UNITED
STATES
 SECURITIES
AND EXCHANGE
COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-KSB
 
 
 ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)OF
 THE
SECURITIES EXCHANGE ACT OF 1934
 
 For the
fiscal year ended December 31, 2007
 
 
 Commission
File Number 1-15497
 
 RecycleNet
Corporation
 (Exact
name of small business issuer in its charter)
 
 Utah
              87-0301924(State
      or other jurisdiction of
                incorporation
      or organization)
              (IRS
      Employer
                Identification
      No.)175 East 400 South,
      Suite 900 Salt Lake City, Utah 84111
              801-531-0404(Address
      of principal executive offices, including Zip Code)
              (Registrant's
      telephone number,)
 
 
 Securities
registered pursuant to Section 12(g) of the Exchange Act:
 Common
Stock, $.010 par value
 
 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  [  ]
 
 Check if
there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B contained in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or any amendment to this Form
10-KSB.  (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]
 
 State
issuer's revenues for its most recent fiscal year: $857,671
 
 State the
aggregate market value of the voting stock held by non-affiliates computed by
reference to the price at which the stock was sold, or the average bid and asked
price of such stock, as of a specified date within the past 60
days.
 
 As at
January 31, 2008, the aggregate market value of the voting stock held by non-
affiliates of the registrant, based on the average bid and ask prices of $0.030
and $ 0.030 respectively, namely $0.030 x 79,091,412 common shares outstanding
was $2,372,742.
 
 As of
December 31, 2007 there were 56,800,000 class N voting non-equity shares
outstanding.
 
 As of
December 31, 2007 there were 79,091,412 of the issuer's Common Shares, $.010 par
value, outstanding.
 
  1
  RECYCLENET
CORPORATION
 INDEX
 
 Table of
Contents
 
 Part
      IItem
      1.
              Description
      of Business
              3Item
      2.
              Description
      of Property
              5Item
      3.
              Legal
      Proceedings
              6Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              6Part
      IIItem
      5.
              Market
      for Common Equity and Related Stockholder Matters and Small Business
      Issuer Purchases of Equity Securities
              7Item
      6.
              Management's
      Discussion and Analysis or Plan of Operation
              8Item
      7.
              Financial
      Statements
              F-1Item
      8.
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              14Item
      8A.
              Controls
      and Procedures
              14Item
      8B.
              Other
      Information
              14Part
      IIIItem
      9.
              Directors,
      Executive Officers, Promoters and Control Persons; Compliance with Section
      16(a) of the Exchange Act
              15Item
      10.
              Executive
      Compensation
              16Item
      11.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholders Matters
              17Item
      12.
              Certain
      Relationships and Related Transactions and Director
      Independence
              17Item
      13.
              Exhibits
              19Item
      14.
              Principal
      Accountant Fees and Services
              20
 
 
 
 
 
  2
  FORWARD
LOOKING STATEMENTS
 
 RecycleNet
Corporation (the "Company", "we" or "us") cautions readers that certain
important factors may affect our actual results and could cause such results to
differ materially from any forward-looking statements that may have been made in
this Form 10-KSB or that are otherwise made by or on behalf of us. For this
purpose, any statements contained in the Form 10-KSB that are not statements of
historical fact may be deemed to be forward-looking statements.
 
 Without
limiting the generality of the foregoing, words such as "may," "expect,"
"believe," "anticipate," "intend," "could," "estimate," "plan" or “continue" or
the negative other variations thereof or comparable terminology are intended to
identify forward-looking statements. Factors that may affect our results
include, but are not limited to, our limited history of non-profitability, our
dependence on a limited number of customers and key personnel, the need for
additional financing and our dependence on certain industries. We are also
subject to other risks detailed herein or detailed from time to time in our
filings with the Securities and Exchange Commission.
 
 
 
 PART
I
  ITEM
1. DESCRIPTION OF BUSINESS
 
 Introduction
 
 RecycleNet
Corporation ("the Company") is a Utah corporation originally incorporated on
December 29, 1961 as Bern Enterprises Inc. and the name was changed to
Garbalizer Machinery Corporation in April 1977. On February 25, 1999, RecycleNet
Corporation (Ontario) entered into a reorganization agreement with Garbalizer
Machinery Corporation of Utah, a company whose shares were publicly traded on
the bulletin board securities market utilizing the symbol “GARM.” On March 19,
1999, the reorganization was consummated with Garbalizer Machinery Corporation
surviving and changing its name to RecycleNet Corporation (Utah). Prior to the
March 19, 1999 reorganization, the assets less liabilities of Garbalizer
Machinery Corporation were sold to Garb-Oil & Power Corporation
(Utah).
 
 RecycleNet
Corporation (Utah) acquired all of the common shares of RecycleNet Corporation
(Ontario) for shares of the Utah Company. As a result of that reorganization,
shareholders of RecycleNet (Ontario) exchanged their common shares in that
company for Class N voting, non-equity shares of RecycleNet Corporation (Utah)
and Class X non-voting, equity shares of RecycleNet Corporation (Ontario). One
Class N share and one Class X share are exchangeable into one common share of
RecycleNet Corporation (Utah). The Company has retained the market symbol "GARM"
as its market symbol and as an acronym for the slogan, "Global Access to
Recycling Markets".
 
 Company
History
 
 In 1989,
Paul Roszel, an officer, director and principal shareholder of the Company began
publishing a newsletter entitled "The Recycler's Exchange". This newsletter was
published for a period of approximately seven years and was a regional recycling
industry newsletter that circulated to an estimated 3,200 recycling based
businesses in Ontario, Canada. Along with the newsletter, Mr. Roszel inserted
classified type advertisements for commodities that were available to buy, sell
or trade. In late 1994, Mr. Roszel began work on physically developing the
concept of an electronic format trading system to distribute the Recycler's
Exchange information world wide via the World Wide Web and e-mail. Thus, the
Recycler's Exchange evolved from a printed newsletter with limited distribution
to one available electronically with worldwide distribution.
 
  3
  The
electronic exchange was activated on-line on May 1, 1995. Since that time, the
Company has developed and implemented a broad range of solutions including
exchange management, sales management, customer interaction, and transaction
processing systems using a combination of proprietary custom designed
technologies and commercially available, licensed technologies.
 
 Mission
 
 RecycleNet
operates a Secondary Commodity Exchange making inefficient recyclable markets
more efficient.  RecycleNet’s mission is to become the leading
exchange for recyclable commodities in the world.
 
 We have
built the world’s largest and abundant trading system for scrap in which anyone,
anywhere, can buy, sell or trade secondary commodities, recyclables, used
equipment and related services. We pioneered online trading for the recycling
industry by developing a network-based marketplace in which buyers and sellers
are brought together in an intuitive, easy-to-use environment. We continue to
evolve to be the first stop for scrap trade and scrap market
trends.
 
 Growth
of Our Exchange
 
 Our
success has been largely dependent upon the success of our individual traders.
This success is reflected in the growth of confirmed, registered members as well
as the participation of free, unregistered traders in the
marketplace.
 
 The
Company has no one customer that the loss of would have a material adverse
impact to the Company, with the exception of Google.  The Google
pay-per-click advertising represents 22.43% of the revenue of the
Company.  The Company believes that the competitive design of the
Google pay-per-click advertising favors the advertisers and may result in a
diminishing percentage of return for web publishers such as us.
 
 Competition
 
 The
market for business-to-business trade is new and quickly evolving. Competition
for advertising, electronic commerce and business users is intense and will
increase substantially in the future. Technological barriers to entry by
competitors are relatively insignificant.  Management expects to face
intensified competition in the future from traditional trade publishers,
directory registry companies, as well as from Internet search engine companies,
trade associations, etc. The Company also competes with traditional forms of
business-to-business advertising and commerce, such as trade magazines, trade
shows, and trade associations for advertisers.
 
 Marketing
 
 The
Company's marketing strategy is described in "Management's Discussion &
Analysis and Financial Condition and Results of Operations".
 
  4
  EFFECT
OF GOVERNMENTAL REGULATIONS
 
 The
Company is a "Reporting Company" under the Securities Exchange Act of 1934 and
is required to file annual, quarterly and periodic reports with the Securities
and Exchange Commission, such as Forms 10-KSB, 10-QSB, and 8-K. The reports are
available at the Commission's Public Reference Room at 450 Fifth Street, NW,
Washington, DC 20549, telephone 1-800-SEC-0330 and may be retrieved
electronically via the Internet at www.sec.gov.
 
 REPORTS
TO SECURITY HOLDERS
 
 The
Company intends to prepare and deliver to its security holders an annual report
each year, which will include audited financial statements.
 
 EMPLOYEES
 
 All
management and staff are retained on an unwritten contract basis under a related
party transaction with Inter-Continental Recycling Inc. Inter-Continental
Recycling is owned 100% by the Company’s President. 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.
Inter-Continental provides services to and for the Company by employees of
Inter-Continental. There is no mark-up or other charges incurred by the Company
from Inter-Continental and the Company pays the same amount for services for the
Inter-Continental employee’s as does Inter- Continental.
 
 The
average monthly invoice from Inter-Continental to the Company approximates
$27,829 paying for services for 10 full-time and part-time employees of
Inter-Continental utilized by the Company. The Company is invoiced for the
salaries as well as employee benefits, such as deductions for Canada Pension
Plans and Employment Insurance, which is a deduction mandated by the Canadian
Government. Management of the Company believes this arrangement is beneficial to
the Company in that all payroll and employee withholding transactions are
consolidated into one company, Inter-Continental, thereby saving the Company a
duplicative expense.
 
 Inter-Continental
is responsible for acquiring and maintaining appropriate insurance covering
liabilities, including employee conduct.
 
 
 ITEM
2. DESCRIPTION OF PROPERTY
 
 FACILITIES
 
 The
Company does not currently own any operating facilities.  The
Company’s corporate offices are located at 175 East 400 South, Suite 900, Salt
Lake City, Utah.  The Company also maintains shared office space at 7
Darren Place, Guelph, Ontario, Canada and RecycleNet Corporation pays $200
(Canadian) per month to Paul Roszel. The Company believes that the current
facilities will be adequate for the foreseeable future. All research and
development activities are performed in these facilities. The Company believes
that the nature of its business coupled with computer networking technology will
allow and support future employees of the Company working from remote locations
outside of the Company's current (or future) facilities.
 
  5
  ITEM
3. LEGAL PROCEEDINGS
 
 During
March 2007, RecycleNet Corporation terminated an agreement with an independent
contractor.  The Company paid all commissions due, up to and including the
date of termination of the agreement, and these amounts were included in the
financial reports for the first quarter.  The Company also paid to the
independent contractor a one time amount which was the equivalent of one month
of commission (based on the average of the previous 3 months commission that he
had received).
 
 During
July 2007 the Company was served with a Statement of Claim from the Superior
Court of Justice in Ontario Canada, where the individual involved claims that
his employment was wrongfully terminated and is seeking damages.
 
 It is the
position of the Company that the claim has no merit as the individual was not an
employee of the Company but was an independent contractor.  Consequently,
we have not accrued any provision for liabilities in the financial statements
for this claim.
 
 The
Company intends to vigorously defend against the claim.  A Notice of Intent
to Defend was served on behalf of the Company on or about July 24, 2007, and a
copy of the Notice of Intent to Defend has been filed in the appropriate court
file.
 
 
 ITEM
4. SUBMISSION OF MATTERS TO SECURITY HOLDERS
 
 No
matters were submitted to a vote of the Company's security holders during the
fourth quarter of fiscal year ended December 31, 2007.
 
 
 
 
 
 
 
 
 
 
 
 
 
  6
  PART
II
 
 
 ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
 MARKET
INFORMATION
 
 The
Company's shares are traded on the over-the-counter bulletin board securities
market. The following table gives the range of high and low bid information for
the Company's common shares for each quarter within the last two fiscal years
through December 31, 2007. Because the Company's shares are traded in the
over-the-counter market, the quotations shown below reflect inter-dealer prices
without retail mark up, markdown or commission and they may not represent actual
transactions.
 
 Fiscal
      Quarter
              
              High Bid
              
              
              Low Bid1st
      Quarter, 2007
              
              $
              0.050
              
              
              $
              0.0502nd
      Quarter, 2007
              
              $
              0.050
              
              
              $
              0.0503rd
      Quarter, 2007
              
              $
              0.040
              
              
              $
              0.0404th
      Quarter, 2007
              
              $
              0.040
              
              
              $
              0.0401st
      Quarter, 2006
              
              $
              0.060
              
              
              $
              0.0302nd
      Quarter, 2006
              
              $
              0.140
              
              
              $
              0.0303rd
      Quarter, 2006
              
              $
              0.060
              
              
              $
              0.0304th
      Quarter, 2006
              
              $
              0.050
              
              
              $
              0.020
 
 
 As of
December 31, 2007, the number of holders of record of the Company's common
shares was 707.  Neither the Company (nor its subsidiaries) have
declared or paid any cash dividends for the last two fiscal years. It is not
anticipated that any cash dividends will be declared or paid in the near future.
There are no contractual or other restrictions that limit the ability of the
Company to pay dividends on its common shares and none are anticipated in the
future.
 
 RECENT
SALES OF UNREGISTERED SECURITIES
 
 In August
2007, 1,909,281 Class X and 1,909,281 Class N shares were converted by a related
party shareholder into 1,909,281 Common shares of RecycleNet Corporation. A
shareholder is entitled to convert one Class X share along with one Class N
share into one Common share of the Corporation at no cost to the shareholder.
After the conversion, the Company had 58,629,978 class N and X shares
outstanding.
 
 In
September 2007, 73,917 Class X and 73,917 Class N shares were converted by a
shareholder into 73,917 Common shares of RecycleNet Corporation. A shareholder
is entitled to convert one Class X share along with one Class N share into one
Common share of the Corporation at no cost to the shareholder. After the
conversion, the Company had 58,556,061 class N and X shares
outstanding.
 
 In
September 2007, 1,756,061 Class X/N shares were redeemed by shareholders for
$47,414 cash.  After the redemption, the Company had 56,800,000 class
N and X shares outstanding.
 
  7
  ITEM
6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 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.
 
 OVERVIEW
 
 RecycleNet
Corporation provides "Global Access to Recycling Markets" (GARM) by providing an
exchange system that facilitates the trade of secondary
commodities.
 
 The
spectrum of goods exchanged on the RecycleNet system includes all grades of
scrap metals, waste paper, recycled plastics, glass, rubber, wood, textiles,
minerals, chemicals and used items. The Company believes that the recyclables
market sector for scrap and used items exceeds $300 billion/year in North
America.
 
 RecycleNet
does not act as a dealer, broker nor processor but rather as an exchange system
that can be utilized by dealers, brokers, processors, generators and consumers
of scrap materials. Any purchasing agent at any factory that has scrap, waste or
by-product is a potential user of the RecycleNet exchange system.
 
 RecycleNet’s
activities today are primarily focused on the electronic exchange of secondary
commodities through an integrated network of Internet portals.
 
 The
RecycleNet system is a hybrid exchange modeled from various aspects utilized by
other formal exchange systems such as the London Metals Exchange, the NASDAQ
stock exchange and other commodity or livestock exchanges and includes some of
the strategies employed by the emerging ECN’s (Electronic Communication
Networks) such as Archipelago.  Unlike eBay that has developed a
marketplace to trade consumer goods using an auction model, RecycleNet is
primarily focused on commercial and industrial goods exchanged in a
buy/sell/trade and bid/ask order matching system.
 
 The
company is unaware of any current direct competition in the market space we
occupy and believes it is a pioneer in maturing a formal market exchange for
secondary commodities.  The Company believes that with the maturing of
Internet technologies and general business acceptance at doing transactions over
the Internet, we will see an incubation of potential competitors.
 
 RecycleNet
believes it has a larger membership base than existing recycling trade
associations from around the world.  Compared to the circulation of
traditional recycling trade publications, RecycleNet’s audience is
larger.
 
 In the
year 2000, the Company recognized the need for specific geographic web portals
within its business and established an online presence to correspond with each
continent.  The Company also believed that the growing potential for
business in Asia demanded separate attention and therefore, implemented a
strategy to establish a Secondary Commodity Clearinghouse service in
China.
 
 On June
15, 2005, Scrap China Corporation was organized under the laws of the State of
Utah as a new business segment and considered to be a development stage
enterprise.  On November 24, 2005, the Board of Directors approved a
pro-rata spin-off of all shares of Scrap China Corporation effective January 20,
2006.
 
  8
  The common shareholders of RecycleNet
received one share of Scrap China Corporation for every ten shares of RecycleNet
common stock.  The Board of Directors of RecycleNet decided to distribute
the Scrap China Corporation shares to the RecycleNet shareholders to benefit its
shareholders and to separate the different lines of business.
 
 Scrap
China Corporation now functions as its own fully reporting entity and is no
longer a wholly owned subsidiary of RecycleNet Corporation.
 
 At
January 20, 2006, Scrap China had common stock of $10,000 and accumulated losses
of $68,624.  This spin-off of Scrap China Corporation resulted in the
shareholders of the Company assuming the common stock and accumulated losses of
Scrap China Corporation and the Company recorded a contribution from
shareholders in the amount of $58,624.
 
 Oldwebsites.com,
Inc., formerly Fiberglass.com, was formed by the Company to undertake a
different line of business from the business regularly engaged in by
RecycleNet.  Oldwebsites.com, Inc. will offer services to grow organic and
natural search traffic to the web sites listed in the exchange.  The
Company believes that the true value of a web site is in the traffic it
generates.  Web sites that utilize the exchange will be monetized
using the services available to the Company.
 
 On June
6, 2007, the Board of Directors of the Company adopted a resolution declaring a
pro-rata spin-off of all shares of Oldwebsites.com, Inc. owned by the Company
effective September 7, 2007.
 
 As of
September 7, 2007 the spin-off of Oldwebsites.com, Inc. was
completed.  Oldwebsites.com, Inc. shares were issued to all common
shareholders of record of the Company as of the close of business on
September 7, 2007.  The shareholders of RecycleNet Corporation received one
share of Oldwebsites.com, Inc. for every ten shares of RecycleNet
Corporation.   The Board of Directors of the Company decided to
distribute the Oldwebsites.com, Inc. shares to the RecycleNet shareholders to
benefit its shareholders and to separate the different lines of
business.  This spin-off of Oldwebsites.com, Inc resulted in the
shareholders of the Company assuming the common stock and accumulated losses of
Oldwebsites.com, Inc and the Company recorded a contribution from shareholders
in the amount of $48,409.
 
 Oldwebsites.com,
Inc. now functions as its own fully reporting entity and is no longer a wholly
owned subsidiary of RecycleNet Corporation.
 
 On
December 31, 2007, the Company sold its RecycleNet Corporation (Ontario)
operations to Inter-Continental Recycling Inc.  Inter-Continental
Recycling Inc. assumed the outstanding debt of $138,019 owed by RecycleNet
Corporation (Utah) to RecycleNet Corporation (Ontario) in exchange for 100% of
the issued and outstanding common shares of RecycleNet Corporation (Ontario)
held by RecycleNet Corporation (Utah).
 
 RecycleNet
has concentrated on building the fundamentals of its business following a
strategy of future profitability before expansion is considered. Over the past
year the Company has continued on its strategy to build its core user base.
RecycleNet believes that the bulk of our future revenues will be derived from
the base it is building now.
 
  9
  While the
Company has cash in the bank and no debt, the relative size of its operations
does not support the speed at which the management believes the Company needs to
grow.  In order to execute on its business plan and ramp its
operations, the Company will seek access to capital to ensure that it can
maintain its predominance in this market space and fully exploit the business
opportunity.
 
 
 RESULTS
OF OPERATIONS
 
 In
January 2006, the Company did a pro-rata spin-off of Scrap China Corporation. In
September 2007, the Company did a pro-rata spin-off of Oldwebsites.com, Inc. In
December 2007, the Company sold its RecycleNet Corporation (Ontario) operations
to Inter-Continental Recycling Inc. The financial data following does not
include the results of the discontinued operations of Scrap China Corporation,
Oldwebsites.com, Inc. or RecycleNet Corporation (Ontario) for the years ended
December 31, 2007 and 2006.
 
 
 SALES
REVENUES
 
 2007
              
              
              2006Sales
      Revenues
              
              $
              857,700
              
              
              $
              1,051,500
 
 Sales
revenues have declined $193,800 in 2007 in comparison to 2006. This is primarily
related to the reduction of “pay per click” advertising revenue income that
diminished substantially in 2007 compared to 2006, and the monthly or annual
subscriptions being changed to a “pay per lead” type service.  The
type of advertising that customers are willing to pay for has changed from the
monthly or yearly “fixed amount” advertising fee or membership fee to the “pay
per lead” type service. As this change matures, we see our revenues
stablelizing.
 
 OPERATING
EXPENSES
 
 2007
              
              
              2006OPERATING
      EXPENSES
              
              $
              904,500
              
              
              $
              940,313
 
 Operating
Expenses decreased in 2007 over 2006 by $35,800. With the erosion of sales
revenues, management is reviewing and developing a process for eliminating any
unnecessary expenses. Sales commissions have decreased by $62,400, and traveling
and convention expenses were curtailed by $11,800.  The balance of the
decrease in expense is attributed to reduction of costs in ISP charges, office
and administrative expenses, bank service charges, and telephone
charges.
 
 Offsetting
these savings, increase expenses were recorded in professional fees relating to
the Sale of RecycleNet Corporation (Ontario) and the spin off of
Oldwebsites.com, Inc., advertising and promotion of $6,400 and labor expenses of
$28,400.
 
 Management
“right-sized” or re-aligned our expenditures with the corresponding revenues
that were generated throughout the year and will continue to manage our
resources in a prudent manner.
 
  10
  During
the year ended December 31, 2007, the Company purchased the web domain
“scrap.net” and all rights to the name for cash of $7,669.
 
 In
comparison, during the year ended December 31, 2006 the Company purchased the
web domain’s “BMEx.org” and “wastechange.org” and all rights to the names for
cash of $3,500 and $35,000, respectively.
 
 The
entire purchase prices for these websites were allocated to the website, which
was accounted for as marketing and advertising costs in accordance with
Statement of Position No. 98-01.  Accordingly, the advertising costs
were expensed at the date of acquisition.
 
 Management
continues to control these expenses to the best of our abilities under these
circumstances.  Management continues to expend most of its excess cash
on continued development of our website and continues to participate in Regional
Trade Shows and Conventions. We feel that this continuing exposure in the
marketplace is in the best interest of the Company to continue this
presence.
 
 NET
INCOME (LOSS) FROM CONTINUING OPERATIONS
 
 2007
              
              
              2006Net
      Income (Loss) from Continuing Operations
              
              $
              (46,800
              )
              
              $
              111,200
 
 As
discussed above, sales revenues decreased significantly during 2007 compared to
2006, while Management’s ability to reduce expenses were delayed somewhat in
trying to assess whether the sales reductions were going to continue declining
or whether they would stabilize at a new level.
 
 We
continue, on a more limited basis, to fund expenditures in our “BRANDING” of the
“RECYCLENET” name as we feel this is an important long term
objective.
 
 CASH
POSITION
 
 The
Company’s cash position at December 31, 2007 has decreased to $52,400, a
$262,900 decrease from the December 31, 2006 balance of $315,300. This is a
direct result of the net loss in operations this year, advances to related
parties of $36,000, and the redemption of Class N (and Class X) shares. The spin
off of Oldwebsites.com, Inc. and the sale of RecycleNet Corporation (Ontario)
reduced our cash position by $93,700, the amount of cash that was on their
Balance Sheet.  In response to the much lower cash balance, management
is monitoring the position daily and approval of all expenditures is under tight
control.
 
 ADVANCES
TO RELATED PARTY
 
 During
the year ended December 31, 2006, the Company advanced an affiliate of the
Company $5,000 with no terms of repayment.
 
 
 
  11
  DEFERRED
REVENUE
 
 Deferred
revenue results from customers who pay for services in advance, such as
quarterly, semi-annually, or annually. The Company records the initial payment
in deferred revenue and then recognizes sales revenue in each subsequent month
in proportion to which services are provided in services. As of December 31,
2007, deferred revenue amounted to $91,549 compared with the $135,143 at
December 31, 2006, a decrease reflective of decreased revenues.
 
 MARKETING
 
 The
Company's marketing strategy is designed to strengthen and increase brand
awareness, increase customer traffic to the web sites, build customer loyalty,
encourage repeat site visitation and develop incremental product and service
revenue opportunities.
 
 The
Company inventively applies technology to deliver personalized service programs
to ensure customer satisfaction and loyalty. The Company's goal is to attract
industry decision-makers to its web sites on a regular and consistent basis by
developing and providing customer services. The Company’s marketing strategy
consists of traditional print media advertising, direct and indirect outbound
email advertising, Internet advertising, tradeshow participation, trade
association partnerships and strategic alliances with other media and related
companies and organizations. Due to the Company's experience gained over the
past thirteen years, management of the Company believes that the Company
benefits from positive "word of mouth" and customer referrals. Every effort is
made to achieve frequent communication with, and obtain feedback from, customers
to continually improve services and products.
 
 FUTURE
PLANS FOR EXPANSION
 
 The
Company plans to continue to sell and support its existing line of information
technology products and services and to continue development of its Application
Service Provider and E-commerce Business segments. It is management's opinion
that its current commercially developed products and services in its Internet
Portal services business segment have been tested, refined and accepted by the
industry at large. The Company will continue, with the feedback of its existing
customer base, to develop and bring to market additional information technology
products and services. The Company intends to continue to increase the market's
awareness of the Company's products and services using traditional print and
online marketing methods.
 
 The
Company's future plans include a program of joint ventures, strategic alliances,
and mergers and acquisitions, which management believes will enable the Company
to acquire and maintain a dominant position as a business-to-business and
business-to-consumer trading resource.
 
 
 
 
 
 
 
  12
  ITEM
7. FINANCIAL STATEMENTS
 
 
 RECYCLENET
CORPORATION
 INDEX
TO FINANCIAL STATEMENTS
 
 PageReport
      of Independent Registered Public Accounting Firm
              F-2Consolidated
      Balance Sheets
              F-3Consolidated
      Statements of Operations
              F-4Consolidated
      Statements of Stockholders' Equity
              F-5Consolidated
      Statements of Cash Flows
              F-6Notes
      to Consolidated Financial Statements
              F-7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  F-1
 
 HANSEN,BARNETT& MAXWELL,
    P.C.A
      Professional CorporationCERTIFIED
      PUBLIC ACCOUNTANTS
              
              Registered
      with the Public CompanyAccounting
      Oversight Board5
      Triad Center, Suite 750Salt
      Lake City, UT 84180-1128Phone:
      (801) 532-2200
                Fax:
      (801) 532-7944www.hbmcpas.com
 
  
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the
Shareholders and the Board of Directors
 RecycleNet
Corporation
 
 We have
audited the consolidated balance sheets of RecycleNet Corporation and
subsidiaries as of December 31, 2007 and 2006 and the related consolidated
statements of operations, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of RecycleNet Corporation and
subsidiaries as of December 31, 2007 and 2006 and the results of their
operations and their cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of
America.
 
 
 HANSEN,
      BARNETT & MAXWELL, P.C.
 
 Salt Lake
City, Utah
 March 27,
2008
 
 
  F-2
  RECYCLENET
CORPORATON AND SUBSIDIARIES
 CONSOLDATED
BALANCE SHEETS
 
 December
      31,
              
              2007
              
              
              2006ASSETSCurrent
      AssetsCash
              
              $
              52,364
              
              
              $
              315,304Trade
      accounts receivable, net of $2,500 and $2,500 respectively of allowance
      for bad debtOther
      receivables
              
              
              -
              
              
              
              844Prepaid
      expenses
              
              
              5,621
              
              
              
              16,022Total
      Current Assets
              
              
              74,913
              
              
              
              365,638Property
      and EquipmentComputer
      equipment
              
              
              21,422
              
              
              
              71,607Less:
      Accumulated depreciation
              
              
              (8,568
              )
              
              
              (39,991
              )Net
      Property and Equipment
              
              
              12,854
              
              
              
              31,616Related
      party receivables
              
              
              151,185
              
              
              
              115,957Total
      Assets
              
              $
              238,952
              
              
              $
              513,211LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccrued
      liabilities
              
              $
              31,109
              
              
              $
              48,503Deferred
      revenue
              
              
              91,549
              
              
              
              135,143Total
      Current Liabilities
              
              
              122,658
              
              
              
              183,646Stockholders'
      EquityClass
      N convertible shares (and Class X shares) - $0.01 par value;
                70,896,789
      shares authorized; 56,800,000 and  60,539,259 N and X shares
      issued and outstanding as of December 31, 2007 and December 31, 2006,
      respectively
              
              
              568,000
              
              
              
              605,393Common
      shares - $0.01 par value; 179,103,211 shares authorized; 79,091,412 and
      77,108,214 shares issued and outstanding as of December 31, 2007 and
      December 31, 2006, respectively
              
              
              790,914
              
              
              
              771,082Additional
      paid-in capital
              
              
              4,462
              
              
              
              34,315Accumulated
      deficit
              
              
              (1,247,082
              )
              
              
              (1,081,225
              )Total
      Stockholders' Equity
              
              
              116,294
              
              
              
              329,565Total
      Liabilities and Stockholders' Equity
              
              $
              238,952
              
              
              $
              513,211
 
    
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-3
  RECYCLENET
CORPORATION AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 
 For
      the year ended December 31,
              
              2007
              
              
              2006Sales
              
              $
              857,671
              
              
              $
              1,051,536Operating
      expensesSelling,
      general and administrative expenses
              
              
              904,512
              
              
              
              940,235Foreign
      currency exchange (gain) loss
              
              
              -
              
              
              
              78Total
      operating expenses
              
              
              904,512
              
              
              
              940,313Income
      (loss) from continuing operations
              
              
              (46,841
              )
              
              
              111,223Discontinued
      operationsLoss
      from discontinued operations - Oldwebsites.com, Inc
              
              
              (32,935
              )
              
              
              (1,991
              )Income
      from discontinued operations - RecycleNet Ontario
              
              
              2,755
              
              
              
              15,317Loss
      from discontinued operations - Scrap China Corp.
              
              
              -
              
              
              
              (4,494
              )Net
      income (loss)
              
              $
              (77,021
              )
              
              $
              120,055Basic
      Income (Loss) Per Common Share FromContinuing
      Operations
              
              $
              -
              
              
              $
              -Discontinued
      Operations
              
              
              -
              
              
              
              -Basic
      Income (Loss) Per Common Share
              
              $
              -
              
              
              $
              -Diluted
      Income (Loss) Per Common Share FromContinuing
      Operations
              
              $
              -
              
              
              $
              -Discontinued
      Operations
              
              
              -
              
              
              
              -Diluted
      Income (Loss) Per Common Share
              
              $
              -
              
              
              $
              -Basic
      Weighted-Average Common Shares Outstanding
              
              
              77,897,928
              
              
              
              77,108,214Diluted
      Weighted-Average Common Shares Outstanding
              
              
              77,897,928
              
              
              
              137,647,473
 
 
 
 
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-4
  RECYCLENET
CORPORATION AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
 FOR
THE YEARS ENDED DECEMBER 31, 2006 AND 2007
 
 Class
      N Common Shares
                (and
      Class X Shares)
              
              
              Common
      Shares
              
              
              Additional
                Paid-in
              
              
              Accumulated
              
              
              Total
      Stockholders'Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              EquityBalance
      - December 31, 2005
              
              
              60,539,259
              
              
              $
              605,393
              
              
              $
              77,108,214
              
              
              $
              771,082
              
              
              $
              34,315
              
              
              $
              (1,259,904
              )
              
              $
              150,886Contribution
      from the spin off of Scrap China
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              58,624
              
              
              
              58,624Net
      Income for the year ended December 31, 2006
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              120,055
              
              
              
              120,055Balance
      - December 31, 2006
              
              
              60,539,259
              
              
              
              605,393
              
              
              
              77,108,214
              
              
              
              771,082
              
              
              
              34,315
              
              
              
              (1,081,225
              )
              
              
              329,565Conversion
      of 1,983,198 shares of Class N (and 1,938,198 shares of Class X) to
      1,938,198 shares of common stock;
              
              
              (1,983,198
              )
              
              
              (19,832
              )
              
              
              1,983,198
              
              
              
              19,832
              
              
              
              -
              
              
              
              -
              
              
              
              -Redemption
      of 1,756,061 Class N (and 1,756,061 Class X) shares;
              
              
              (1,756,061
              )
              
              
              (17,561
              )
              
              
              -
              
              
              
              -
              
              
              
              (29,853
              )
              
              
              -
              
              
              
              (47,414
              )Distribtion
      from spin-off of Oldwebsites.com, Inc.
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (48,409
              )
              
              
              (48,409
              )Distribution
      from sale of RecycleNet Ontario
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (40,427
              )
              
              
              (40,427
              )Net
      loss for the year ended December 31, 2007
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (77,021
              )
              
              
              (77,021
              )Balance
      - December 31, 2007
              
              
              56,800,000
              
              
              $
              568,000
              
              
              $
              79,091,412
              
              
              $
              790,914
              
              
              $
              4,462
              
              
              $
              (1,247,082
              )
              
              $
              116,294
 
 
 
 
 
 
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-5
  RECYCLENET
CORPORATION AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 
 For
      the year ended December 31,
              
              2007
              
              
              2006Cash
      Flows From Operating Activities:Net
      income (loss)
              
              $
              (77,021
              )
              
              $
              120,055Adjustments
      to reconcile net income (loss) to net cash provided by (used in) operating
      activities:Depreciation
              
              
              8,626
              
              
              
              9,651Foreign
      currency exchange loss
              
              
              5,488
              
              
              
              (1,680
              )Changes
      in assets and liabilities:Accounts
      and other receivables
              
              
              15,335
              
              
              
              7,347Prepaid
      expenses
              
              
              10,401
              
              
              
              (5,615
              )Accounts
      payable and accrued liabilities
              
              
              (24,697
              )
              
              
              6,779Deferred
      revenue
              
              
              (32,019
              )
              
              
              33,146Net
      Cash Provided By (Used In) Operating Activities
              
              
              (93,887
              )
              
              
              169,683Cash
      Flows From Investing Activities:Advances
      to related party
              
              
              (35,228
              )
              
              
              (52,333
              )Advances
      to affiliates
              
              
              -
              
              
              
              (5,000
              )Purchase
      of property and equipment
              
              
              -
              
              
              
              (25,339
              )Cash
      distributed in spin off of Oldwebsites.com, Inc.
              
              
              (51,269
              )
              
              
              -Cash
      distributed in sale of RecycleNet Ontario, Inc.
              
              
              (42,411
              )
              
              
              -Net
      Cash Used In Investing Activities
              
              
              (128,908
              )
              
              
              (82,672
              )Cash
      Flows From Financing Activities:Redemption
      of Class N (and Class X) Shares
              
              
              (47,414
              )
              
              
              -Net
      Cash Used In Financing Activities
              
              
              (47,414
              )
              
              
              -Effect
      of Exchange Rate Changes on Cash
              
              
              7,269
              
              
              
              1,314Net
      Change in Cash
              
              
              (262,940
              )
              
              
              88,325Cash
      at Beginning of Period
              
              
              315,304
              
              
              
              226,979Cash
      at End of Period
              
              $
              52,364
              
              
              $
              315,304Non
      Cash Investing and Financing Activities:Contribution
      from spin off of Scrap China Corporation
              
              $
              -
              
              
              $
              58,624Distribution
      from spin off of Oldwebsites.com
              
              
              48,409
              
              
              
              -Conversion
      of 1,983,198 S/N shares to 1,983,198 common shares
              
              
              19,832
              
              
              
              -Distribution
      on sale of RecycleNet Ontario
              
              
              40,427
              
              
              
              -
 
 
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-6
  RECYCLENET
CORPORATION
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2007 AND 2006
 
 NOTE
1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 
 Consolidation
- The accompanying consolidated financial statements include the accounts of
RecycleNet Corporation and its wholly-owned subsidiary Scrap.Net, Inc., as well
as the newly incorporated subsidiaries Waste.Net, Inc. and Recycle West Network.
Inter-company accounts and transactions have been eliminated in
consolidation.
 
 On
January 20, 2006, the Company did a pro-rata spin-off of all shares of Scrap
China Corporation owned by the Company to its common shareholders of
record.
 
 On
September 7, 2007, the Company did a pro-rata spin-off of all shares of
Oldwebsites.com, Inc. owned by the Company to its common shareholders of
record.  At the completion of the spin-offs, Scrap China Corporation
and Oldwebsites.com, Inc. became their own fully reporting entities and are no
longer wholly owned subsidiaries of the Company.  On December 31,
2007, the Company sold RecycleNet Corporation (Ontario) to a related
party.
 
 Accordingly,
the Company has reflected these operations as discontinued and has restated the
prior year consolidated financial statements to conform to such
presentation.
 
 On
November 7, 2007, the Company purchased 15,000,000 common shares of Waste.Net,
Inc. for $9,000. This represents 100% of the issued common shares of Waste.Net,
Inc. Waste.Net was incorporated on August 20, 2007.  Waste.Net, Inc. is a
network responsible for building and maintaining the branding and awareness for
RecycleNet's US recycling portal operations. Waste.Net, Inc has been
divided into 5 regions.  The first region, Recycle West Network, was
incorporated on August 20, 2007 to represent the states of Texas, New Mexico,
Arizona, Nevada, Utah, Colorado, Oregon, Washington, Arkansas, Idaho, Montana,
Wyoming, North Dakota, South Dakota and California.
 
 Also on
November 7, 2007, the Company purchased 600,000 common shares of Recycle West
Network, Inc for $60.
 
 On
November 14, 2007 Waste.net purchased 3,000,000 common shares of Recycle West
Network, Inc for $1,500. RecycleNet and Waste.net now control 100% of the common
shares issued of Recycle West Network, Inc.
 
 As such,
Waste.Net, Inc. and Recycle West Network, Inc. are wholly owned subsidiaries of
RecycleNet Corporation (Utah) and these companies are included in the
consolidated financial statements of the Company.
 
 Operations
- The Company is in the business of designing Internet sites, Internet
advertising and Internet trading of consumable recyclable goods. The Company has
developed web site management, sales management, search, customer interaction,
and transaction processing systems using a combination of proprietary custom
designed technologies and commercially available licensed technologies. The
Company designs web systems and flexible databases which allow for the addition,
modification, or replacement of web site content. The Company provides Internet
hosting facilities and redundant high speed Internet connectivity. The Company
has developed its own content and web site management tools to facilitate the
maintenance and updating of its web sites. The Company's primary operations are
conducted from Ontario, Canada.  However, the U.S. dollar is the
functional currency for the Company's consolidated operations because most of
the Company’s transactions are in U.S. dollars. Gains and losses from foreign
currency translations and exchange gains and losses are included in the results
of operations.
 
  F-7
  Use of
Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
 
 Fair Values of
Financial Instruments - Due to their near-term nature, the amounts
reported as trade accounts receivable, advances to related party, accounts
payable, accrued liabilities and deferred revenues are considered to be
reasonable approximations of their fair values.
 
 Accounts
Receivable–The
Company provides an allowance for doubtful accounts equal to the estimated
collection losses that could be incurred in collection of all receivables. The
estimated losses are based on historical collection experience coupled with
review of the current status of existing receivables. Allowance for doubtful
accounts for December 31, 2007 and 2006 was $2,500 and $2,500,
respectively.
 
 Computer
Equipment –Computer equipment is stated at cost. Maintenance and repairs
of equipment are charged to operations and major improvements are capitalized.
Upon retirement, sale, or other disposition, the cost and accumulated
depreciation are eliminated from the accounts and a gain or loss is included in
operations. Depreciation is computed using the straight-line method over the
estimated useful lives of the property and equipment, which are three to five
years. Depreciation expense was $8,626 and $9,651 for the years ended December
31, 2007 and 2006, respectively.  Computer software costs incurred for
internal use are expensed as incurred during the preliminary evaluation stage,
are capitalized during the acquisition and development stage, and are expensed
during the operation stage, including training and maintenance. Capitalizable
software development costs for internal use were not material for the years
ended December 31, 2007 and 2006.
 
 Revenue
Recognition - Revenue from services are recognized as the services are
provided. Website advertising services are charged on a monthly or “pay per
lead” basis without guarantee of the number of customers viewing the web site.
Revenues from the Internet portal services business are derived from individual
custom packages that include any combination of the following services:
subscription fees, credit package bundles that are used in the “pay per lead”
services, HTML linking services, advertising, and web page construction. The
Company “pay per lead” service is designed so that the customer can buy the
information that is of value to them instead of paying a monthly or annual
fee.  With respect to the Internet portal sites that facilitate
e-commerce trading, the Company only charges a fee for services that are
provided to customers. The Company does not charge sellers or buyers a
percentage of the value of their transactions nor does the Company charge a
back-end fee. Customer payments received in advance of providing services are
recorded as deferred revenue and are then recognized proportionately as services
are performed.
 
 Advertising
Costs - Advertising costs are charged to expense in the period incurred.
Advertising expense for the years ended December 31, 2007 and 2006 was $16,023
and $12,851 respectively.
 
  F-8
  Recent Accounting
Pronouncements-In July 2006, the FASB issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 ("FIN
48")”, which provides criteria for the recognition, measurement, presentation
and disclosure of uncertain tax positions.  A tax benefit from an
uncertain position may be recognized only if it is "more likely than not" that
the position is sustainable based on its technical merits.  The
provisions of FIN 48 are effective for fiscal years beginning after December 15,
2006.  The Company does not expect that FIN 48 will have a material
effect on its consolidated financial condition or results of
operations.
 
 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. The Company does not expect the adoption of SFAS
No. 157 to have a material impact on its consolidated financial
statements.
 
 In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities. SFAS No. 159 permits companies to
choose to measure many financial instruments and certain other items at fair
value. SFAS No. 159 is effective for financial statements issued for fiscal
years beginning after November 15, 2007. The Company does not expect the
adoption of SFAS No. 159 to have a material impact on its consolidated 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 acquiree 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 consolidated
financial statements, if any, upon adoption of SFAS No. 141 (R) or
SFAS No. 160.
 
 Corrected prior year financial
statements-During
the course of preparing the financial statements for the three months ended
March 31, 2007, the Company identified certain prior period misstatements whose
impact was not material, either individually or in aggregate, to the Company’s
financial statements for the year ended December 31, 2006. However, these
misstatements were considered material to the Company’s financial statements for
the three months ended March 31, 2007.  As a result, the Company
corrected the financial statements for the year ended December 31,
2006.  The corrected balance sheet as of December 31, 2006 is included
in these financial statements.  These misstatements relate to
recognizing deferred revenue in a subsidiary of the Company.  The
effect of correcting these misstatements resulted in an increase in deferred
revenue of $2,345 and a decrease in total equity of $2,345, which included a
decrease in net loss of $1,179.
 
  F-9
  Reclassification — Certain
2006 amounts have been reclassified to conform to the December 31, 2007
presentation. This has resulted in no change to the net income of the
Company.
 
 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 per common share is calculated by dividing net
income by the weighted-average number of Class N (and Class X) shares and common
shares outstanding to give effect to potentially issuable common shares, except
during loss periods when those potentially issuable shares are anti-dilutive. At
December 31, 2007, the Company had 56,800,000 Class N (and Class X) 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 year ended December 31, 2007 and 2006 are as follows:
 
 For
      the Year Ended December 31,
              
              2007
              
              
              2006Weighted-average
      number of common shares used in basic income (loss) per common share
      calculation
              
              
              77,879,928
              
              
              
              77,108,214Incremental
      potentially issuable common shares from assumed conversion of Class N (and
      Class X) common shares
              
              
              -
              
              
              
              60,539,259Weighted-average
      number of common shares and dilutive potential common shares used in
      diluted income (loss) per common share calculation
              
              
              77,879,928
              
              
              
              137,647,473
 
 
 NOTE
2 - ACQUISITIONS
 
 On
November 7, 2007, the Company purchased 15,000,000 common shares of Waste.Net
for $9,000. This represents 100% of the issued common shares of Waste.Net,
Inc.
 
 Also on
November 7, 2007, the Company purchased 600,000 common shares of Recycle West
Network, Inc for $60.
 
 On
November 14, 2007 Waste.net purchased 3,000,000 common shares of Recycle West
Network, Inc for $1,500 US. RecycleNet and Waste.net now control 100% of the
common shares issued of Recycle West Network, Inc.
 
 Domain Names - During the year
ended 2007, the Company purchased the web domain “scrap.net” and all rights to
the name for cash of $7,669. During 2006, the Company purchased the web domain’s
“BMEx.org” and “wastechange.org” and all rights to the names for cash of $3,500
and $35,000, respectively.  The entire purchase price for these
websites were allocated to the website which was accounted for as marketing and
advertising costs in accordance with Statement of Position No.
98-01.  Accordingly, the advertising costs were expensed at the date
of acquisition.
 
 NOTE
3 - RELATED PARTY TRANSACTIONS
 
 Related Party Receivable — At various times during 2007
and 2006, the Company paid expenses on behalf of Scrap China Corporation,
resulting from travel, management, legal and accounting expenses. Additional
funds, if required, will be provided by the Company and will be treated as an
advance to a related party.  These advances are due on demand and bear
no interest. At December 31, 2007 and 2006, amounts due from Scrap China totaled
$146,185, and $110,957, respectively.
 
  F-10
  During
the year ended December 31, 2006, the Company advanced an affiliate of the
Company $5,000 with no terms of repayment.
 
 Service Agreements - The
Company has an agreement with Inter-Continental Recycling, Inc. to provide
various services for the Company. Inter-Continental Recycling, Inc. is 100%
owned by the immediate family of the President of the Company. The Company is
billed monthly for services provided for management and sales activities, which
vary monthly based on the activity level. The charges for these services for the
twelve months ended December 31, 2007 and 2006 were $425,496 and $371,331
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.
Inter-Continental provides services to and for the Company by employees of
Inter-Continental. There is no mark-up or other charge incurred by the Company
from Inter-Continental and the Company pays the same amount for services for the
Inter-Continental employee’s as does Inter- Continental.  The
management/staff charges for the years ended December 31, 2007 and 2006 were
$333,947 and $305,534, respectively.
 
 Internet
service provider (ISP) fees are billed on a monthly basis from Inter-Continental
Recycling Inc. to the Company.  The ISP charges for the years ended
December 31, 2007 and 2006 were $29,443 and $40,734, 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, and recorded by the Company for this merchant service
agreement with Inter-Continental Recycling Inc. for the years endedDecember 31,
2007 and 2006 were $62,106 and $25,063, respectively.
 
 The
Company has office space in a facility owned by the President of the Company.
For the years ended December 31, 2007 and 2006, rent expense was $2,245 and
$2,117, respectively.
 
 Under the
terms of a distribution rights agreement related to the Rhodium WebWeaver
TurnKey E-Commerce system, the Company is obligated to pay Mr. Roszel, the
President of the Company, a $1,000 royalty payment for each Rhodium WebWeaver
license the Company is able to secure.  For the years ended December
31, 2007 and 2006, no royalty payments were required under this
agreement.
 
 NOTE
4 - 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. The Class N shares have voting rights of one vote per share and
are non-equity participating. The Class X common shares are non-voting but
equity participating. The Class N and Class X shares are convertible into common
shares on the basis of one Class N share and one Class X share into one common
share of the Company, solely at the option of the holders.
 
  F-11
  In August
and September 2007, 1,983,198 Class X/N shares were converted by shareholders
into 1,983,198 Common shares of RecycleNet Corporation. A shareholder is
entitled to convert one Class X share along with one Class N share into one
Common share of the Corporation at no cost to the shareholder. After the
conversion, the Company had 58,556,061 class X/N shares
outstanding.
 
 In
September 2007, 1,756,061 Class X/N shares were redeemed by shareholders for
$47,414 cash.  After the redemption, the Company had 56,800,000 class
N and X shares outstanding.
 
 As
further discussed in Note 6, the Company approved a pro-rata spin-off of Scrap
China Corporation in January 2006, recognizing a contribution from shareholders
of $58,624 and approved a pro-rata spin-off of Oldwebsites.com, Inc. in
September 2007, recognizing a distribution to shareholders of
$48,409.
 
 As
further discussed in Note 6, the Company sold RecycleNet Corporation (Ontario)
to a related party and recognized a distribution to shareholders of
$40,427.
 
 NOTE
5 - INCOME TAXES
 
 Deferred
tax assets are comprised of the following at December 31, 2007 and
2006:
 
 For
      the years ended December 31,
              
              2007
              
              
              2006Operating
      Loss Carry Forward
              
              $
              284,604
              
              
              $
              434,580Valuation
      Allowance
              
              
              (284,604
              )
              
              
              (434,580
              )Total
      Deferred Tax Asset
              
              $
              -
              
              
              $
              -
 
 The
Company had no income tax expense for the years ended December 31, 2007 and
2006.
 
 The
following is a reconciliation of the amount of expense that would result from
applying federal statutory rates to pretax income (loss) with the provision for
income taxes for the years ended December 31:
 
 For
      the years ended December 31,
              
              2007
              
              
              2006Tax
      at federal statutory rates (34%)
              
              $
              (26,187
              )
              
              $
              44,946Benefit
      of operating loss carryforward
              
              
              -
              
              
              
              (1,680
              )Net
      operating losses distributed in spin-off and sale
              
              
              40,057
              
              
              
              -Expiration
      of net operating losses
              
              
              152,371
              
              
              
              -Other
      changes in the valuation allowance
              
              
              (166,751
              )
              
              
              (44,831
              )State
      Benefit, net of federal tax
              
              
              (914
              )
              
              
              (2,676
              )Effect
      of actual tax rates lower than statutory rate
              
              
              (203
              )
              
              
              4,039Effect
      of exchange rate changes
              
              
              1,627
              
              
              
              202Provision
      for Income Taxes
              
              $
              -
              
              
              $
              -
 
  F-12
  The
Company has federal operating loss carry forwards of $710,761 that expire from
2008 through 2027. The use of operating loss carry forwards are limited and may
not be available to offset future income.
 
 NOTE
6 – DISCONTINUED OPERATIONS
 
 On
November 24, 2005, the Board of Directors approved a pro-rata spin-off of all
shares of Scrap China Corporation effective January 20, 2006. The common
shareholders of RecycleNet received one share of Scrap China Corporation for
every ten shares of RecycleNet common stock.  The Board of Directors of
RecycleNet decided to distribute the Scrap China Corporation shares to the
RecycleNet shareholders to benefit its shareholders and to separate the
different lines of business. At January 20, 2006, Scrap China had common stock
of $10,000 and accumulated losses of $68,624.  This spin-off of Scrap
China Corporation resulted in the shareholders of the Company assuming the
common stock and accumulated losses of Scrap China Corporation and the Company
recorded a contribution from shareholders in the amount of $58,624. The
discontinued operations of Scrap China Corporation for the year ended December
31, 2006 are as stated below.
 
 On June
6, 2007, the Board of Directors approved a pro-rata spin-off of all shares of
Oldwebsites.com, Inc. effective September 7, 2007. The common shareholders
of RecycleNet received one share of Oldwebsites.com, Inc. for every ten shares
of RecycleNet common stock.  The Board of Directors of RecycleNet decided
to distribute the Oldwebsites.com, Inc. shares to the RecycleNet shareholders to
benefit its shareholders and to separate the different lines of business. At
September 7, 2007, Oldwebsites.com, Inc. had common stock of $131,927 and
accumulated losses of $83,518.  This spin-off of Oldwebsites.com, Inc.
resulted in the shareholders of the Company assuming the common stock and
accumulated losses of Oldwebsites.com, Inc. and the Company recorded a
distribution to shareholders in the amount of $48,409. The discontinued
operations of Oldwebsites.com, Inc. for the years ended December 31, 2007 and
2006 are as stated below.
 
 On
December 31, 2007, the Company sold its RecycleNet Corporation (Ontario)
operations to Inter-Continental Recycling Inc., a related party.
Inter-Continental Recycling Inc. assumed the outstanding debt of $138,019 owed
by RecycleNet Corporation (Utah) to RecycleNet Corporation (Ontario) in exchange
for 100% of the issued and outstanding common shares of RecycleNet Corporation
(Ontario) held by RecycleNet Corporation (Utah). At December 31, 2007,
RecycleNet (Ontario) had common stock of $3 and accumulated losses of $458,674.
As a result of the sale, the Company recognized a distribution to shareholders
in the amount of $40,427. The discontinued operations of RecycleNet Corporation
(Ontario) for the years ended December 31, 2007 and 2006 are as stated
below.
 
 A summary
of the results from discontinued operations for the years ended December 31,
2007 and 2006 are as follows:
 
 2007
              
              
              2006Oldwebsites.com,
      Inc.Net
      revenue
              
              $
              3,129
              
              
              $
              7,197Operating
      expenses
              
              
              (36,064
              )
              
              
              (9,188
              )Loss
      from operations
              
              
              (32,935
              )
              
              
              (1,991
              )Net
      loss
              
              $
              (32,935
              )
              
              $
              (1,991
              )
 
  F-13
  
 2007
              
              
              2006RecycleNet
      Corporation (Ontario)Net
      revenue
              
              $
              79,698
              
              
              $
              88,790Operating
      expenses
              
              
              (76,943
              )
              
              
              (73,473
              )Income
      from operations
              
              
              2,755
              
              
              
              15,317Net
      income
              
              $
              2,755
              
              
              $
              15,317
 
 
 2007
              
              
              2006Scrap
      ChinaNet
      revenue
              
              $
              -
              
              
              $
              -Operating
      expenses
              
              
              -
              
              
              
              4,494Loss
      from operations
              
              
              -
              
              
              
              (4,494
              )Net
      loss
              
              $
              -
              
              
              $
              (4,494
              )
 
 
 NOTE
7 – CONTINGENCIES
 
 During
March 2007, RecycleNet Corporation terminated an agreement with an independent
contractor.  The Company paid all commissions due up to and including the
date of termination of the agreement, and these amounts were included in the
financial reports for the first quarter.  The Company also paid to the
independent contractor a one time amount which was the equivalent of one month
commission (based on the average of the previous 3 months commission that he had
received).
 
 During
July 2007 the Company was served with a Statement of Claim from the Superior
Court of Justice in Ontario Canada, where the individual involved claims that
his employment was wrongfully terminated and is seeking damages.
 
 It is the
position of the Company that the claim has no merit as the individual was not an
employee of the Company but was an independent contractor.  Consequently,
we have not accrued any provision for liabilities in the Financial Statements
for this claim.
 
 The
Company intends to vigorously defend against the claim.  A Notice of Intent
to Defend was served on behalf of the Company on or about July 24, 2007, and a
copy of the Notice of Intent to Defend has been filed in the appropriate court
file.
 
 
 
 
 
 
 
 
 
  F-14
  ITEM
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
 
 None.
 
 Item
8A.   CONTROLS AND PROCEDURES
 
 Evaluation
of disclosure controls and procedures.
 
 As of the
end of the period covered by this report, the Company conducted an evaluation,
under the supervision and with the participation of the principal executive
officer and principal financial officer, of the Company’s disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, the
principal executive officer and principal financial officer concluded that the
Company’s disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.
 
 Management’s
Report on Internal Control over Financial Reporting.
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act). Our management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2007. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated
Framework. Our management has concluded that, as of December 31, 2007, our
internal control over financial reporting is effective based on these
criteria.
 
 Changes
in internal control over financial reporting.
 
 There was
no change in our internal control over financial reporting that occurred during
the quarter ended December 31, 2007 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
 
 ITEM
8B. OTHER INFORMATION
 
 LEGAL PROCEEDINGS -During
March 2007 RecycleNet Corporation terminated an agreement with an independent
contractor.  The Company paid all commissions due up to and including the
date of termination of the agreement, and these amounts were included in the
financial reports for the first quarter.  The Company also paid to the
independent contractor a one time amount which was the equivalent of one month
commission (based on the average of the previous 3 months commission that he had
received).
 
 During
July 2007 the Company was served with a Statement of Claim from the Superior
Court of Justice in Ontario Canada, where the individual involved claims that
his employment was wrongfully terminated and is seeking damages.
 
 It is the
position of the Company that the claim has no merit as the individual was not an
employee of the Company but was an independent contractor.  Consequently,
we have not accrued any provision for liabilities in the Financial Statements
for this claim.
 
  14
  The
Company intends to vigorously defend against the claim.  A Notice of Intent
to Defend was served on behalf of the Company on or about July 24, 2007, and a
copy of the Notice of Intent to Defend has been filed in the appropriate court
file.
 
 
 Part
III
 
 
 ITEM
9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT
  The
directors and officers of the Company are as follows:
  Name
              
              Age
              
              Position
              
              Term
      of OfficePaul
      Roszel
              
              51
              
              Chairman
      of the Board, President
              
              Inception
      to PresentRichard
      R. Ivanovick C.A.
              
              67
              
              Chief
      Financial Officer
              
              03/99
      to PresentKeith
      A. Deck
              
              71
              
              Director
              
              06/00
      to Present
 
 Paul
Roszel has been involved with the Company since 1988. Mr. Roszel has over 25
years of hands on experience in the recycling industry. He has been actively
involved in the development and implementation of collection, processing,
transportation and sales/marketing programs for secondary
commodities.
 
 Richard
R. Ivanovick C.A. joined the Company in November 1998. For the past 30 years,
Mr. Ivanovick has been serving as President of Marsh Tire Service Ltd., Ontario,
Canada, a company involved in automobile service, sales and leasing of
automobiles, in the Guelph, Ontario area.
 
 Keith A.
Deck is a retired executive with experience in the Automotive and Electrical
Manufacturing areas of business. From 1989 to 1999 Mr. Deck was the General
Manager of the Rocktell and Autocom plant operations of Linamar Corporation in
Guelph, Ontario Canada. Limamar Corporation is a publicly traded company on the
Toronto Stock Exchange in Canada.
 
 Each of
these persons owns, directly or indirectly, common shares of the
Company.  Mr. Roszel also owns, directly or indirectly, class N (class
X) shares of the Company, which are convertible into common shares on a
one-to-one basis, as detailed in the following schedules found in Item
11.
 
 INDEMNIFICATION
OF DIRECTORS AND OFFICERS.
 
 Section
16-10a-901 through 909 of the Utah Revised Business Corporation Act authorizes a
corporation's board of directors or a court to award indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred, including counsel fees) arising under the
Securities Act of 1933. A director of a corporation may only be indemnified if:
(1) the conduct was in good faith; and (2) the director reasonably believed that
the conduct was in or not opposed to the corporation's best interest; and (3) in
the case of any criminal proceeding, the director had no reasonable cause to
believe the conduct was unlawful. A corporation may not indemnify a person under
the Utah Act unless and until the corporation's board of directors has
determined that the applicable standard of conduct set forth above has been
met.
 
  15
  The
Company's Articles of Incorporation do not provide for any additional or
different indemnification procedures other than those provided by the Utah Act,
nor has the Company entered into any indemnity agreements with its current
directors and officers regarding the granting of other or additional or
contractual assurances regarding the scope of the indemnification allowed by the
Utah Act. At present, there is no pending litigation or proceeding involving a
director, officer or employee of the Company regarding which indemnification is
sought, nor is the Company aware of any threatened litigation that may result in
claims or indemnification. The Company has not obtained director's and officer's
liability insurance, although the board of directors of the Company may
determine to investigate and, possibly, acquire such insurance in the
future.
 
 
 ITEM
10. EXECUTIVE COMPENSATION
 
 The
following table shows compensation earned during the fiscal years 2007 and 2006
by the Officers and Directors of the Company.  They are the only
persons who received compensation during those periods. No other miscellaneous
compensation was paid or stock options granted during those
periods.
 
 Summary
Compensation Table
 
 Name & Principal
      Positions
              
              Fiscal Year
              
              SalaryPaul
      Roszel, President & Chairman
              
              2007
              
              $79,7112006
              
              $75,059Richard
      R. Ivanovick, CFO
              
              2007
              
              $37,428(Note
      1)
              
              2006
              
              $35,284Keith
      A. Deck, Director
              
              2007
              
              $NIL(Note
      1)
              
              2006
              
              $NIL
 
 NOTE
1:  During the years ended December 31, 2007 and 2006 Richard R
Ivanovick, CFO was paid for consulting services of $37,428 and 35,284,
respectively. Keith A Deck did not receive any funds in the year ended December
31, 2007 or for the year ended December 31, 2006. Subsequent to December 31,
2003, neither had drawn any salary or benefits.
 
 
 
 
 
 
 
 
 
 
 
  16
  ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDERS MATTERS
 
 The
following tables sets forth, as of the date herein, the share ownership of each
person known by the Company to be the beneficial owner of 5% or more of the
Company's shares, each officer and director individually and all directors and
officers of the Company as a group.
 
 
 Title
      of Class
                (Note
      1)
              
              Name
      & Address
                of
      Beneficial Owner
                (Note
      1)
              
              Amount,
      Nature & Percentage
                of
      Beneficial Ownership
                (on
      a fully converted basis)Class
      N
              
              Inter-Continental
      Recycling, Inc.
                (Note
      2 & 3)
                7
      Darren Place
                Guelph,
      Ontario Canada
              
              56,800,000
      shares (voting) 100.00%Class
      N
              
              Paul
      Roszel
                (Note3)
                7
      Darren Place
                Guelph,
      Ontario Canada
              
              no
      shares
      (voting)            
            0.00%Class
      N
              
              Richard
      R. Ivanovick
                23
      Cottontail Place
                Cambridge,
      Ontario Canada
              
              no
      shares
      (voting)             
           0.00%Class
      N
              
              Keith
      A. Deck
                46
      Sherwood Dr.
                Guelph,
      Ontario Canada
              
              no
      shares
      (voting)                   0.00%Common
              
              Inter-Continental
      Recycling, Inc.
                (Note
      2 & 3)
                (see
      above address)
              
              39,821,121
      shares (voting)   50.35%Common
              
              Paul
      Roszel
                (Note
      2 & 3)
                (see
      above address)
              
              3,344,130
      shares (voting)       4.23%Common
              
              Richard
      R. Ivanovick C.A.
                (see
      above address)
              
              4,105,622
      shares (voting)       5.19%Common
              
              Keith
      A. Deck
                (see
      above address)
              
              812,004
      shares (voting)         
      1.03%
 
 Note (1)
Class N shares are convertible into common shares on a one for one basis. As of
December 31, 2007, there were 56,800,000 Class N shares outstanding. At the same
date, there were 79,091,412 common shares outstanding. The percentages in the
above table are for the particular class.
 
 Note (2)
Inter-Continental Recycling Inc. is owned and beneficially held by Mr. Paul
Roszel, a director of the Company, and his immediate family.
 
 Note (3)
Mr. Roszel may be deemed to be a beneficial owner of the 56,800,000 Class N
shares held by Inter-Continental Recycling, Inc.
 
 
 ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
 The
Company has an agreement with Inter-Continental Recycling, Inc., an Ontario
Corporation with its head office address at 7 Darren Place, Guelph Ontario.
Inter-Continental Recycling, Inc. is controlled 100% by Mr. Paul Roszel and his
immediate family. Inter-Continental Recycling Inc. operates a pool of qualified
personnel, working on development projects, computer programming updates and
sales activities for various companies.  From this pool of personnel,
Inter-Continental assigns and provides employees to the Company as long as the
Company requires them and can pay the associated costs.
 
  17
  RecycleNet
Corporation is billed on average $2,453 monthly for direct costs for web hosting
fees and utilization of bandwidth. It is also billed monthly for services
supplied directly for management and sales activities, which vary monthly based
on the activity level.
 
 Inter-Continental
Recycling Inc. owns 56,800,000 Class N shares and 39,821,121 common shares of
RecycleNet Corporation. Inter-Continental owned approximately 94.9% of the
outstanding shares in RecycleNet Corporation (Ontario) at the time of the
reorganization between RecycleNet and Garbalizer Machinery Corporation in April,
1999. It then exchanged its equity interest in RecycleNet (Ontario) for Class X
shares in RecycleNet (Ontario) and an equal number of Class N shares in
RecycleNet (Utah), which are convertible into common shares of RecycleNet
(Utah).
 
 Mr. Paul
Roszel through his holdings also controls the majority of the shares in
RecycleNet Corporation (Utah).
 
 There are
no other transactions during 2007, or proposed transactions, between the Company
and any director or officer or greater than 5% shareholder in which such persons
had or is to have a direct or indirect material interest. The Company has no
stock options, option plans or other incentive compensation plans at the present
time, although the Company anticipates that it may adopt incentive compensation
plans in the future. Further, the Company has no formal management or employment
agreements with any of its officers, directors or other employees.
 
 The
Company intends to enter into agreements in the future with other companies or
entities to process credit card merchant transactions, for which the Company
will receive a fee. Officers, directors and greater than 5% shareholders of the
Company may have a direct or indirect interest in future potential businesses or
entities in the recycling industry.
 
 The
Company has an agreement with Inter-Continental Recycling, Inc. to provide
various services for the Company. Inter-Continental Recycling, Inc. is owned
100% 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
twelve months ended December 31, 2007 and 2006 were $425,496 and $371,331
respectively.
 
 Related Party Receivable — As of December 31, 2007, the
Company had advanced $146,185 to Scrap China Corporation.  This
resulted from expenses incurred for travel, management and legal and accounting
expenses paid on behalf of Scrap China Corporation.  Additional funds,
if required, will be provided by the Company and will be treated as an advance
to a related party.  These advances are due on demand and bear no
interest.
 
 
 PROMOTERS
OF THE COMPANY
 
 The
promoter of the Company is Mr. Paul Roszel. Prior to the incorporation of
RecycleNet Corporation (Ontario), Paul Roszel developed the concept of the
electronic dissemination of the information described above. In so doing, Mr.
Roszel acquired the domain name, the web sites and the web pages described
herein. Upon the incorporation of RecycleNet Corporation (Ontario), in
consideration for his services and expertise in developing the web sites and
pages, Mr. Roszel transferred ownership of these items to the corporation for
shares. As of November 1999, after the March 19, 1999 merger reorganization, the
number of Class N Shares issued by the corporation to Mr. Roszel and his related
corporation, for the above services and expertise, totaled 61,559,581.
 
  18
  DESCRIPTION
OF SECURITIES
 
 The
Company has authorized 250,000,000 common shares, par value $.01, of which
79,091,412 common shares were issued and outstanding at December 31, 2007 and
56,800,000 Class N voting, non-equity shares were outstanding at December 31,
2007. The Class N voting, non-equity shares are convertible on a one for one
basis into common shares of the Company, RecycleNet Corporation (Utah), upon the
surrender by the holder of one Class N share and one Class X non-voting, equity
share of RecycleNet Corporation (Ontario).
 
 The Class
X shares are non-voting, equity participation shares and provide the medium for
the non-realization of capital gains for tax purposes of the original Canadian
shareholders. Upon surrender of one each Class N and Class X share, the Company
will issue one common share of the Company and the Class N and Class X shares
will be cancelled. Subject to the foregoing, the owners of outstanding common
shares of the Company are entitled to receive dividends out of assets legally
available therefore at such times and in amounts as the directors of the Company
may determine. Each shareholder of common and each shareholder of Class N shares
is entitled to one vote for each common share or Class N share held on all
matters submitted to a vote of shareholders.
 
 Cumulative
voting for the election of directors is not provided for in the Company's
amended Articles of Incorporation, which means that the holders of a majority of
the shares voted can elect all of the directors then standing for election. The
voting shares are not entitled to preemptive rights and are not subject to
conversion or redemption. Upon a liquidation, dissolution or winding-up of the
Company, the assets legally available for distribution to stockholders are
distributable equally among the holders of the shares after payment of claims of
creditors. Each outstanding share is, and all shares that may be issued in the
future, will be fully paid and non-assessable.
 
 There are
no provisions in the amended Articles of Incorporation of the Company that would
delay, defer, or prevent a change in control of the Company. The Company has no
debt securities issued and the Company does not contemplate issuing any in the
near future.
 
 
 ITEM
13. EXHIBITS AND REPORTS ON FORM 8-K
 
 Exhibit
              Description
 20
              Consent
      Resolution dated June 7, 2007.
 Filed on
June 7, 2007
 
 20
              Consent
      Resolution dated November 24, 2005.
 Filed on
November 30, 2005
 
 
 
 
 
 
  19
  INDEX
TO EXHIBITS
 
 Exhibit
              Description
  2
              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,
      2001
 
 31.1
              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.
 
 
 ITEM
14. Principal Accountant Fees and Services
 
 Hansen,
Barnett & Maxwell served as the Company’s independent accountants for the
years ended December 31, 2007 and 2006, and is expected to serve in that
capacity for the current year. Principal accounting fees for professional
services rendered for the Company by Hansen, Barnett & Maxwell for the years
ended December 31, 2007 and 2006 are summarized as follows:
 
 2007
              
              
              2006Audit
              
              $
              22,500
              
              
              $
              21,250Audit
      related
              
              
              1,750
              
              
              
              –Tax
              
              
              1,300
              
              
              
              1,300Total
              
              $
              25,550
              
              
              $
              22,550
 
 Audit
Fees.Audit fees were
for professional services rendered in connection with the Company’s annual
financial statement audits and quarterly reviews of financial statements and
review of and preparation of consents for registration statements for filing
with the Securities and Exchange Commission.
 
  20
  Tax
Fees.  Tax fees related to services for tax compliance and
consulting.
 
 Audit Committee
Pre-Approval Policies and Procedures.  At its regularly
scheduled and special meetings, the Audit Committee of the Board of Directors,
which is comprised of independent directors knowledgeable of financial
reporting, considers and pre-approves any audit and non-audit services to be
performed by the Company’s independent accountants. The Audit Committee has the
authority to grant pre-approvals of non-audit services.
 
 SIGNATURES
 
 In
accordance with Section 13 or 15(d) of the Exchange Act the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 RECYCLENET
CORPORATION
 
 March 31,
2008
 
 
 
 BY:/s/ Paul
Roszel
 Paul
Roszel, Chairman of the Board of Directors
 
 
 In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
 
 March 31,
2008
 
 BY:/s/ Paul
Roszel
 Paul
Roszel, Chairman of the Board of Directors
 
 
 March 31,
2008
 
 BY:/s/ Richard R.
Ivanovick
 Richard
R. Ivanovick, C.A., CFO