



Gross Profit



For the Three Months Ended

March 31,



2004

2003









Gross Profit

$

191,100

$

102,600



Gross Profit of $191,100 in the first quarter of 2004 has increased 86% over the $102,600 recorded in the similar period of 2003.  Gross Profit is a direct result of our revenue associated with our Portal web site activities.  Our gross profit related to the Andela business has not matured and this business, as yet, is not contributing to our gross profit.



Operating Expenses

For the Three Months Ended

March 31,



2004

2003



General and Administrative



Expenses

$

174,400

$

136,900



General and Administrative Expenses increased to $174,400 in 2004 from $136,900 in the first quarter of 2003, an increase of $37,500. Compared to the same quarter of 2003, sales commissions increased $7,700, a direct result of our increased sales revenues, while additional costs associated with running our business at the new revenue levels and increased web site traffic levels were incurred in office and administration expenses of  $39,000 and travel of  $16,600. However reductions in professional fees of $4,500, miscellaneous expenses of $5,400 as we purchased RecycleXchange in February , 2003 as noted below.



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 US funds was paid by cash and was allocated to the website of RecycleXchange.com which was accounted for as marketing and advertising costs in accordance with the Statement of Position No 98-2. Accordingly, the advertising costs were expensed at the date of acquisition.



Net Income (Loss)



For the Three Months Ended

March 31,



2003

2003







Net Income (loss)

$

16,100

$

(23,200)



The Net quarterly profit of $16,100 reported in the first quarter of 2004 was a significant improvement over  the $23,200 loss recorded in the similar period of 2003. Portal Sales revenues improved in the current quarter by 86% as noted above compared to the same period last year.  This gave management additional cash to fund attendance at more Trade Fairs and Conventions in order to increase our exposure in the marketplace. Managements continuing challenge is to grow and improve the business model within the cash parameters of our daily business activities.



In October 2003, the Company entered into two separate investor relations agreements to perform various public relations services.  As compensation for these services, the Company issued 3,750,000 shares of common stock.  The shares were valued at $112,500 or $0.03 per share, which was the market value of the common stock on the date the agreements were entered into.  The $112,500 was immediately expensed as consulting expense.





9





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As part of one of the agreements, the Company placed an additional 250,000 shares of common stock into escrow.  On March 31, 2004, 125,000 shares were released and the remaining 125,000 shares are to be released on August 31, 2004.  For accounting purposes, the 125,000 shares held in escrow are considered unvested stock,  the fair value of which is measured at the market price of unrestricted stock on the grant date.  These shares have been valued at $3,750 or $0.03 per share.  In accordance with EITF D-90:  Grantor Balance Sheet Presentation of Unvested, Forfeitable Equity Instruments Granted to a Non-employee, these shares will be treated as un-issued shares until such time as they are released from escrow.  The value of the shares will be amortized as consulting expense over the period from the date of grant to the date released from escrow.  The amortization of consulting expense will be recorded as an accrued liability.  At such time as the shares are released from escrow, the accrued liability will be reclassed to equity.  At March 31, 2004, the Company recognized $3,078 of consulting expense in connection with the shares held in escrow.



Liquidity and Capital Resources



The Companys cash position recorded at March 31, 2004 of $263,300 has increased by $50,000 from the December 31, 2003 cash position of $213,300 and represents the companys largest cash position since inception. At these revenue levels, with prudent controls on our expenses, strength in our business activities, and no debt to retire, RecycleNet is operating  with  positive cash flow.



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 March 31, 2004, deferred revenue of $74,700 was slightly higher than the December 31, 2003 balance of $71,100.  With sales revenues in the current quarter just slightly lower than the last quarter of 2003 , this account remained basically unchanged.





ITEM 3. CONTROLS AND PROCEDURES



As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d015(e) under the Securities Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, the principal executive officer and principal financial officer concluded that the Companys 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.



There was no change in the Companys internal control over financial reporting during the Companys most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.





PART II  OTHER INFORMATION





ITEM 1.

LEGAL PROCEEDINGS



To the knowledge of the Company there are no pending or threatened litigation or proceedings against the Company.





10





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ITEM 2.

CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES



In October 2003, the Company entered into two separate investor relations agreements to perform various public relations services.  As compensation for these services, the Company issued 3,750,000 shares of common stock.  The shares were valued at $112,500 or $0.03 per share, which was the market value of the common stock on the date the agreements were entered into.  The $112,500 was immediately expensed as consulting expense.



As part of one of the agreements, the Company placed an additional 250,000 shares of common stock into escrow.  On March 31, 2004, 125,000 shares were released and the remaining 125,000 shares are to be released on August 31, 2004.  For accounting purposes, the 125,000 shares held in escrow are considered unvested stock.  The fair value of which is measured at the market price of unrestricted stock on the grant date.  These shares have been valued at $7,500 or $0.03 per share.  In accordance with EITF D-90:  Grantor Balance Sheet Presentation of Unvested, Forfeitable Equity Instruments Granted to a Nonemployee, these shares will be treated as un-issued shares until such time as they are released from escrow.  The value of the shares will be amortized as consulting expense over the period from the date of grant to the date released from escrow.  The amortization of consulting expense will be recorded as an accrued liability.  At such time as the shares are released from escrow, the accrued liability will be reclassed to equity.  On March 31, 2004 the Company reclassed $3,750 from the accrued liability to equity.





ITEM 3.

DEFAULTS UPON SENIOR SECURITIES



None





ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



None





ITEM 5.

OTHER INFORMATION



None





ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K



(a) Exhibits.  All exhibits required by Item 601 of Regulation S-B and required hereunder, as filed with the Securities and Exchange Commission in Form 10-QSB on March 31, 2004, are incorporated herein by reference.



Exhibit            Description

-------  -----------

31.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer pursuant to U.S.C Section 1350 as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002



32.2

Certification of Chief Executive Officer pursuant to U.S.C Section 1350 as adopted pursuant to



Section 906 of the Sarbanes-Oxley Act of 2002



(b) Reports on Form 8-K.



None







11





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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





April 30, 2004

/s/  Paul Roszel



Paul Roszel, President and Chairman of the Board of

Directors





April 30, 2004

/s/  Richard Ivanovick



Richard Ivanovick, C.A., Chief Financial and

Accounting Officer





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12