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, 2005




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]





State
      issuer's revenues for its most recent fiscal year: $917,600





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
      March 24, 2006, the aggregate market value of the voting stock held by
      non-affiliates of the registrant, based on the average bid and ask prices of
      $0.040 and $ 0.040 respectively, namely $0.040 x 77,108,214 common shares
      outstanding was $3,084,329.





As
      of
      December 31, 2005 there were 60,539,259 class N voting non-equity shares
      outstanding.





As
      of
      December 31, 2005 there were 77,108,214 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
            6Item
                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.
            7Item
                6.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            8Item
                7.
            Financial
                Statements
            F-1Item
                8.
            Changes
                In and Disagreements with Accountants on Accounting and Financial
                Disclosure
            13Item
                8A.
            Controls
                and Procedures
            13Part
                IIIItem
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act
            14Item
                10.
            Executive
                Compensation
            15Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholders Matters.
            16Item
                12.
            Certain
                Relationships and Related Transactions
            17Item
                13.
            Exhibits
                and Reports on Form 8-K
            19Item
                14.
            Principal
                Accountant Fees and Services
            19










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 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 X share is 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".











3








**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.





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. Our
      core
      user base has continued to expand across the RecycleNet Network to a point
      where
      approximately 2.5 million unique traders participate each month.





We
      have
      employed a strategy to diversify our client base. The Company does not have
      any
      customer that individually represents more than 15% of its business. The loss
      of
      any particular customer would not have a material adverse impact on the Company.










4








**Marketing**





The
      Company's marketing strategy is described in "Management's Discussion &
Analysis and Financial Condition and Results of Operation".





**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 charge incurred by the Company
      from Inter-Continental and the Company pays the same amount for services for
      the
      Inter-Continental employees as does Inter- Continental.





The
      average monthly invoice from Inter-Continental to the Company approximates
      $27,700, and pays for services for 12 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. Therefore, the Company believes the arrangement to be
      as
      fair to it as could have been made with an unaffiliated party. Also,
      Inter-Continental is responsible for acquiring and maintaining appropriate
      insurance covering liabilities, including employee conduct. 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, on a monthly basis, for an agreed upon rate
      of
      commission. (See "Facilities" and "Security Ownership of Certain Beneficial
      Owners and Management" below.)








5








**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.





**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, such as McGraw
      Hill, Penton Media, directory registry companies, such as Thomas Register,
      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.








**ITEM
      3. LEGAL PROCEEDINGS**





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








**ITEM
      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, 2005.










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, 2005. 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
                Bid1stQuarter, 2005
            
            $
            0.060
            
            $
            0.0202ndQuarter, 2005
            
            $
            0.080
            
            $
            0.0203rdQuarter, 2005
            
            $
            0.050
            
            $
            0.0204thQuarter, 2005
            
            $
            0.070
            
            $
            0.0301st
                Quarter, 2004
            
            $
            0.100
            
            $
            0.0502nd
                Quarter, 2004
            
            $
            0.100
            
            $
            0.0303rd
                Quarter, 2004
            
            $
            0.090
            
            $
            0.0404th
                Quarter, 2004
            
            $
            0.070
            
            $
            0.030








As
      of
      December 31, 2005, 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
      June
      2005, the Company purchased the web domain iolcentral.com in exchange for 50,000
      shares of common stock. The shares were valued at $1,250 or $0.025 per share,
      which was the market value of the common stock on the date the purchase was
      entered into. The $1,250 was immediately expensed as marketing
      expense.





During
      November 2005, certain class N shareholders converted 636,422 Class N shared
      to
      common shares







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, wastepaper, 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 or 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.





RecycleNet
      has concentrated on building the fundamentals of its business following a
      strategy to get it right, get it profitable and then get it big. 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.











8








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.





RecycleNet
      has recognized the need for specific geographic web portals within its business
      and in the year 2000, established an online presence to correspond with each
      continent. The Company also believes 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.





As
      a
      result, on June 15, 2005 a new business segment was formed, a Utah corporation,
      Scrap China Corporation. Scrap China Corporation is wholly owned and operated
      by
      RecycleNet Corporation.





Scrap
      China Corporation is a development stage company. The Company’s plan is to set
      up a base of operations in China and to obtain all necessary permits,
      registrations or licenses required to facilitate the import of scrap materials
      into China.





On
      June
      15, 2005, upon inception of Scrap China Corporation, initial seed capital of
      $10,000, was provided by RecycleNet by purchasing 10,000,000 common shares
      (100%). The funds provided are to be used to establish a base of operations
      in
      China.





On
      November 24, 2005, the Board of Directors of RecycleNet Corporation adopted
      a
      resolution declaring a pro-rata spin-off of all shares of Scrap China
      Corporation owned by RecycleNet. Scrap China Corporation shares were issued
      to
      all shareholders of record  of
      the
      Company as at the close of business on January 20, 2006.  The shareholders
      of RecycleNet receive one share of Scrap China Corporation for every ten shares
      of RecycleNet.   The Board of Directors of RecycleNet decided to
      distribute the Scrap China shares to the RecycleNet shareholders to benefit
      its
      shareholders and to separate the different lines of business.





Scrap
      China Corporation functions as its own fully reporting entity and it no longer
      is a wholly owned subsidiary of RecycleNet Corporation.





**RESULTS
      OF OPERATIONS**





In
      December 2004, Andela Products Ltd, a wholly-owned subsidiary of RecycleNet
      was
      sold. The financial data following does not include the results of Andela
      Products and Scrap China corporation operations for the years ended December
      31,
      2005 and 2004.










9








**SALES
      REVENUES**





2005
            
            2004Sales
                Revenues -RecycleNet
            
            $
            917,600
            
            $
            738,200








The
      Sales
      revenue for the year ended December 31, 2005 of $917,600 reflected a $179,400
      increase over the same period of 2004, a 24% improvement. These favorable
      results were recorded in the last half of 2005 and reflect additional revenues
      being realized from advertising revenues.








**OPERATING
      EXPENSES**





2005
            
            2004OPERATING
                EXPENSES
            
            $
            908,300
            
            $
            738,300





Operating
      Expenses have increased in 2005 over 2004 by $120,000. During the first half
      of
      2005, the company expended travel, trade show and convention costs in order
      to
      increase the “Brand” awareness of the “RECYCLENET” name. In addition we
      increased our salaried staff by one to support this effort.





In
      September 2005, our President, Mr. Paul Roszel participated in a US sponsored
      trade mission to China regarding scrap materials to be exported into China.
      These expenses were incurred in September and contributed to our increased
      travel expenditures for the last quarter and year to date figures.





Also,
      during the last quarter, Mr.Roszel traveled extensively, conducting a business
      evaluation for a client which we hope will mature into a long term business
      relationship and long term revenue increases.





As
      such,
      increases in professional fees, travel, advertising and promotion, labor and
      commissions on increased sales have amounted for most of the 2005 expense
      increase. Small increases were recorded in other expense categories to support
      our increased business activity.










10








N **ET
      INCOME (LOSS)**





2005
            
            2004Net
                Income (Loss)
            
            $
            (58,600
            )
            $
            10,000





The
      company recorded a loss of $58,600 in 2005 even though the company had a 24%
      improvement in revenues. As at September 30, 2005, the company’s Profit and Loss
      Statement reflected a $118,600 loss for the first three quarters, while the
      last
      quarter recorded a $60,000 profit, a marked improvement compared to a $18,600
      loss in the last quarter of 2004, thus reducing our yearly loss to
      $58,600.





As
      discussed above, we have expended addition funds on “BRANDING” the “RECYCLENET”
name, the Scrap China Corporation company expansion and the additional traveling
      associated with the client study. We expect the client study to be concluded
      in
      the first quarter of 2006 and our traveling cost to decline
      accordingly.








CASH
      POSITION





The
      Company’s cash position at December 31, 2005 was $227,000, a decline from the
      December 31, 2004 balance of $274,300, primarily resulting from our operating
      loss for the year. However, the last quarter of 2005 did record a $60,000 profit
      and the outlook for the first quarter of 2006 is favorable. This will allow
      us
      to increase our cash position and the underlying strength of the
      company.








**Advances
      to Related Party**  **—** At
      December 31, 2001, the Company had a $17,500 accounts receivable from Andela
      Tool & Machine. The loan was unsecured and due on demand. During 2002 the
      receivable was converted to a loan bearing interest at 4% per annum, repayable
      in 36 equal monthly payments commencing in October 2002 and remained unsecured.
      As of September 30, 2005 the entire loan was repaid in full.





The
      Company does not anticipate loaning funds to other persons in the future on
      terms similar to the loan to Andela Tool & Machine, Inc. Management of the
      Company agreed to the terms based upon the common ownership the Company had
      with
      Andela Tool & Machine, Inc.




In
      December 2004, The Company sold its stake in Andela Products Ltd to James and
      Cynthia Andela for a sum of $2.00.







11







**DEFFERED
      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 sale revenue in each subsequent month
      that proportion which is provided in services. As of December 31, 2005, deferred
      revenue amounted to $102,000 compared with the $96,500 at December 31, 2004,
      a
      modest increase.








**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 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, trade show 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 ten 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. It is management's opinion that its
      current commercially developed products and services in its Internet Portal
      services has 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 - December 31, 2005 and 2004
            F-3Consolidated
                Statements of Operations for the Years Ended December 31, 2005 and
                2004
            F-4Consolidated
                Statements of Stockholders' Equity for the Years Ended December 31,
                2005
                and 2004
            F-5Consolidated
                Statements of Cash Flows for the Years Ended December 31, 2005 and
                2004
            F-6Notes
                to Consolidated Financial Statements
            F-7






















F-1





**H****ANSEN****,
                B****ARNETT****&
                M****AXWELL**A
                Professional CorporationCERTIFIED
                PUBLIC ACCOUNTANTS
            
            **Registered
                with the Public Company**5
                Triad Center, Suite 750
            
            **Accounting
                Oversight Board**Salt
                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, 2005 and 2004 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 audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe 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, 2005 and 2004 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





Salt
      Lake
      City, Utah


March
      16,
      2006










F-2





**RECYCLENET
      CORPORATON AND SUBSIDIARIES**


**CONSOLDATED
      BALANCE SHEETS**








**December
                31,****2005**
            
            **2004****ASSETS****Current
                Assets**Cash
            
            $
            226,979
            
            $
            274,244Trade
                accounts receivable, net of $2,500, respectively, allowance for bad
                debt
            
            
            37,396
            
            
            13,027Other
                receivables
            
            
            4,118
            
            
            10,314Prepaid
                expenses
            
            
            10,214
            
            
            4,693Advances
                to related party - current
            
            
            -
            
            
            4,573**Total
                Current Assets**
            
            
            278,707
            
            
            306,851**Property
                and Equipment**Computer
                equipment
            
            
            46,258
            
            
            41,306Less:
                Accumulated depreciation
            
            
            (30,340
            )
            
            (24,578
            )**Net
                Property and Equipment**
            
            
            15,918
            
            
            16,728**Total
                Assets**
            
            $
            294,625
            
            $
            323,579**LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                Liabilities**Trade
                accounts payable
            
            $
            -
            
            $
            664Accrued
                liabilities
            
            
            41,712
            
            
            18,141Deferred
                revenue
            
            
            102,027
            
            
            96,525**Total
                Current Liabilities**
            
            
            143,739
            
            
            115,330**Stockholders'
                Equity**Class
                N convertible shares (and Class X shares of Amalco) - $0.01 par value;
                70,896,789 shares authorized; 60,539,259 and 61,175,681 shares issued
                and
                outstanding, respectively
            
            
            605,393
            
            
            611,757Common
                shares - $0.01 par value; 179,103,211 shares authorized; 77,108,214
                and
                76,471,792 shares issued and outstanding
            
            
            771,082
            
            
            764,218Additional
                paid-in capital
            
            
            34,315
            
            
            33,565Accumulated
                deficit
            
            
            (1,259,904
            )
            
            (1,201,291
            )**Total
                Stockholders' Equity**
            
            
            150,886
            
            
            208,249**Total
                Liabilities and Stockholders' Equity**
            
            $
            294,625
            
            $
            323,579











The
      accompanying notes are an integral part of these consolidated financial
      statements.








F-3





**RECYCLENET
      CORPORATION AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**








***For
                the Years Ended December 31,***
            
            **2005**
            
            **2004****Sales**
            
            $
            917,604
            
            $
            738,246**Operating
                Expenses**Selling,
                general and administrative expenses
            
            
            908,299
            
            
            738,389Foreign
                currency exchange (gain) loss
            
            
            3,788
            
            
            (6,278
            )**Total
                Operating Expenses**
            
            
            912,087
            
            
            732,111**Income
                From Continuing Operations**
            
            
            5,517
            
            
            6,135**Discontinued
                Operations**Loss
                from discontinued operations
            
            
            (64,130
            )
            
            (1,685
            )Gain
                on disposal of discontinued operations
            
            
            -
            
            
            5,569**Income
                (Loss) on Discontinued Operations**
            
            
            (64,130
            )
            
            3,884**Net
                Income (Loss)**
            
            $
            (58,613
            )
            $
            10,019**Basic
                Income (Loss) Per Common Share From**Continuing
                operations
            
            $
            -
            
            $
            -Discontinued
                operations
            
            
            -
            
            
            -**Basic
                Income (Loss) Per Common Share**
            
            $
            -
            
            $
            -**Diluted
                Income (Loss) Per Common Share From**Continuing
                operations
            
            $
            -
            
            $
            -Discontinued
                operations
            
            
            -
            
            
            -**Diluted
                Income (Loss) Per Common Share**
            
            $
            -
            
            $
            -**Basic
                Weighted-Average Common Shares Outstanding**
            
            
            76,508,584
            
            
            76,307,379**Diluted
                Weighted-Average Common Shares Outstanding**
            
            
            137,047,843
            
            
            137,483,060










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, 2005 AND 2004**











Class
                N Common Shares
              (and
                Class X Shares
              of
                Amalco)
            
            Common
                Shares
            
            Additional
                Paid-in
            
            Accumulated
            
            Total
                Stockholders'Shares
            
            Amount
            
            Shares
            
            Amount
            
            Capital
            
            Deficit
            
            Equity**Balance
                - December 31, 2003**
            
            
            61,175,681
            
            $
            611,757
            
            
            76,171,792
            
            $
            761,718
            
            $
            28,565
            
            $
            (1,211,310
            )
            $
            190,730Issuance
                of Common Shares for consulting services
            
            
            -
            
            
            -
            
            
            250,000
            
            
            2,500
            
            
            5,000
            
            
            -
            
            
            7,500Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            10,019
            
            
            10,019**Balance
                - December 31, 2004**
            
            
            61,175,681
            
            
            611,757
            
            
            76,421,792
            
            
            764,218
            
            
            33,565
            
            
            (1,201,291
            )
            
            208,249Issuance
                of Common Shares for marketing expense
            
            
            -
            
            
            -
            
            
            50,000
            
            
            500
            
            
            750
            
            
            -
            
            
            1,250Conversion
                of Class N shares to common sheres
            
            
            (636,422
            )
            
            (6,364
            )
            
            636,422
            
            
            6,364
            
            
            -
            
            
            -
            
            
            -Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (58,613
            )
            
            (58,613
            )**Balance
                - December 31, 2005**
            
            
            60,539,259
            
            $
            605,393
            
            
            77,108,214
            
            $
            771,082
            
            $
            34,315
            
            $
            (1,259,904
            )
            $
            150,886

















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 Years Ended December 31,***
            
            **2005**
            
            **2004****Cash
                Flows from Operating Activities:**Net
                income (loss)
            
            $
            (58,613
            )
            $
            10,019Adjustments
                to reconcile net income (loss) to net cash from operating
                activities:Depreciation
            
            
            5,761
            
            
            4,117Foreign
                currency exchange (gain) loss
            
            
            (3,788
            )
            
            6,278Issuance
                of common shares for marketing expense
            
            
            1,250
            
            
            -Allowance
                for doubtful accounts
            
            
            -
            
            
            (193
            )Changes
                in assets and liabilities:Accounts
                and other receivables
            
            
            (17,964
            )
            
            19,093Prepaid
                expenses
            
            
            (5,267
            )
            
            499Accounts
                payable and accrued liabilities
            
            
            34,055
            
            
            14,745Deferred
                revenue
            
            
            5,025
            
            
            24,604**Net
                Cash from Operating Activities**
            
            
            (39,541
            )
            
            79,162**Cash
                Flows from Investing Activities:**Collection
                of advances to related party
            
            
            4,573
            
            
            5,889Purchase
                of property and equipment
            
            
            (5,004
            )
            
            (13,386
            )**Net
                Cash from Investing Activities**
            
            
            (431
            )
            
            (7,497
            )**Cash
                Flows from Financing Activities:**
            
            
            -
            
            
            -**Effect
                of Exchange Rate Changes on Cash**
            
            
            (7,293
            )
            
            (10,717
            )**Net
                Change in Cash**
            
            
            (47,265
            )
            
            60,948**Cash
                at Beginning of Period**
            
            
            274,244
            
            
            213,296**Cash
                at End of Period**
            
            $
            226,979
            
            $
            274,244














The
      accompanying notes are an integral part of these consolidated financial
      statements.








F-6







**RECYCLENET
      CORPORATION**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2005 AND 2004**





**NOTE
      1-ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES**





***Basis
      of Presentation*** -The
      accompanying financial statements present the consolidated financial position
      of
      RecycleNet Corporation and subsidiaries and the results of their operations
      and
      their cash flows in accordance with accounting principles generally accepted
      in
      the United States of America. The consolidated entities are referred to
      hereafter as RecycleNet or the Company.





***Consolidation*** - The
      accompanying consolidated financial statements include the accounts of
      RecycleNet Corporation and its wholly-owned subsidiaries. Inter-company accounts
      and transactions have been eliminated in consolidation. During November 2005,
      the Company decided to spin off Scrap China, effective January 2006, to the
      Company’s shareholders. During the year ended December 31, 2004, the Company
      discontinued its equipment sales segment. Accordingly, the Company has reflected
      these operations as discontinued. Discontinued operations are discussed further
      in Note 7.





***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 data bases 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.





***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 cash, trade accounts receivable,
      advances to related party, accounts payable, accrued liabilities and deferred
      revenues are considered to be reasonable approximations of their fair values.





***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 gain or loss is included in operations. Depreciation
      is
      computed using the straight-line method over the estimated useful lives of
      the
      equipment, which are three to five yeas. Depreciation expense was $5,761 and
      $4,117 for the years ended December 31, 2005 and 2004,
      respectively.








F-7








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, 2005 and 2004.





***Revenue
      Recognition*** -
      Revenue from services are recognized as the services are provided. Web site
      advertising services are charged on a monthly 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, HTML linking services,
      advertising, and web page construction. The Company charges a per-client,
      per-month repetitive service fee, regardless of the services provided. With
      respect to the Internet portal sites that facilitate e-commerce trading, the
      Company only charges a monthly 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, 2005 and 2004 were $36,010 and $7,461
      respectively.





***Reclassification
      —*** Certain
      previously reported amounts have been reclassified to conform to the 2005
      presentation. These reclassifications had no effect on previously reported
      net
      income.





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





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





2005
            
            2004Basic
                weighted-average common shares outstanding
            
            
            76,508,584
            
            
            76,307,379Dilutive
                effect of Class N shares
            
            
            60,539,259
            
            
            61,175,681Diluted
                weighted-average common shares Outstanding
            
            
            137,047,843
            
            
            137,483,060










F-8








For
      the
      year ended December 31, 2005, the Company had 60,539,259 potentially issueable
      common shares that were excluded from the calculation of diluted loss per share
      due to their anti-dilutive effects.





**NOTE
      3-INCOME TAXES**





Deferred
      tax assets are comprised of the following at December 31, 2005 and 2004:





2005
            
            2004Operating
                loss carry forwards
            
            $
            479,411
            
            $
            481,733Less:
                Valuation allowance
            
            
            (479,411
            )
            
            (481,733
            )Net
                Deferred Tax Asset
            
            $
            -
            
            $
            -








The
      Company had no income tax expense for the years ended December 31, 2005 and
      2004.





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:





2005
            
            2004Tax
                expense at statutory rate (34%)
            
            $
            1,876
            
            $
            3,406Nontaxable
                exchange loss
            
            
            1,499
            
            
            (4,818
            )Change
                in deferred tax asset valuation allowance
            
            
            (2,322
            )
            
            1,924Benefit
                of operating loss carryforward
            
            
            (484
            )
            
            -Other
            
            
            (569
            )
            
            (512
            )Net
                Income Tax Expense
            
            $
            -
            
            $
            -








The
      Company has U.S. federal operating loss carry forwards of $1,284,245 that expire
      from 2005 through 2024. The use of U.S. operating loss carry forwards are
      limited and may not be available to offset future income. If tax benefits from
      the U.S. operating loss carry forwards acquired in the acquisition of Garbalizer
      are realized in the future, they will be recognized as a reduction of income
      tax
      expense.





**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. During the year ended December 31, 2005 636,422 Class N shares
      were converted to common shares. Prior to December 31, 200, 9,721,108 Class
      N
      shares have been converted to common shares. At December 31, 2005, 60,539,259
      Class N shares remained outstanding. The Class N shares have voting rights
      of
      one vote per share and are non-equity participating. Amalco, the Ontario
      subsidiary of the Company, is authorized to issue an unlimited number of Class
      X
      common shares. The Class X common shares of Amalco 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 of Amalco into one
      common share of the Company, solely at the option of the holders.








F-9








In
      June
      2005, the Company purchased the web domain iolcentral.com in exchange for 50,000
      shares of common stock. The shares were valued at $1,250 or $0.025 per share,
      which was the market value of the common stock on the date the purchase was
      entered into. The $1,250 was immediately expensed as marketing
      expense.





**NOTE
      5-RELATED PARTY TRANSACTIONS**





On
      June
      15, 2005, the Company formed a new wholly owned subsidiary, Scrap China
      Corporation, and invested $10,000 in exchange for 10,000,000 shares of Scrap
      China Common stock, which represented 100% of the outstanding common stock
      of
      Scrap China.





In
      October 2002, the Company converted a $17,500 unsecured receivable from a
      company related through common ownership to a 4% note receivable. For the years
      ended December 31, 2005 and 2004, the Company received principal payments of
      $4,573 and $5,889 leaving a balance of $0 and $4,573 respectively.





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.





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 employees as does Inter- Continental. The management/staff
      charges for the years ended December 31, 2005 and 2004 were $332,586 and
      $277,971 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,
      2005 and 2004 were $52,563 and $44,280 respectively.





Inter-Continental
      Recycling Inc. and the Company are also engaged in a merchant services
      agreement. On behalf of Inter-Continental Recycling Inc. the Company operates,
      maintains, bills and collects payments for services offered on web sites owned
      by Inter-Continental Recycling Inc. The Company then issues payment to
      Inter-Continental Recycling Inc. for an agreed upon rate. The commissions paid
      recorded by the Company for this merchant service agreement with
      Inter-Continental Recycling Inc. for the years ending December 31, 2005 and
      2004
      were $46,525. and $13,077. respectively.





The
      Company has office space in a facility owned by the President of the Company.
      For the years ended December 31, 2005 and 2004, rent expense was $1,983 and
      $1,530, respectively.





Under
      the
      terms of a distribution rights agreement related to the Rhodium WebWeaver
      TurnKey E-Commerce system, the Company is obligated to pay 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, 2005 and 2004 no royalty
      payments were required under this agreement.





F-10








**NOTE
      6-SEGMENT INFORMATION**





Accounting
      principles generally accepted in the United States of America establish
      disclosures related to components of a company for which separate financial
      information is available and evaluated regularly by the company’s chief
      operating decision makers in deciding how to allocate resources and in assessing
      performance. They also require segment disclosures about products and services
      as well as geographic area.





Prior
      to
      December 2004 the Company had operations in two segments of its Internet
      business, namely: Internet Portal Services and Internet Sales of Equipment
      (Andela Products Ltd.). As discussed in Note 7 the company discontinued
      operations of Internet Sales Equipment (Andela Products Ltd.) therefore segment
      disclosure is no longer required.








**NOTE
      7-DISCONTINUED OPERATIONS**





On
      November 24, 2005, the Board of Directors of approved a pro-rata spin-off of
      all
      shares of Scrap China Corporation effective January 20, 2006.





The
      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 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 it no
      longer is a wholly owned subsidiary of RecycleNet Corporation.





In
      December 2004, the Company divested its holdings in Andela Products Ltd. In
      the
      six years of operations, the Company was not able to realize a profit from
      this
      segment of the business. The Company sold its stake in Andela Products Ltd
      to
      James and Cynthia Andela for the sum of $2. Upon disposal of this segment of
      the
      business the Company realized a gain in the amount of $5,569 for recovery of
      prior losses of Andela Products Ltd.





A
      summary
      of the results from discontinued operations for the years ended December 31,
      2005 and 2004 are as follows:





2005
            
            2004Net
                revenue
            
            $
            -
            
            $
            -Operating
                expenses - Andela
            
            
            -
            
            
            1,685Operating
                expenses - Scrap China
            
            
            64,130
            
            
            -Loss
                from operations
            
            
            (64,130
            )
            
            (1,685
            )Gain
                on disposal
            
            
            -
            
            
            5,569Income
                tax expense
            
            
            -
            
            
            -Net
                income (loss) from discontinued operations
            
            $
            (64,130
            )
            $
            3,884







F-11








**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS**





None.





**ITEM
      8A. CONTROLS AND PROCEDURES**





As
      of the
      end of the period covered by this report, the Company conducted an evaluation,
      under the supervision and with the participation of the principal executive
      officer and principal financial officer, of the Company’s disclosure controls
      and procedures (as defined in Rules 13a-15(e) and 15d015(e) under the Securities
      Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, the
      principal executive officer and principal financial officer concluded that
      the
      Company’s disclosure controls and procedures are effective to ensure that
      information required to be disclosed by the Company in reports that it files
      or
      submits under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in Securities and Exchange Commission rules
      and forms.





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





**Part
      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
            
            49
            
            Chairman
                of the Board, President
            
            Inception
                to PresentRichard
                R. Ivanovick C.A.
            
            65
            
            Chief
                Financial Officer,
            
            03/99
                to PresentKeith
                A. Deck
            
            69
            
            Director
            
            06/00
                to Present




Paul
      Roszel has been involved with the Company since 1988. Mr. Roszel has over 22
      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 twenty-eight
      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.






13








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.





**INVOLVEMENT
      IN CERTAIN LEGAL PROCEEDINGS:**





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








**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.





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 2005 and
      2004
      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.
















14





Summary
      Compensation Table





Name
                & Principal Positions
            
            Fiscal
                Year
            
            SalaryPaul
                Roszel, President & Chairman
            
            
            2005
            
            $
            85,0602004
            
            $
            65,459Richard
                R. Ivanovick, CFO
            
            
            2005
            
            $
            33,048(Note
                1)
            
            
            2004
            
            $
            30,804Keith
                A. Deck, Director
            
            
            2005
            
            $
            NIL(Note
                1)
            
            
            2004
            
            $
            NIL





NOTE
      1:
      During the years ended December 31, 2005 and 2004 Richard R Ivanovick, CFO
      was
      paid for consulting services of $33,048 and $30,804 respectively. Keith A Deck
      did not receive any funds in the year ended December 31, 2005 or for the year
      ended December 31, 2004. Subsequent to December 31, 2003, neither had drawn
      any
      salary or benefits.








**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**





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
            
            58,033,269
                shares (voting) 95.86Recycling,
                Inc. (Note 2 & 3)7
                Darren PlaceGuelph,
                Ontario CanadaClass
                N
            
            Paul
                Roszel (Note3)
            
            676,012
                shares (voting) 1.12%7
                Darren PlaceGuelph,
                Ontario CanadaClass
                N
            
            Richard
                R. Ivanovick
            
            no
                shares (voting) 0.00%23
                Cottontail PlaceCambridge,
                Ontario CanadaClass
                N
            
            Keith
                A. Deck
            
            no
                shares (voting) 0.00%46
                Sherwood Dr.Guelph,
                Ontario CanadaCommon
            
            Inter-Continental
            
            38,587,852
                shares (voting) 50.04%Recycling,
                Inc. (Note 2 & 3)(see
                above address)Common
            
            Paul
                Roszel (Notes 2 & 3)
            
            2,668,118
                shares (voting) 3.46%(see
                above address)Common
            
            Richard
                R. Ivanovick C.A.
            
            4,105,622
                shares (voting) 5.32%(see
                above address)Common
            
            Keith
                A. Deck
            
            812,004
                shares (voting) 1.05%(see
                above address)








15








Note(1)
            Class
                N shares are convertible into common shares on a one for one basis.
                As of
                December 31, 2005, there were 60,539,259 Class N shares outstanding.
                At
                the same date, there were 77,108,214 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 owns 676,012 Class N shares in his own name of which he has
                voting
                power. In addition, he may be deemed to be a beneficial owner of
                the
                58,033,269 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.





RecycleNet
      Corporation is billed $4,380 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 58,033,269 Class N shares and 38,587,852 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 2005, 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.











16






**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 with
      a
      contributed share capital of approximately $1.35. ****





**DESCRIPTION
      OF SECURITIES**





The
      Company has authorized 250,000,000 common shares, par value $.01, of which
      77,108,214 common shares were issued and outstanding at December 31, 2005 and
      60,539,259 Class N voting, non-equity shares were outstanding at December 31,
      2005. 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.











17







**ITEM
      13. EXHIBITS AND REPORTS ON FORM 8-K**





**Exhibit**
            **Description**20
            Consent
                Resolution dated November 24, 2005. Filed on November 30,
                2005







**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,
                200131.1
            Chief
                Executive Officer Certification under Section 302 of the Sarbanes-Oxley
                Act of 2002.31.2
            Chief
                Financial Officer Certification under Section 302 of the Sarbanes-Oxley
                Act of 2002.32.1
            Chief
                Executive Officer Certification under Section 906 of the Sarbanes-Oxley
                Act of 2002.32.2
            Chief
                Financial Officer Certification under Section 906 of the Sarbanes-Oxley
                Act of 2002.








**ITEM
      14. Principal Accountant Fees and Services**





Hansen,
      Barnett & Maxwell served as our independent registered public accounting
      firm for the years ended December 31, 2005 and 2004, and is expected to serve
      in
      that capacity for the current year. Principal accounting fees for professional
      services rendered for us by Hansen, Barnett & Maxwell for the years ended
      December 31, 2005 and 2004 are summarized as follows:





**2005**
            
            **2004**Audit
            
            $
            12,119
            
            $
            14,322Audit
                related
            
            
            -
            
            
            -Tax
            
            
            731
            
            
            710All
                other
            
            
            -
            
            
            -Total
            
            $
            12,850
            
            $
            15,032










18





***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.





***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.













































































19








**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,
      2005











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,
      2006





BY: /s/
      Paul
      Roszel


Paul
      Roszel, Chairman of the Board of Directors








March
      31,
      2006





BY: /s/
      Richard R.
      Ivanovick


Richard
      R. Ivanovick, C.A., CFO














20