UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


FORM
10-Q





ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE
SECURITIES EXCHANGE ACT OF 1934





For the
quarter ended December 31, 2008


Commission
File Number 000-51503





Scrap China
Corporation


(Exact
Name of registrant as specified in its charter)





Utah
              81 -
      0674073(State
      or other jurisdiction of Incorporation or organization)
              (I.R.S.
      Employer Identification No.)








175 East 400 South
      Suite 900, Salt Lake City, Utah
              84111
              801-531-0404(Address
      of principal executive offices)
              (Zip
      Code)
              (Registrant's
      telephone number)





www.scrapchina.com


(Web
Address)





(Copies
      to:)Steve
      Taylor, 175 East 400 South, Suite 900 Salt Lake City, Utah,
      84111
              801
      578-3283





Check
whether the issuer (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 [ x ]    No [ ]





State the
number of shares outstanding of the issuer’s classes of common equity, as of the
latest practicable date:  February 14, 2009 – 7,710,843




1





SCRAP
CHINA CORPORATION


FORM
10-Q


QUARTER
ENDED December 31, 2008





TABLE
OF CONTENTS





PagePART
      I – FINANCIAL INFORMATIONItem
      1.
                                      Financial
      StatementsCondensed
      Balance Sheets – December 31, 2008 and June 30, 2008
      (Unaudited)
                                      
                                      3Condensed
      Statements of Operations for the Three and Six Months Ended December 31,
      2008 and December 31, 2007 and for the period from June 15, 2005 (Date of
      Inception) Through December 31, 2008 (Unaudited)
                                      
                                      4Condensed
      Statements of Cash Flows for the Six Months Ended December 31, 2008and
      2007 and for the period from June 15, 2005 (Date of Inception) Through
      December 31, 2008 (Unaudited)
                                      
                                      5Notes
      to Condensed Financial Statements
                                      
                                      6Item
      2.
                                      Management’s
      Discussion and Analysis
                                      
                                      7Item
      3.
                                      Quantitative
      and Qualitative Disclosures about Market Risk
                                      
                                      8Item
      4T.
                                      Controls
      and Procedures
                                      
                                      9PART
      II – OTHER INFORMATIONItem
      1.
                                      Legal
      Proceedings
                                      
                                      9Item
      1A.
                                      Risk
      Factors
                                      
                                      9Item
      2.
                                      Unregistered
      Sales of Equity Securities and use of Proceeds
                                      
                                      9Item
      3.
                                      Default
      Upon Senior Securities
                                      
                                      9Item
      4.
                                      Submission
      of Matters to a Vote of Security Holders
                                      
                                      9Item
      5.
                                      Other
      Information
                                      
                                      10Item
      6.
                                      Exhibits
      and Reports on Form 8-K
                                      
                                      10Signatures
                                      
                                      10








2





SCRAP
CHINA CORPORATION


PART
I – FINANCIAL INFORMATION





ITEM
1.   FINANCIAL STATEMENTS




SCRAP
      CHINA CORPORATION(A
      Development Stage Company)CONDENSED
      BALANCE SHEETS(UNAUDITED)December
      31,
                                          
                                          
                                          June
      30,2008
                                          
                                          
                                          2008ASSETSCurrent
      AssetsCash
                                          
                                          $
                                          345
                                          
                                          
                                          $
                                          363Total
      Assets
                                          
                                          $
                                          345
                                          
                                          
                                          $
                                          363LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      LiabilitiesAccrued
      liabilities
                                          
                                          $
                                          6,230
                                          
                                          
                                          $
                                          8,250Payable
      to related party
                                          
                                          
                                          160,892
                                          
                                          
                                          
                                          150,735Total
      Current Liabilities
                                          
                                          
                                          167,122
                                          
                                          
                                          
                                          158,985Stockholders'
      DeficitCommon
      shares - par value $0.001 per share; 250,000,000 shares authorized;
      7,710,843 shares issued and outstanding
                                          
                                          
                                          7,711
                                          
                                          
                                          
                                          7,711Additional
      paid-in capital
                                          
                                          
                                          2,289
                                          
                                          
                                          
                                          2,289Deficit
      accumulated during development stage
                                          
                                          
                                          (176,777
                                          )
                                          
                                          
                                          (168,622
                                          )Total
      Stockholders' Deficit
                                          
                                          
                                          (166,777
                                          )
                                          
                                          
                                          (158,622
                                          )Total
      Liabilities and Stockholders' Deficit
                                          
                                          $
                                          345
                                          
                                          
                                          $
                                          363





See the
accompanying notes to the condensed financial statements





3


SCRAP
      CHINA CORPORATION(A
      Development Stage Company)CONDENSED
      STATEMENTS OF OPERATIONS(UNAUDITED)For
      the period fromFor
      the Three Months Ended
                                                              
                                                              
                                                              For
      the Six Months Ended
                                                              
                                                              
                                                              June
      15, 2005 (date ofDecember
      31,
                                                              
                                                              
                                                              December
      31,
                                                              
                                                              
                                                              inception)
      through2008
                                                              
                                                              
                                                              2007
                                                              
                                                              
                                                              2008
                                                              
                                                              
                                                              2007
                                                              
                                                              
                                                              December
      31, 2008Sales
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -Operating
      ExpensesSelling,
      general andadminstrative
      expenses
                                                              
                                                              
                                                              4,471
                                                              
                                                              
                                                              
                                                              4,679
                                                              
                                                              
                                                              
                                                              8,155
                                                              
                                                              
                                                              
                                                              13,440
                                                              
                                                              
                                                              
                                                              176,777Total
      Operating Expenses
                                                              
                                                              
                                                              4,471
                                                              
                                                              
                                                              
                                                              4,679
                                                              
                                                              
                                                              
                                                              8,155
                                                              
                                                              
                                                              
                                                              13,440
                                                              
                                                              
                                                              
                                                              176,777Net
      Loss
                                                              
                                                              $
                                                              (4,471
                                                              )
                                                              
                                                              $
                                                              (4,679
                                                              )
                                                              
                                                              $
                                                              (8,155
                                                              )
                                                              
                                                              $
                                                              (13,440
                                                              )
                                                              
                                                              $
                                                              (176,777
                                                              )Basic
      and Diluted Net Loss per Share
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -Weighted-Average
      CommonShares
      Outstanding
                                                              
                                                              
                                                              7,710,843
                                                              
                                                              
                                                              
                                                              7,710,843
                                                              
                                                              
                                                              
                                                              7,710,843
                                                              
                                                              
                                                              
                                                              7,710,843





See the
accompanying notes to the condensed financial statements





4




SCRAP
      CHINA CORPORATION(A
      Development Stage Company)CONDENSED
      STATEMENTS OF CASH FLOWS(UNAUDITED)For
      the period fromFor
      the Six Months Ended
                                  
                                  
                                  June
      15, 2005 (date ofDecember
      31,
                                  
                                  
                                  inception)
      through2008
                                  
                                  
                                  2007
                                  
                                  
                                  December
      31, 2008Cash
      Flows from Operating Activities:Net
      loss
                                  
                                  $
                                  (8,155
                                  )
                                  
                                  $
                                  (13,440
                                  )
                                  
                                  $
                                  (176,777
                                  )Changes
      in assets and liabilities:Accrued
      liabilities
                                  
                                  
                                  (2,020
                                  )
                                  
                                  
                                  (3,020
                                  )
                                  
                                  
                                  6,230Payable to related party
                                  
                                  
                                  10,157
                                  
                                  
                                  
                                  16,442
                                  
                                  
                                  
                                  160,892Net
      Cash Used in Operating Activities
                                  
                                  
                                  (18
                                  )
                                  
                                  
                                  (18
                                  )
                                  
                                  
                                  (9,655
                                  )Cash
      Flows from Investing Activities:
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Cash
      Flows from Financing Activities:Proceeds
      from sale of common stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  10,000Net
      Cash Provided by Financing Activities
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  10,000Net
      Change in Cash
                                  
                                  
                                  (18
                                  )
                                  
                                  
                                  (18
                                  )
                                  
                                  
                                  345Cash
      at Beginning of Period
                                  
                                  
                                  363
                                  
                                  
                                  
                                  399
                                  
                                  
                                  
                                  -Cash
      at End of Period
                                  
                                  $
                                  345
                                  
                                  
                                  $
                                  381
                                  
                                  
                                  $
                                  345


See the
accompanying notes to the condensed financial statements





5





SCRAP
CHINA CORPORATION


(A
Development Stage Company)


NOTES
TO CONDENSED FINANCIAL STATEMENTS


(UNAUDITED)





NOTE
1–ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES





Organization and Nature of
Operations— On June
15, 2005, Scrap China Corporation (“the Company”) was organized under the laws
of the State of Utah as a wholly owned subsidiary of RecycleNet
Corporation.  The Company is considered a development stage enterprise
and is in the process of raising capital to fund operations.  As such,
the Company has, since inception, spent most of its efforts in developing its
business plan and in raising capital to fund its operations. The Company has
relied upon cash flows from equity issuances and advances from RecycleNet
Corporation to sustain operations.  The Company is continuing to mature its
business plan and is proceeding to raise capital in order to execute the proof
of concept phase for the Company’s operations.





Basis of Presentation — The
accompanying condensed financial statements have been prepared by Scrap China
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 10K as of June 30, 2008 previously filed
with the SEC on September 29, 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 June 30,
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 the portions of SFAS No. 157 that were not
postponed by (FSP FIN) No. 157-2 did not have a material impact on the Company’s
financial statements. The Company does not expect the adoption of the postponed
portions of SFAS No. 157 to have a material impact on its 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 underSFAS 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 is effective for financial statements of fiscal
years and interim periods beginning after November 15, 2008.  The
Company has not yet determined the effects on its financial statements, if any,
that may result upon the adoption of SFAS 161.





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 are effective for financial
statements issued for fiscal years beginning after December 15, 2008. Early
adoption is prohibited. The Company has not yet determined the effect on its
financial statements, if any, upon adoption of SFAS No. 141(R) or SFAS
No. 160.





6





In
February 2008, the FASB issued FASB Staff Position (FSP) FAS No. 140-3, Accounting for Transfers of
Financial Assets and Repurchase Financing Transactions (FSP FAS 140-3).
FSP FAS 140-3 requires an initial transfer of a financial asset and a repurchase
financing that was entered into contemporaneously or in contemplation of the
initial transfer to be evaluated as a linked transaction under SFAS No. 140
unless certain criteria are met, including that the transferred asset must be
readily obtainable in the marketplace. FSP FAS 140-3 is effective for fiscal
years beginning after November 15, 2008, and will be applied to new transactions
entered into after the date of adoption. Early adoption is prohibited. The
Company has not yet determined the effect on its financial statements, if any,
that will occur upon adoption of FSP FAS 140-3.





In May
2008, the FASB issued SFAS 162, The Hierarchy of Generally Accepted
Accounting Principles.  SFAS No. 162 identifies the sources of
accounting principles and provides entities with a framework for selecting the
principles used in preparation of financial statements that are presented in
conformity with GAAP.  The current GAAP hierarchy has been criticized
because it is directed to the auditor rather than the entity, it is complex, and
it ranks FASB Statements of Financial Accounting Concepts, which are subject to
the same level of due process as FASB Statements of Financial Accounting
Standards, below industry practices that are widely recognized as generally
accepted but that are not subject to due process.  The Board believes
the GAAP hierarchy should be directed to entities because it is the entity (not
its auditors) that is responsible for selecting accounting principles for
financial statements that are presented in conformity with GAAP.  The
adoption of FASB 162 is not expected to have a material impact on the Company’s
financial statements.





Business Condition—
The Company has limited operating history and it has not yet been able to
develop and execute its business plan.  This situation raises
substantial doubt about its ability to continue as a going concern. The Company
plans to fund its operations by issuing equity securities or loans from related
parties. Success in these efforts is not assured.  The financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.





NOTE
2–PAYABLE TO RELATED PARTY





At
December 31, 2008 and June 30, 2008, the Company owed $160,892 and $150,735,
respectively, to RecycleNet Corporation.  During the year ended June
30, 2008, and the six months ended December 31, 2008, RecycleNet Corporation
paid certain expenses for travel, management and legal, and accounting expenses
on behalf of Scrap China Corporation. The Company anticipates that RecycleNet
Corporation, if required, would provide additional funds; however, there is no
assurance that future advances will be repaid.  These advances are due
on demand and bear no interest.





ITEM
2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN 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.





7





Plan
of Operation





Scrap
China Corporation is a development stage company.  The Company plans
to specialize in moving scrap materials into China.  These materials
include, but are not limited to, scrap metal, waste paper, scrap plastic, scrap
glass, etc.  The Company’s main focus will be on freight consolidation
resulting in better economics in the transactions.





The
Company is continuing to mature its business plan and is proceeding to raise
capital in order to execute the proof of concept phase for the companies
operations.





The
Company is unaware of any existing or probable government regulations in the
United States or China that would have any material negative impact on our
business.





The
Company has assessed which permits, registrations or licenses are required to
import goods into China and the costs associated with them.  There are
a number of permits, registrations and licenses that may be required by either
the Company, or by any buyer or seller that the Company deals with, in order to
be in compliance with any Chinese rules, regulations and environmental
laws.  The Company does not anticipate any difficulties in completing
this process or any difficulties in obtaining any necessary documentation that
may be required.





To date
the Company has determined that the following permits, registrations or licenses
may be required in China:





1.
            General
      Administration for Quality Supervision, Inspection and
      Quarantine  – AQSIQ


2.
            Compulsory
      Certificate – CCC




On June
15, 2005, upon inception of the Company, RecycleNet Corporation provided initial
capital of $10,000 by purchasing 10,000,000 common shares
(100%).  RecycleNet Corporation, if required, over the next twelve
months, will provide additional funds.  The Company does not
anticipate spending more than $100,000 over the next twelve months.





The
Company does not anticipate the purchase of any significant equipment or
buildings during the development stage.





The
Company does not expect any significant change in employees.





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).





8





ITEM
      4T.
            CONTROLS
      AND PROCEDURES





Evaluation of Disclosure
Controls:The Company evaluated
the effectiveness of the design and operation of its “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 the
chief executive officer (“CEO”) and chief financial officer (“CFO”). Rules
adopted by the SEC require that in this section of the Quarterly Report on Form
10-Q, the Company present the conclusions of the CEO and the CFO about the
effectiveness of its disclosure controls and procedures as of the end of the
period covered by this report based on the disclosure controls
evaluation.




Objective of Controls: The
Company’s disclosure controls and procedures are designed so that information
required to be disclosed in the 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. The Company’s disclosure controls and procedures are also intended to
ensure that such information is accumulated and communicated to its 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, the Company’s CEO and CFO have concluded that as
of the end of the period covered by this report, the 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 the Company’s internal
control over financial reporting during the quarter ended December 31, 2008 that
have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.








PART
II – OTHER INFORMATION





ITEM
      1.
            LEGAL
      PROCEEDINGS





Neither
the Company nor any of its officers, directors or greater than 10% beneficial
shareholders are involved in any litigation or legal proceedings involving the
business of the Company.





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





9





ITEM
      5.
            OTHER
      INFORMATION





None





ITEM
      6.
            EXHIBITS
      AND REPORTS OF FORM 8-K





Index
to Exhibits





Exhibit
3.1 – Articles of Incorporation (1)





Exhibit
20 – Resolution of Board of directors re: Acquisition of Shares (1)





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





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





Exhibit
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





Exhibit
32.2 – Certification of Chief Financial Officer pursuant to U.S.C Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002





(1)  Incorporated by
reference herein filed as exhibits to the Company's Registration Statement on
Form 10SB previously filed with the SEC on August 18, 2005, and subsequent
amendments made thereto.








Reports
on Form 8-K





None





SIGNATURES








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








Scrap
      China CorporationFebruary
      13, 2009Paul
      Roszel, President and Chairman of the Board of
DirectorsFebruary
      13, 2009Richard
      Ivanovick, C.A., Chief Financial and Accounting
  Officer









10