SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 FORM
10-Q
 
 
 [X]
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 FOR THE QUARTERLY PERIOD
ENDED:  June 30, 2009
 
 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)
 
 (Copies
to:)
 Steve
Taylor, 175 East 400 South, Suite 900 Salt Lake City, Utah,
84111              801
578-3283
 
 Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
 Yes  (
x )    No (  )
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company:
 Large
      Accelerated
    Filer   (    )
                Accelerated
      Filer (   )Non-Accelerated
      Filer     (    )
                Smaller
      Reporting Company ( x )
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act):    Yes
(  )   No  ( x )
 
 Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest applicable date:
 
 The
number of common shares outstanding at August 14,
2009:   79,091,412
 The
number of class N shares outstanding at   August 14,
2009:   56,800,000
  
 
 RECYCLENET
CORPORATION AND SUBSIDIARIES
 FORM
10-Q
 QUARTER
ENDED June 30, 2009
 
 TABLE
OF CONTENTS
 
 PagePART
      I – FINANCIAL INFORMATIONItem
      1.
                    Financial
      StatementsCondensed
      Consolidated Balance Sheets June 30, 2009 and December 31, 2008
      (Unaudited)
                    3Condensed
      Consolidated Statements of Operations for the Three and Six Months Ended
      June 30, 2009 and 2008 (Unaudited)
                    4Condensed
      Consolidated Statements of Cash Flows for the Six Months Ended June 30,
      2009 and 2008 (Unaudited)
                    5Notes
      to Condensed Consolidated Financial Statements (Unaudited)
                    6Item
      2.
                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    9Item
      3.
                    Quantitative
      and Qualitative Disclosures About Market Risk
                    11Item
      4T.
                    Controls
      and Procedures
                    11PART
      II – OTHER INFORMATIONItem
      1.
                    Legal
      Proceedings
                    12Item
      1A.
                    Risk
      Factors
                    12Item
      2.
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    12Item
      3.
                    Defaults
      Upon Senior Securities
                    12Item
      4.
                    Submission
      of Matters to a Vote of Security Holders
                    12Item
      5.
                    Other
      Information
                    12Item
      6.
                    Exhibits
                    12Signatures
                    13
 
 
  
 
 PART
I – FINANCIAL INFORMATION
 
 ITEM
1.   FINANCIAL STATEMENTS
 
 RECYCLENET CORPORATION AND
      SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
      SHEETS(Unaudited)June 30,
                                                                      
                                                                      
                                                                      December
31,2009
                                                                      
                                                                      
                                                                      2008ASSETSCurrent
    AssetsCash
                                                                      
                                                                      $
                                                                      38,291
                                                                      
                                                                      
                                                                      $
                                                                      41,348Trade accounts receivable, net of
      allowance for bad debt of $2,500 and $2,500,
      respectively
                                                                      
                                                                      
                                                                      13,711
                                                                      
                                                                      
                                                                      
                                                                      13,213Prepaid
      expenses
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      6,061Total Current
      Assets
                                                                      
                                                                      
                                                                      52,002
                                                                      
                                                                      
                                                                      
                                                                      60,622Property and
      EquipmentEquipment
                                                                      
                                                                      
                                                                      21,422
                                                                      
                                                                      
                                                                      
                                                                      21,422Less: Accumulated
      depreciation
                                                                      
                                                                      
                                                                      (14,995
                                                                      )
                                                                      
                                                                      
                                                                      (12,853
                                                                      )Net Property and
      Equipment
                                                                      
                                                                      
                                                                      6,427
                                                                      
                                                                      
                                                                      
                                                                      8,569Related party
      receivable
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      160,892Total
Assets
                                                                      
                                                                      $
                                                                      58,429
                                                                      
                                                                      
                                                                      $
                                                                      230,083LIABILITIES AND STOCKHOLDERS'
      EQUITY (DEFICIT)Current
      LiabilitiesRelated party accounts
      payable
                                                                      
                                                                      $
                                                                      17,320
                                                                      
                                                                      
                                                                      $
                                                                      8,702Accrued
      liabilities
                                                                      
                                                                      
                                                                      12,644
                                                                      
                                                                      
                                                                      
                                                                      29,494Deferred
      revenue
                                                                      
                                                                      
                                                                      69,502
                                                                      
                                                                      
                                                                      
                                                                      57,074Total Current
      Liabilities
                                                                      
                                                                      
                                                                      99,466
                                                                      
                                                                      
                                                                      
                                                                      95,270Stockholders' Equity
      (Deficit)Class N convertible shares $0.01
      par value;70,896,789 shares
      authorized; 56,800,000 and 56,800,000 Class N
sharesissued and
      outstanding, respecitvely
                                                                      
                                                                      
                                                                      568,000
                                                                      
                                                                      
                                                                      
                                                                      568,000Common shares - $0.01 par value;
      179,103,211 shares authorized;79,091,412 and
      79,091,412 shares issued and oustanding,
    respectively
                                                                      
                                                                      
                                                                      790,914
                                                                      
                                                                      
                                                                      
                                                                      790,914Additional paid-in
      capital
                                                                      
                                                                      
                                                                      4,462
                                                                      
                                                                      
                                                                      
                                                                      4,462Accumulated
      deficit
                                                                      
                                                                      
                                                                      (1,404,413
                                                                      )
                                                                      
                                                                      
                                                                      (1,228,563
                                                                      )Total Stockholders' Equity
      (Deficit)
                                                                      
                                                                      
                                                                      (41,037
                                                                      )
                                                                      
                                                                      
                                                                      134,813Total Liabilities and
      Stockholders' Equity (Deficit)
                                                                      
                                                                      $
                                                                      58,429
                                                                      
                                                                      
                                                                      $
                                                                      230,083
 
 
 See the
accompanying notes to the condensed consolidated financial
statements.
 
 3
  RECYCLENET CORPORATION AND
      SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS
      OF OPERATIONS(Unaudited)For the Three
      Months
                                                                    
                                                                    
                                                                    For the Six
      MonthsEnded June
    30,
                                                                    
                                                                    
                                                                    Ended June
    30,2009
                                                                    
                                                                    
                                                                    2008
                                                                    
                                                                    
                                                                    2009
                                                                    
                                                                    
                                                                    2008Sales
                                                                    
                                                                    $
                                                                    106,982
                                                                    
                                                                    
                                                                    $
                                                                    147,601
                                                                    
                                                                    
                                                                    $
                                                                    219,803
                                                                    
                                                                    
                                                                    $
                                                                    336,206Operating
      ExpensesSelling, general and
      administrative expenses
                                                                    
                                                                    
                                                                    107,808
                                                                    
                                                                    
                                                                    
                                                                    127,969
                                                                    
                                                                    
                                                                    
                                                                    228,781
                                                                    
                                                                    
                                                                    
                                                                    293,315Write-off of related party
      receivable
                                                                    
                                                                    
                                                                    166,872
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    166,872
                                                                    
                                                                    
                                                                    
                                                                    -Total Operating
      Expenses
                                                                    
                                                                    
                                                                    274,680
                                                                    
                                                                    
                                                                    
                                                                    127,969
                                                                    
                                                                    
                                                                    
                                                                    395,653
                                                                    
                                                                    
                                                                    
                                                                    293,315Net Income
      (Loss)
                                                                    
                                                                    $
                                                                    (167,698
                                                                    )
                                                                    
                                                                    $
                                                                    19,632
                                                                    
                                                                    
                                                                    $
                                                                    (175,850
                                                                    )
                                                                    
                                                                    $
                                                                    42,891Basic Income (Loss) Per Common
      Share
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -Diluted Income (Loss) Per Common
      Share
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -Basic Weighted-Average Common
      Shares Outstanding
                                                                    
                                                                    
                                                                    79,091,412
                                                                    
                                                                    
                                                                    
                                                                    79,091,412
                                                                    
                                                                    
                                                                    
                                                                    79,091,412
                                                                    
                                                                    
                                                                    
                                                                    79,091,412Diluted Weighted-Average Common
      Shares Outstanding
                                                                    
                                                                    
                                                                    79,091,412
                                                                    
                                                                    
                                                                    
                                                                    135,891,412
                                                                    
                                                                    
                                                                    
                                                                    79,091,412
                                                                    
                                                                    
                                                                    
                                                                    135,891,412
 
 See the
accompanying notes to the condensed consolidated financial
statements.
  4
  RECYCLENET CORPORATION AND
      SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS
      OF CASH FLOWS(Unaudited)For the Six Months Ended June
      30,
                                          
                                          2009
                                          
                                          
                                          2008Cash Flows From Operating
      Activities:Net income
      (loss)
                                          
                                          $
                                          (175,850
                                          )
                                          
                                          $
                                          42,891Adjustments to reconcile net
      income (loss) to net cash provided by operating
      activities:Depreciation
                                          
                                          
                                          2,142
                                          
                                          
                                          
                                          2,143Write-off of related party
      receivable
                                          
                                          
                                          166,872
                                          
                                          
                                          
                                          -Changes in assets and
      liabilities:Accounts and other
      receivables
                                          
                                          
                                          (498
                                          )
                                          
                                          
                                          (3,527
                                          )Prepaid
      expenses
                                          
                                          
                                          6,061
                                          
                                          
                                          
                                          2,286Accrued liabilities and accounts
      payable
                                          
                                          
                                          (8,232
                                          )
                                          
                                          
                                          (15,297
                                          )Deferred
      revenue
                                          
                                          
                                          12,428
                                          
                                          
                                          
                                          (1,997
                                          )Net Cash Provided By Operating
      Activities
                                          
                                          
                                          2,923
                                          
                                          
                                          
                                          26,499Cash Flows From Investing
      Activities:Advances to related
      party
                                          
                                          
                                          (5,980
                                          )
                                          
                                          
                                          (4,550
                                          )Net Cash Used In Investing
      Activities
                                          
                                          
                                          (5,980
                                          )
                                          
                                          
                                          (4,550
                                          )Net Cash Used in Financing
      Activities
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Net Change in
      Cash
                                          
                                          
                                          (3,057
                                          )
                                          
                                          
                                          21,949Cash at Beginning of
      Period
                                          
                                          
                                          41,348
                                          
                                          
                                          
                                          52,364Cash at End of
      Period
                                          
                                          $
                                          38,291
                                          
                                          
                                          $
                                          74,313
   See the
accompanying notes to the condensed consolidated financial
statements.
  5
  RECYCLENET
CORPORATION AND SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 NOTE
1–ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of Presentation — The
accompanying condensed consolidated 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-K as of December 31, 2008. 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, 2009.
 
 Recent Accounting Pronouncements —In September 2006, the Financial Accounting Standards Board (FASB) issued
SFAS No. 157, Fair
Value Measurements, which defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS No. 157 is effective for
fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. In February 2008, the FASB issued FASB Staff Position (FSP
FIN) No. 157-2 which extended the effective date for certain nonfinancial assets
and nonfinancial liabilities to fiscal years beginning after November 15,
2008.  The adoption of SFAS No. 157-2 did not have a material impact
on the Company’s financial statements.
 
 In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations, and
SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements. SFAS No. 141(R) requires an
acquirer to measure the identifiable assets acquired, the liabilities assumed
and any non-controlling interest in the acquire at their fair values on the
acquisition date, with goodwill being the excess value over the net identifiable
assets acquired. SFAS No. 160 clarifies that a non-controlling interest in
a subsidiary should be reported as equity in the consolidated financial
statements, consolidated net income shall be adjusted to include the net income
attributed to the non-controlling interest and consolidated comprehensive income
shall be adjusted to include the comprehensive income attributed to the
non-controlling interest. The calculation of earnings per share will continue to
be based on income amounts attributable to the parent. SFAS
No. 141(R) and SFAS No. 160 were effective for financial
statements issued for fiscal years beginning after December 15, 2008. Early
adoption is prohibited. The adoption of SAFS No. 141(R) and SFAS No. 160 did not
have a material affect on the Company’s financial statements.
 
 In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities.  SFAS No. 161 amends SFAS
No. 133, Accounting for
Derivative Instruments and Hedging Activities to require enhanced
disclosures concerning the manner in which an entity uses derivatives (and the
reasons it uses them), the manner in which derivatives and related hedged items
are accounted for under SFAS No. 133 and interpretations thereof, and the
effects that derivatives and related hedged items have on an entity's financial
position, financial performance, and cash flows.  SFAS No. 161 was
effective for financial statements of fiscal years and interim periods beginning
after November 15, 2008. The adoption of SFAS No. 161 did not have a material
affect on the Company’s financial statements.
 
 InApril 2009, the FASB
issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments(FSP FAS 107-1 and APB 28-1). FSP FAS 107-1 and
APB 28-1 amends FASB Statement No. 107, Disclosures about Fair Value of
Financial Instruments, to require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements. This FSP also amendsAPB Opinion No. 28, Interim Financial Reporting,
to require those disclosures in summarized financial information at interim
reporting periods. FSP FAS 107-1 and APB 28-1 are effective for interim reporting
periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009.The adoption of FSP FAS No. 107-1 and APB
28-1 did not have a material affect on the Company’s financial
statements.
  6
 
 In May
2009, the FASB issued SFAS No. 165,Subsequent Eventswhich
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued.  SFAS No. 165 is effective for interim
financial periods ending after June 15, 2009.  The adoption of SFAS
No. 165 did not have a material impact on the Company’s consolidated financial
statements.
 
 In May 2009, the FASB issued SFAS 168,The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles (as amended)(FAS 168). FAS 168replaces SFAS 162,Hierarchy of
Generally Accepted Accounting Principles,and establishes theFASB Accounting
Standards Codification(Codification) as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with Generally Accepted Accounting Principals (GAAP). FAS 168 is
effective for financial statements issued for interim and annual periods ending
after September 15, 2009.The Company has not yet determined the effect
on its consolidated financial statements, if any, that will occur upon adoption
of FAS 168.
 
 In June
2009, the FASB issued SFAS No. 166, Accounting for Transfers of
Financial Assets.  SFAS No. 166 revises SFAS No. 140,
Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities.  SFAS No. 166 requires more disclosure about sales
of securitized financial assets and similar transactions, particularly if the
seller retains some risk to the assets. The statement eliminates the concept of
a qualifying special-purpose entity, changes the requirements for the
derecognition of financial assets, and calls upon sellers of the assets to make
additional disclosures about them.  SFAS No. 166 is effective for
fiscal years beginning after November 15, 2009. Earlier application is
prohibited.  This statement must be applied to transfers occurring on
or after the effective date.  The Company has not yet determined the
effect on its consolidated financial statements, if any, upon adoption of SFAS
No. 166.
 
 NOTE
2–RELATED PARTY TRANSACTIONS
 
 Related Party Receivable — As of June 30, 2009, the
Company had advanced $166,872 to Scrap China Corporation, a related party
through common ownership of the majority shareholder.  This resulted
from expenses incurred for travel, management and legal and accounting expenses
paid on behalf of Scrap China Corporation.  These advances are due on
demand and bear no interest. During the quarter ended June 30, 2009, the Company
wrote off the balance of the related party receivable of $166,872, resulting in
a zero balance of the receivable as of June 30, 2009.  Scrap China’s
operations have not materialized as planned and therefore, the management
determined that it is likely that the note receivable is uncollectible as of
June 30, 2009.
 
 Service Agreements — The Company has an agreement
with Inter-Continental Recycling, Inc. and its wholly owned subsidiary Cooksmill
NetSystems, Inc. to provide various services for the Company. Inter-Continental
Recycling, Inc., and as such Cooksmill NetSystems, Inc., is 100% owned by the
immediate family of the President of the Company.  The Company is
billed monthly for services supplied for management and sales activities, which
vary monthly based on the activity level. The charges for these services for the
six months ended June 30, 2009 and 2008 were $119,460 and $116,901,
respectively.
 
 Cooksmill
NetSystems Inc. provides Rhodium Webweaver Services (ISP) to the Company for
website management and the fees for this service are billed to the Company on a
monthly basis. The Rhodium Webweaver Services (ISP) charges for each of the six
months ended June 30, 2009 and 2008 were $12,000 and $12,000
respectively.
 
 All
management and staff are retained on an unwritten contract basis under a related
party transaction with Inter-Continental Recycling, Inc. Because of the
affiliation between Inter-Continental and the Company, the agreement between
them has no definite duration and will continue as necessary for the conduct of
business by the Company. Inter-Continental assigns and provides employees to the
Company as long as the Company requires them and can pay the associated costs.
There is no mark-up or other charge incurred by the Company from
Inter-Continental and the Company pays the same amount for services provided by
the Inter-Continental employees as does Inter-Continental. The management/staff
charges for the six months ended June 30, 2009 and 2008 were $107,416 and
$98,981, respectively.
 
 Inter-Continental
Recycling, Inc. and the Company are also engaged in a merchant services
agreement. On behalf of Inter-Continental Recycling, Inc. the Company operates,
maintains, bills and collects payments for services offered on web sites owned
by Inter-Continental Recycling, Inc.  The Company then issues payment
to Inter-Continental Recycling, Inc. for an agreed upon rate.  The
commissions paid recorded by the Company for this merchant service agreement
with Inter-Continental Recycling, Inc. for the six months ending June 30, 2009
and 2008 were $44 and $5,920, respectively.
  7
 
 The
Company engaged in an affiliate marketing agreement with Cooksmill NetSystems,
Inc. on January 1, 2008.  Through this affiliate marketing agreement,
Cooksmill NetSystems, Inc. pays the Company (the “Affiliate”) a commission on
net Pay-Per-Lead service sales generated by customers referred by the Company’s
web sites.
 
 The
Company has office space in a facility owned by the President of the Company.
For the six months ended June 30, 2009 and 2008, rent expense was $1,200 and
$1,200, respectively.
 
 NOTE
3–STOCKHOLDERS’ EQUITY
 
 The
Company is authorized to issue 250,000,000 common shares with a par value of
$0.01 per share. The Board of Directors is authorized to designate one or more
series within the class of common shares and to designate relative preferences,
limitations and rights. The Board has designated 70,896,789 common shares as
Class N shares. At June 30, 2009, 56,800,000 Class N shares were
outstanding.  The Class N shares have voting rights of one vote per
share and have no right, preference or ability to share in the net assets of the
corporation upon dissolution.  The Class N shares are directly
convertible to common shares on a one for one basis, solely at the option of the
holders.
 
 NOTE
4–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 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.  At June 30,
2009, the Company had 56,800,000 Class N shares outstanding that were excluded
from the calculation of diluted loss per share.  The shares used in
the computation of basic and diluted income (loss) per common share for the
three and six months ended June 30, 2009 and 2008 are reconciled as
follows:
  For the Three Months
      Ended
                                                
                                                
                                                For the Six Months
      EndedJune 30,
                                                
                                                
                                                June 30,2009
                                                
                                                
                                                2008
                                                
                                                
                                                2009
                                                
                                                
                                                2008Weighted-average number of common
      shares used in basicincome
      (loss) per common share calculation
                                                
                                                
                                                79,091,412
                                                
                                                
                                                
                                                79,091,412
                                                
                                                
                                                
                                                79,091,412
                                                
                                                
                                                
                                                79,091,412Incremental potentially issuable
      common shares from assumedconversion
      of Class N common shares
                                                
                                                
                                                -
                                                
                                                
                                                
                                                56,800,000
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                56,800,000Weighted-average number of
      common shares and dilutivepotential
      common shares used in diluted income (loss) percommon
      share calculation
                                                
                                                
                                                79,091,412
                                                
                                                
                                                
                                                135,891,412
                                                
                                                
                                                
                                                79,091,412
                                                
                                                
                                                
                                                135,891,412
  
 ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 Cautionary Statement
Regarding Forward-Looking Statements
 
 Certain
statements contained in this Section and elsewhere in this Form 10-Q 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.
  8
 
 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.
  Liquidity
and Capital Resources
  June
      30,
                        
                        
                        December
      31,2009
                        
                        
                        2008Cash
      on Hand
                        
                        $
                        38,300
                        
                        
                        $
                        41,300
 
 The world
economy has experienced a slowdown of activity during 2008 and 2009 and
RecycleNet has also experienced this same reduced activity. However, in spite of
this erosion of business, the management of RecycleNet has successfully
maintained the Company’s current cash position of $38,300, a small decrease of
$3,000 from the year ended December 31, 2008 balance of $41,300. Management will
continue to closely monitor both sales revenues and related expenses in the
coming quarter to maintain our liquidity.
 
 Results of
Operations
 
 Sales
Revenues
 
 Three
      Months Ended
                        
                        
                        Six
      Months EndedJune
      30,
                        
                        
                        June
      30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Sales
      Revenues
                        
                        $
                        107,000
                        
                        
                        $
                        147,600
                        
                        
                        $
                        219,800
                        
                        
                        $
                        336,200
 
 Sales
recorded in the second quarter of 2009 of $107,000 were $40,600 less than the
similar period of 2008 while sales correspondingly decreased by $116,400 during
the first six months of 2009 compared to the 2008 revenue of $336,200, a 34.6%
decrease.  This reduction resulted directly from the Company’s
movement to “pay per lead” revenue credits compared to the monthly membership
and advertising type of revenue stream as well as the world economies
experiencing a strong downturn in business activity and revenue
streams.
 
 The type
of revenue now being realized from sales activities in the Internet business is
changing quickly from monthly billing for memberships and advertising to “usage
credits” based on delivered performance on web site
visits.  Management has been forced to adjust to this dynamic change
in the type of revenue the Company is receiving for its services and is
attempting to keep abreast of any further changes in revenue.
 
 Operating
Expenses
 
 Three
      Months Ended
                        
                        
                        Six
      Months EndedJune
      30,
                        
                        
                        June
      30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Operating
      Expenses
                        
                        $
                        274,700
                        
                        
                        $
                        128,000
                        
                        
                        $
                        395,700
                        
                        
                        $
                        293,300
 
 
 Expenses
in the second quarter were increased by $146,700  compared to the
similar quarter in 2008 while for the six months ended June 30, 2009, expenses
were increased by $102,400 compared to the 2008 period.
 
 During
the quarter ended June 30, 2009, the Company wrote off the balance of the
related party receivable of $166,900, resulting in a zero balance of the
receivable as of June 30, 2009.
  9
 
 Reduction
in six months sales commissions of $6,200, office and administration of $23,500,
bank interest of $1,800, professional fees of $8,600, and
advertising/promotion/travel of $31,500 accounted for the largest savings.
Management reduced these expenses as quickly as possible relative to the sales
revenue decline. Unfortunately, management’s actions to reduce expenses are
delayed until after the Company experiences revenue reductions.
 
 Net
Income (Loss) from Continuing Operations
 
 Three
      Months Ended
                        
                        
                        Six
      Months EndedJune
      30,
                        
                        
                        June
      30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Net
      Income (Loss)
                        
                        $
                        (167,700
                        )
                        
                        $
                        19,600
                        
                        
                        $
                        (175,900
                        )
                        
                        $
                        42,900
 
 A net
loss was recorded in the second quarter of 2009 of $167,700 compared to the
profit of $19,600 in 2008.  For the six months ended June 30, 2009 the
Company recorded a net loss of $175,900 compared to the $42,900 net income
recorded in the same period of 2008.
 
 As
discussed above, although during the first six months, sales have deteriorated
by $116,400, management responded in a timely fashion to reduce expenses for the
same period by $64,500. During the quarter ended June 30, 2009, the Company
wrote off the balance of the related party receivable of $166,900, resulting in
a zero balance of the receivable as of June 30, 2009. Management will continue
to monitor the expense levels closely and relate them directly to sales revenues
realized.
 
 
 Deferred
Revenue
 June
      30,
                    
                    
                    December
      31,2009
                    
                    
                    2008Deferred
      Revenue
                    
                    $
                    69,500
                    
                    
                    $
                    57,100
 
 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 portion which is provided in services. As of June 30, 2009, deferred
revenue of $69,500 has increased compared to the December 31, 2008 balance of
$57,100. Though sales decreased during the first six months of 2009, the number
of sales, which have a deferred portion inherent in the sale contract increased
during this period.
  Off
Balance Sheet Arrangements
  None
 
 ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 As a
“smaller reporting company” (as defined by Item 10 of Regulation S-K), the
Company is not required to provide information required by this Item, as defined
by Regulation S-K Item 305(e).
 
 ITEM
4T. CONTROLS AND PROCEDURES
  Evaluation of Disclosure
Controls:We
evaluated the effectiveness of the design and operation of our “disclosure
controls and procedures” as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the
period covered by this report. This evaluation (the “disclosure controls
evaluation”) was done under the supervision and with the participation of
management, including our chief executive officer (“CEO”) and chief financial
officer (“CFO”). Rules adopted by the SEC require that in this section of our
Quarterly Report on Form 10-Q we present the conclusions of the CEO and the CFO
about the effectiveness of our disclosure controls and procedures as of the end
of the period covered by this report based on the disclosure controls
evaluation.
  10
  Objective of Controls: Our
disclosure controls and procedures are designed so that information required to
be disclosed in our reports filed or submitted under the Exchange Act, such as
this Quarterly Report on Form 10-Q, is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms. Our
disclosure controls and procedures are also intended to ensure that such
information is accumulated and communicated to our management, including the CEO
and CFO, as appropriate to allow timely decisions regarding required disclosure.
There are inherent limitations to the effectiveness of any system of disclosure
controls and procedures, including the possibility of human error and the
circumvention or overriding of the controls and procedures. Accordingly, even
effective disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives, and management necessarily is
required to use its judgment in evaluating the cost-benefit relationship of
possible disclosure controls and procedures.
 
 Conclusion: Based upon the
disclosure controls evaluation, our CEO and CFO have concluded that as of the
end of the period covered by this report, our disclosure controls and procedures
were effective to provide reasonable assurance that the foregoing objectives are
achieved.
  Changes in Internal Control over
Financial Reporting: There were no changes in our internal control over
financial reporting during the quarter ended June 30, 2009, that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
 
  11
  PART
II – OTHER INFORMATION
 
 ITEM
1.                                                                                                         LEGAL
PROCEEDINGS
 None
 
 ITEM
1A.  RISK FACTORS
 As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company
is not required to provide information required by this Item.
 
 ITEM
2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 None
 
 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
 None
 
 INDEX
TO EXHIBITS
 
 Exhibit
              Description2
              Stock
      Exchange Agreement as an exhibit to Form 10-SB are hereby incorporated by
      reference.  Filed on April 4, 2001.3.1
              Articles
      of Incorporation filed as an exhibit to Form 10-SB are hereby incorporated
      by reference. Filed on December 8, 1999.3.2
              By-laws
      filed as an exhibit to Form 10-SB, Amendment No. 5 are hereby incorporated
      by reference. Filed on March 7, 2000.10
              Material
      Contracts(a)  Agreement
      between RecycleNet Corporation and Paul Roszel as an exhibit to Form
      10-SB, Amendment No. 6 are hereby incorporated by reference. Filed on
      April 12, 2001.(b)  Agreement
      between RecycleNet Corporation and fiberglass.com, Inc. as an exhibit to
      Form 10-SB, Amendment No. 6 are hereby incorporated by reference. Filed on
      April 12, 2001.(c)   Agreement
      between RecycleNet Corporation and metalworld.com, inc. as an exhibit to
      Form 10-KSB hereby incorporated by reference. Filed on April 16,
      200131.1
              Chief
      Executive Officer Certification under Section 302 of the Sarbanes-Oxley
      Act of 2002.31.2
              Chief
      Financial Officer Certification under Section 302 of the Sarbanes-Oxley
      Act of 2002.32.1
              Chief
      Executive Officer Certification under Section 906 of the Sarbanes-Oxley
      Act of 2002.32.2
              Chief
      Financial Officer Certification under Section 906 of the Sarbanes-Oxley
      Act of 2002.
  12
  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
      CorporationAugust
      14, 2009
                /s/
      Paul RoszelPaul
      Roszel, President and Chairman of the Board ofDirectorsAugust
      14, 2009
                /s/
      Richard IvanovickRichard
      Ivanovick, C.A., Chief Financial andAccounting
      Officer
 
 
 13