RECYCLENET CORP, 10SB12G, 1999-12-02

RECYCLENET CORP
10SB12G, 1999-12-02

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-SB

GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS

ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934

RecycleNet Corporation
(Name of Small business Issuer in its charter)

Utah 87-0301924
----------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

7 Darren Place, Guelph, ON. NIH 6J2 Canada
- - - - -------------------------- ----------------
(Address of principal executive (Zip Code)
offices)

Issuer's telephone number (519)-767-2913

Securities to be registered under Section 12 (b) of the Act:

Title of each class Name of each exchange on which
to be so registered Each class is to be registered

N/A N/A
--------------------- -------------------------------

Securities to be registered under Section 12(g) of the Act:
Common Shares, Par value $.01
-----------------------------

(Title of Class)

______________________________________________________________________

(Title of Class)

<PAGE>
1

PART 1

PART 1, ITEM 1(a)
DESCRIPTION OF BUSINESS
-----------------------

RecycleNet Corporation ("Company") is a Utah corporation
originally incorporated on December 29, 1961. The Company
(formerly named The Garbalizer Machinery Corporation) was formally
reorganized on March 19, 1999 and the name was changed to
RecycleNet Corporation.

Neither the Company as presently constituted nor any of its
predecessors has filed for any bankruptcy, receivership, or
similar proceedings.

Prior to the March 19, 1999 reorganization, the assets less
liabilities of Garbalizer Machinery Corporation were sold to
Garb-Oil & Power Corporation (Utah). The Company engaged in
reverse share acquisition reorganization with RecycleNet (Ontario)
a company originally incorporated on December 22, 1997, under the
laws of the province of Ontario, Canada. 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 Garbalizer Machinery Corporation. The Class N shares
are exchangeable into common shares of Garbalizer Machinery
Corporation (on a one Class N share for one common share basis).

<PAGE>

As at November 15, 1999 the Company has authorized 150,000,000
common shares with 10,643,941 common shares and 68,130,269 Class
N shares outstanding.

The Company is engaged in providing Internet web services and
E-Commerce services to both the business-to-business and
business-to-consumer communities.

<PAGE>
3

PART 1, ITEM 1(B)

INDUSTRY BACKGROUND - GROWTH OF THE INTERNET AND ON LINE COMMERCE
-----------------------------------------------------------------

The Internet has emerged as a global medium enabling millions of
people world wide to share information, communicate, and conduct
business electronically. International Data Corporation ("IDC")
estimates that the number of Web users will grow from
approximately 150,000,000 worldwide in 1998 to approximately
500,000,000 worldwide by the end of 2003. Since its emergence as
a mass communications medium, the Internet has features and
functions that are unavailable in traditional media. As a result,
the Internet has quickly emerged as a success-critical medium.
According to Jupiter Communications, Internet advertising and
promotion is projected to grow from approximately $1.9 billion in
1998 to $7.7 billion in 2002. Also, according to Forrester
Research, business-to-business Internet advertising and promotion
is projected to grow from $290 million in 1998 to approximately
$2.6 billion in 2002. Finally, according to Forrester research,
business-to-business electronic commerce is projected to grow from
$17 billion in 1998 to $327 billion in 2002.

The growing adoption of the Web represents an enormous opportunity
for businesses to conduct commerce over the Internet. IDC
estimates that commerce over the Internet will increase from
approximately $40 billion world wide in 1998 to approximately $900
billion world wide in 2003. Companies focused on facilitating and
conducting transactions between businesses over the Internet
typically use the Internet to offer products and services that can
be easily described with graphics and text and do not necessarily
require physical presence for purchase or trade. The Internet

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4

gives these companies the opportunity to develop relationships
with customers world wide from a central location without having
to make significant investments required to develop wholesale or
retail facilities or develop printing and mailing infrastructure
associated with traditional direct marketing activities. As such,
there are significant benefits in business-to-business and
business-to-consumer transactions over the Internet.

PART 1, ITEM 1(c)

THE COMPANY'S WEB SITES
-----------------------

The Company has developed a wide variety of Internet based
information technology services/products, which are available
globally through several web sites owned by the Company. The web
sites are:
1) Recycler's World - a world wide trading site for
information relating to secondary or recyclable
commodities, by-products, and used and surplus items
or materials. It can be accessed at www.recycle.net

2) C.R.U.M.B. (Crumb Rubber Universal Marketing
Bureau)-Established in 1997 as a global
business-to-business resource and source of
information specializing in crumb rubber trade. Crumb
rubber is the product of shredding and granulating
tires to a fine particulate consistency. This site can
be accessed at www.rubber.com/crumb
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5

3) auto.recycle.net - This site facilitates an
Internet used vehicle marketplace.

4) equip.recycle.net - This site provides on line
access to a used equipment marketplace.

5) used.recycle.net - This site provides access to a
used and collectable marketplace.

6) SEC-MAT- A site providing secondary materials and
commodities clearing house functions. This site can be
accessed at www.sec-mat.com

Each of the industries specific web sites functions as a
business-to-business trading resource and a business-to-consumer
marketplace. RecycleNet Corporation derives its revenues from
three business segments, namely Internet portal services,
proprietary exchange software and E-commerce services. Within
those segments are revenues from businesses and persons
advertising on the web pages, construction of web pages by the
Company for others, HTML Link fees and subscription fees from
persons and businesses listed in the directories listed below.
Also, the Company believes that fees to be generated from
activities associated with
"E-Commerce" as discussed herein will provide significant future
revenue to the Company.

<PAGE>
6

PART 1, ITEM 1(d)
INTERNET PORTAL SERVICES
------------------------
The Recycler's World web site functions as a "front door" or
portal to information on the waste/recycling industry and trading
of secondary commodities and used items. In it's capacity as an
industry specific Internet portal, the Recycler's World provides
the following on line services:

Trade Directory:
----------------
The Recycler's World web site maintains a recycling industry trade
directory that lists Traders & Recyclers from around the world.
The Recycler's World Trade Directory is freely accessible to
anyone with Internet access. It is organized alphabetically and
by industry specialization or sector. Directory listings for
companies include full contact information, and
e-mail reply form and links to the Company's own web site where
applicable.

Equipment Directory:
-------------------
The Recycler's World web site maintains a recycling equipment
directory that lists OEM Equipment Manufactures and distributors
from around the world and is organized alphabetically, by industry
specialization or sector and by equipment type. Directory
listings for companies include full contact information and e-mail
reply form and links to the Company's web site where applicable.

Association Directory:
----------------------
The Recycler's World web site maintains a recycling industry
association directory that lists member based recycling
organizations from around the world and is organized
alphabetically and by industry specialization or sector. It
includes directory listings for associations with full contact
information, and e-mail form and links to the association's web
site where applicable.

<PAGE>
7

Publication Directory:
----------------------
The Recycler's World web site maintains a recycling industry
publication directory that lists recycling related publications
from around the world and is organized alphabetically and by
industry specialization or sector. Directory listings for
publications, journals and magazines include full contact
information and e-mail reply forms and links to the publication's
web site where applicable.

Exchange Directory:
-------------------
The Recycler's World web site maintains a directory that lists
recycling related information or commodity exchanges from around
the world and is organized alphabetically and by industry
specialization or sector. Directory listings for exchanges
include full contact information, and e-mail reply form and links
to the exchange's web site where applicable.

Industry Specific E-mail Forums:
--------------------------------
This is free for the general industry and public to view and
interact with each other and is organized by industry
specialization or sector. These e-mail based forums provide
subscribers with a free system for exchanging industry/sector
specific news, questions and answers, comments, technical
bulletins, among others.

Home Pages, Web Site Hosting and Internet Service Provider Services:
-------------------------------------------------------------------

The Company provides development, consulting and hosting services
for the general industry and public to view and interact with each
other. A corporate home page on a web site functions to promote a
company's products and services. Elements included on a home page
or web site may also facilitate e-commerce for that particular
company. The Company also provides custom Internet dial-up access
and services.

<PAGE>
8

Targeted Graphic Advertising:
-----------------------------

Targeted graphic advertising opportunities exist throughout the
more than 7,000 web pages within the Company's web site,
Recycler's World. Comparative statistics show that advertisers
pay more for targeted ads than for general ads. Also attracted
are small to mid-sized advertisers due to the cost effective
advertising that reaches highly targeted user bases.

PART 1, ITEM (e)
INTERNET EXCHANGE SOFTWARE
--------------------------

The Company has developed several Internet server based software
products and services. These value enhanced added software
products/services provide users with the ability to enhance their
presence on the Internet, generate and/or receive high quality
sales lead related information, and respond more effectively and
efficiently to qualified sales leads. The software products and
services include:

The Recycler's Exchange:
-----------------------
The Recycler's Exchange is a free buy/sell/trade listing service
that allows anyone with internet access to post any items they
wish to buy, sell or trade. The Recycler's Exchange has over 177
categories and covers the spectrum of used items, used equipment,
waste & scrap materials, a $ 300 billion/year industry.

On-line Inventory Service:
--------------------------
The On-line Inventory Service is a server-based software that
enables a customer to create dynamic web pages off their entire
inventory. Customers have the ability to update their pages
on-line "at will" and may also include pictures of the items
listed. Items listed in the On-line Inventory Service are also
integrated into The Recycler's Exchange.

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9

On-Line Market Price System:
---------------------------

The On-Line Market Price System is a server-based software that
enables customers to list their over-the-scale buying prices for
specific items or grades of materials they wish to purchase. The
On-Line Market Price System is dynamic, customers can edit their
prices "at will" and the terms are unique to F.O.B. (shipping
point) and grade.

The RecycleNet Composite Index:
------------------------------

The RecycleNet Composite Index provides real time market trend
information by taking a snapshot of the On-Line Market Price
System. The RecycleNet Composite Index is available both on-line
and through a subscription service.

Xchange Listing Service:
------------------------

This Xchange Listing Service software enables customers to create
a dynamic set of web pages listing all items they wish to buy or
sell. Customers have the ability to update their pages on-line "at
will" and may also include pictures of the items listed. Items
listed in Xchange Listing Service are also integrated into The
Recycler's Exchange.

Turn-Key Internet Exchange Software:
------------------------------------

The Turn-Key Internet Exchange Software is a server-based software
provides customers with a turn-key business opportunity and
enables customers to operate their own distinct Internet based
exchange business.

<PAGE>
10

PART 1, ITEM (f)
E-COMMERCE
----------

The Company operates a secure server to support electronic
commerce and services. The Company is currently developing
additional services that incorporate e-commerce features. These
services will enable customers to conduct secure financial
transactions over the Internet.

One such service under development is the Company's Secondary
Commodity Clearing Service. This e-commerce based service will
allow RecycleNet Corporation to retain a portion of the
transactional value of the goods traded via the system. The
company anticipates an average fee of 10% of the value of the
goods traded. The company is unable to estimate the proportion of
market share it can capture. It is estimated that the North
American marketplace for recycled commodities exceeds 300 billion
dollars per year in trade.

The Company believes a strategic opportunity exists related to the
distribution of hardware and software supporting e-cash
transactions. E-cash is a system of electronically transferring
cash values using Smart Card technology. A Smart Card resembles a
standard plastic credit card (including the magnetic strip on the
reverse side) and has a small gold-embossed silicon chip embedded
on the card in which data is stored including cash balances owned
by the holder. The evolution of e-cash is a new and dynamic
dimension to e-commerce, over and above the existing credit card
transaction technology. The Company believes that the
e-cash system is uniquely compatible to the trading of goods,
commodities and services.

The Company believes that the Internet system and it's associated
technologies such as email, world wide web, instant messaging,
e-commerce, among others, provides the potential for any person or

<PAGE>
11

company in any industry to conduct business electronically. The
exchange of goods among individuals and business traditionally has
been conducted through trading forums such as classified
advertisements, newsletters, person to person trading and other
similar devices which had historically been inefficient for many
reasons including the difficulty and expense for buyers and
sellers traditionally to meet, exchange information and complete
transactions, limited varieties in goods offered by any single
individual or trader, high transaction costs, lack of a reliable
and efficient means of setting prices for sales and purchases.

The Company believes it has developed and continues to develop
targeted and trade specific information technology
services/products, which may be used by companies for
e-commerce and other trade related purposes. These
services/products assist companies and individuals in harnessing
the potential that the Internet offers. Further, these services
are constantly evolving to accommodate new technology, customer
feedback, and regulatory requirements. The Company plans to
continue to develop additional services.

<PAGE>
12

PART 1, ITEM (g)
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 believes that the design of its web sites applies
technology to deliver personalized service programs to insure
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 and free
services. Marketing strategy consists of traditional print media
advertising, direct and indirect outbound e-mail advertising,
Internet advertising, trade show participation, trade association
partnerships and strategic alliances with other media and related
companies and organizations.

PART 1, ITEM (h)
COMPANY HISTORY
---------------

Prior to May 1995, Paul Roszel, an officer, director and principal
shareholder of the Company published 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. In late 1994, as the popularity of
the Internet grew, Mr. Roszel began work on physically developing
the concept of an electronic format web site 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 electronically
distributed worldwide. The web site was activated on-line on May
1, 1995.

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13

During the early development stages, (1995-1997) RecycleNet was
operated as a sole proprietorship by Mr. Roszel. RecycleNet
Corporation (an Ontario private corporation) was incorporated on
December 22, 1997.

During 1998, RecycleNet Corporation participated in an electronic
cash pilot program, which was conducted by Mondex Canada.

On February 25, 1999, RecycleNet Corporation (Ontario) entered
into a reorganization agreement with Garbalizer Machinery
Corporation of Utah, a company whose shares are publicly traded on
the over the counter bulletin board utilizing the symbol "GARM".
On March 19, 1999, the reorganization was consummated with
Garbalizer Machinery Corporation surviving and changing its name
to RecycleNet Corporation (a Utah corporation) and acquiring all
of the common shares of RecycleNet Corporation (Ontario) for
shares of the Utah Company. The Company has retained the market
symbol "GARM" as its market symbol and as an acronym for the
slogan, "Global Access to Recycling Markets".

In the past four years, the Company has developed and implemented
a broad range of software solutions including site management,
sales management, search, customer interaction, and transaction
processing systems using a combination of proprietary custom
designed technologies and commercially available, license
technologies. The scaleable structure of the Company's hardware
and software allows for rapid deployment of new web site features
and services, while maintaining user performance standards. In
the rapidly changing Internet environment, the ability to update
an application to stay current with new technologies it's
custom designed systems and flexible data base design allow for
the addition, modification, or replacement of web site content in
a cost efficient and expeditious manner.

<PAGE>
14

The Company currently uses UNIX BSD and APACHE software as its web
server. Its Internet servers are located in Cambridge, Ontario,
Canada. Supervisory staff provide professional Internet hosting
facilities and redundant high speed Internet connectivity.
Supervisory staff provide monitoring and support 24 hours a day, 7
days a week, supplementing the system administrators.

The Company has developed it's own content and web site management
tools to facilitate the maintenance and updating of it's web
sites. Web site management tools enable the company's staff to
update its web sites from remote locations throughout the day.

The market in which the Company competes is characterized by
rapidly changing technology, evolving industry standards, frequent
new service and product announcements, and changing customer
demands. Accordingly, the Company's future success may depend on
it's ability to adapt to rapidly changing technologies, to adapt
it's services to evolving industry standards and to continually
improve the performance, features and reliability of it's service
in response to competitive service and product offerings and
evolving demands of the market place. The failure of the Company
to adapt to such changes would harm the Company's business. In
addition, the wide spread adoption of new internet, networking or
telecommunications technologies or other technological changes
could require substantial expenditures by the Company to modify or
adapt it's services or infrastructure.

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15

PART 1, ITEM (i)
NEW AND EXISTING REGULATIONS OF THE INTERNET
--------------------------------------------

The Company is subject to the same federal, state and local laws
as other companies conducting business on the Internet.
Currently, there are relatively few laws specifically directed
towards on-line services. Due to the increasing popularity and
use of the Internet and on-line services, however, it is possible
that laws and regulations will be adopted with respect to the
Internet or on-line services. These laws and regulations could
cover issues such as on-line contracts, user privacy, freedom of
expression, pricing, fraud, content and quality of products and
services, taxation, advertising, intellectual property rights and
information security. Applicability to the Internet of existing
laws governing these issues is uncertain. The application of
current and future laws to persons doing business on the internet
would not likely have a harmful effect or result in a competitive
disadvantage to the Company inasmuch as all entities doing
business on the internet would likely be subject to the same
regulations and laws.

PART 1, ITEM (j)
EMPLOYEES
---------
The Company has no employees. All management and staff are
retained on a contract basis as required under a related party
transaction with Inter-Continental Recycling Inc.

<PAGE>
16

PART 1, ITEM (k)
FACILITES
---------
The Company maintains shared office space at 7 Darren Place,
Guelph Ontario Canada and this space is provided at no charge to
the company by Inter-Continental Recycling Inc.

PART 1, ITEM (l)
LEGAL PROCEEDINGS
-----------------
Neither the Company nor any of it's officers, directors or greater
than 10% beneficial shareholders are involved in any litigation or
legal proceedings involving the business of the Company.

PART 1, ITEM (m)
COMPETITION
-----------
The market for business-to-business trade focused Internet web
sites 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.

It is Management's opinion that the number of business to business
Internet companies relying on Internet-based advertising revenue
will increase greatly in the future, which may increase pricing
pressure on our advertising rates.

<PAGE>
17

PART 1, ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------

PART 1, ITEM 2(a)
FORWARD LOOKING STATEMENTS

Certain statements contained herein constitute "forward-looking
statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
can be identified by the use of predictive, future-tense or
forward-looking terminology, such as "believes," "anticipates,"
"expects," "estimates," "plans," "may," "intends," "will," and
words of similar import. You are cautioned that any such
forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties. You
should not place undue reliance on these forward-looking
statements. Actual results may differ materially from those
projected in the forward-looking statements for many reasons,
including the various risks that the Company faces as described
below, elsewhere in this document and in other documents that the
Company files with the SEC.

The following discussion of the financial condition and results of
operations of the Company should also be read in conjunction with
the financial statements and notes related thereto, included
elsewhere in this report.

PART 1, ITEM 2(B)
OVERVIEW
--------

RecycleNet Corporation is recognized internationally as a pioneer
and leader, providing dynamic and business critical Internet based
information technology services. RecycleNet Corporation provides
"Global Access to Recycling Markets" (GARM) through dynamic
Internet portals that facilitate e-commerce trading. The
Company's web sites are described in "Item 1.c. Description of
Business" above.

<PAGE>
18

PART 1, ITEM 2(C)
RESULTS OF OPERATIONS
---------------------
ITEM 2(C) 1. GENERAL
-------
RecycleNet Corporation (an Ontario Private Corporation) was
incorporated on December 22, 1997 and purchased the ongoing
business proprietorship of Mr. Paul Roszel. The Company operated
its business activities and continued to expand its operations
throughout the following period.

On March 19, 1999, RecycleNet Corporation (an Ontario Private
Corporation) completed a reverse share acquisition with the
Garbalizer Machinery Corporation, A Utah Corporation. RecycleNet
Corporation (Ontario) since it's inception, has provided Internet
services and has received all of its sales revenue from these
activities. All of the previous business activities of Garbalizer
Machinery Corporation have not continued on in the new parent.
Consequently, all of the following financial cata being discussed
will not compare any Garbalizer Machinery Corporation figures with
it's relevant comparisons.

Throughout the reporting periods shown hereafter, commone
stock was issued for various items (ie. business & start-up costs;
merger costs; professional fees and marketing expenses). United
States generally accepted accounting principles requires that we
value these shares at reasonable current values when issued.
Consequently, the paid-in-capital of the Company records as
received a substantial paid-in capital and the consolidated
statement of operations records a correspondingly large expense.

To assist the readers of these financial statements, we have
reported nornal opreational sales and expenses resulting in an
operating loss before special expenses.

We have itemized the speical expenses below that are not cash
paid expenses and did not result from any payments from our bank
accounts.

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19

ITEM 2(C) 2. SALES REVENUES
--------------

January 1, 1999- January 1, 1998- JANUARY 1, 1998-
September 30, 1999 September 30, 1998 December 31, 1998
------------------ ------------------ -----------------
Sales
Revenues-US $ $316,300 $75,700 $100,900

Sales revenues for the period January 1, 1999 to September 30,
1999 were $316,300, a 313% increase over the annual previous
year's sales of $100,900, and a 417% increase or $240,600 over the
similar period of 1998.

These favorable sales figures continue to support the high level
of service delivered to our clients with their resulting increase
in traffic at our web sites as well as sales being recorded in our
Andela subsidiary in 1999.

<PAGE>
20

ITEM 2(c) 3. OPERATING EXPENSES
------------------
Treating our operating expenses with a similar discussion as we
detailed above with our sales revenues, below is a table
comparison of the expenses for the reporting periods.

January 1, 1999- January 1, 1998- January 1, 1998-
September 30, 1999 September 30, 1998 December 31, 1998
------------------ ------------------ -----------------
Expenses-US $ $172,400 $71,400 $96,400

Operating Expenses recorded during January 1, 1999 to September
30, 1999 were $172,400, an increase of $101,000 over the same
period ended September 30, 1998.

Salaries and benefits constitute the largest portion of our
operating expenses and have increased during this last period.
The staffing levels have increased recently relative to sales
personnel, as we need additional attention to be offered to the
increased number of inquiries we are receiving for services. Once
these additional personnel are trained, we will record increased
sales revenues, which should offset their expenses.

In addition, legal and accounting costs associated with the
Securities & Exchange Commission filings and some traveling
expenses have also increased our operating expenses. Some of
these costs are one-time up front costs that will be minimized in
the future. Our other general costs are not large and control of
these expenses should not be onerous.

<PAGE>
21

ITEM 2(c) 4. NET PROFIT (LOSS) BEFORE SPECIAL ITEMS
--------------------------------------

Net (loss) for the period ended December 31, 1998 amounted to (US
$9,500). While sales revenues were rising at a strong rate,
initial expenses associated with creating the web site, initial
incorporating and legal costs were incurred early in the year.

January 1, 1999- January 1, 1998- January 1, 1998-
September 30, 1999 September 30, 1998 December 31, 1999
------------------ ------------------ -----------------

Net Profit (loss) ($35,700) ($6,200) ($9,500)
US $ Before Special
Items

The net (loss) in the period ending September 30, 1998 amounted to
($6,200) and was attributed primarily in contracting the core
staff to operate our business as well as accounting and legal
costs associated with starting our business operations.

The net (loss) in the period January 1, 1999 to September 30, 1999
of ($35,700) US is a reflection of the above noted sales revenues,
and higher expenses, which eroded our profit this period. As well,
there were legal and traveling costs associated with the reverse
take over of the Garbalizer Machinery Corporation. The hiring of
additional sales personnel to capture the continuing increased
inquiries contributed primarily to our reduced profit but as the
sales staff becomes trained, our sales revenues will increase to
offset these costs. We expect our operations will improve to
profitability in the near future as we capture these sales revenues.

The operations of Andela Products Ltd. to September 30, 1999
included in these financial statements have operated in
essentially a break-even basis. We expect this operation will
contribute to our profitability in the near future.

<PAGE>
22

ITEM 2(c) 5. NET PROFIT (LOSS)
----------------

Jan. 1, 1999- Jan. 1, 1998- Jan. 1, 1998- Dec. 22, 1997-
Sept. 30, Sept. 30, Dec. 31, 1998 Dec. 31, 1997
1999 1998
------------- -------------- ------------- -------------

Net Profit ($974,800) ($6,200) ($9,500) ($6,198,500)
(loss) US $

As discussed above in our Net Profit (Loss) Before
Special Items, our day-to-day business activities are operating at
a slight loss year to date. As our sales personnel mature in
their duties, our sales revenue will increase without a
proportional increase in expenses. We expect our monthly
operations will show a profit in the very near future.

During the various stages in the formation of the
Company, from inception at December 22, 1997 until September 1999,
common stock was issued for various services such as business
development and start-up; merger costs; professional fees and
marketing.

Generally accepted accounting practice in the United
States requires that we value these shares at the time of
issuance, at a reasonable value. Consequently, in December 1997
shares valued at $6,191,700 were issued for business development
and start-up costs and was recorded as Paid-in Capital of the
Corporation. These costs were also recorded as "Special Expenses"
in the Operating Statement and were written off in their entirety,
resulting in this $6,198,500 non-cash loss.

Similarly, in the nine-month period ending September
30, 1999, additional common stock was issued for equivalent value
of $940,000, increasing the Paid-in Capital of the Company by this
amount. Correspondingly, the Statement of Operations recorded
$940,000 of "Special Expenses" for marketing costs; professional
fees and merger costs which contributed essentially to the
$974,800 loss for the period. Please note that this $940,000 of
"Special Expenses" was not a cash loss and the Balance Sheet
reflects our strong bank and cash position.

<PAGE>
23

ITEM 2(c) 6. LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
As of September 30, 1999, the Company's cash and short-term
investment consisted of $93,800 US and accounts receivable of $52,700 US.
Since we essentially have no debt, nor any bank indebtedness, these funds
will be used to fund general operations and to pursue our
expansion strategy in either hiring additional staff or acquiring
businesses in the future.

RecycleNet Corporation completed the acquisition of Andela
Products Ltd. of Richfield Springs, New York in the quarter ended
June 30, 1999. Andela Products Ltd. is involved in strategic
marketing programs for recyclable commodities and has developed a
unique Internet based service. RecycleNet anticipates Andela
Products Ltd. will add significant revenues for the Company in the
future.

The acquisition of Andela Products Ltd. was completed by utilizing
a contingency of shares of RecycleNet, the Ontario Corporation
that were budgeted prior to the March 19, 1999 reorganization of
the Company; subsequently this acquisition has no effect on the
Company's cash position and no shareholder dilution will take place.

ITEM 2(c) 7. DEFERRED REVENUE
----------------

Deferred revenue results from RecycleNet customers who pay for
their service purchases in advance, such as quarterly, half year,
or annually. RecycleNet records the initial payment in deferred
revenue and then recognizes in each month that proportion which is
provided in services. As at September 30, 1999, deferred revenue
amounted to $43,600 US and will be recorded into sales revenue
each month in the future as these services are provided.

<PAGE>
24

ITEM 2(c) 8. YEAR 2000 COMPLIANCE
--------------------

1) State of Readiness and Costs
The Company currently uses equipment such as computers, servers,
Internet service provider lines, telephones, fax machines,
electricity and software to conduct its business. All of our
current equipment and software is Y2K compliant and we do not
believe we have any costs associated with upgrading any of the
equipment or systems.

2) Risks
Our daily business activities are dependent on our suppliers, to
maintain electricity and to access our Internet lines. Should any
of these systems be interrupted, our suppliers such as Bell Canada
and Ontario Hydro, which are large companies, would be working
frantically to restore service. Internally, the Y2K issue could
result in system failures or miscalculations causing disruptions
of operations, including, among others, a temporary inability to
process transactions, send invoices or engage in similar normal
business activities. Sine we have customers in many countries
around the world, we are at risk if any of the systems in any of
these countries experience service interruptions. However, we
expect that these system interruptions would also be temporary and
that service would be restored quickly by their suppliers.

3) Contingency Plans
RecycleNet is entirely dependant on its suppliers to solve any
interruption of service in any of our supply systems. The
companies that operate these systems are large and have
maintenance personnel who have been trained to solve these
interruption problems. Their history of service restoration has
been quite impressive in previous years and we have been assured
that they have already successfully conducted tests to prove their
competence in the Y2K issue.

<PAGE>
25

If any of our systems were to be interrupted because of Y2K
difficulties, there is sufficient technical personnel in house and
locally in our region to correct any problem immediately. We do
not expect the Y2K issue to have any significant effect on our
Company in the months ahead.

ITEM 2(c) 9. a) 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 and free services. 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 excellent customer service record over the
past four years, RecycleNet 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.

<PAGE>
26

ITEM 2(c) 10. a) Future Plans for Expansion
--------------------------
The Company plans to continue to sell and support its existing
line of information technology products and services. These
products/services have been widely 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 NEW success-critical information technology products and
services. The Company intends to continue to increase the market's
awareness of its products/services using traditional print and
online marketing methods.

The Company's future plans include a program of joint ventures,
strategic alliances, mergers and acquisitions; which will further
reinforce the predominant position it holds as a
business-to-business and business-to-consumer trading resource.

PART 1, ITEM 3
DESCRIPTION OF PROPERTY
-----------------------

The Company does not currently own or lease any operating
facilities. Because of the electronic nature of its business, the
Company does not require permanent operating facilities.

The Company maintains shared office space at 7 Darren Place,
Guelph Ontario Canada and this space is provided at no charge to
the company by Inter-Continental Recycling Inc.

PART 1, ITEM 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
& 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.

<PAGE>
27

Title Name & Address Amount & Nature Percentage of
of Class of Beneficial Owner of Beneficial Owner Ownership
(on a fully
converted basis)
- - - - ----------- ------------------- -------------------- ------------------
(Note 1)

Class N Inter-Continental 58,033,269 shares (voting) 73.70%
Recycling, Inc. (Note 2)
7 Darren Place
Guelph, Ontario Canada

Class N Paul Roszel 3,526,312 shares (voting) 4.48%
7 Darren Place
Guelph, Ontario Canada

Class N Mikael Prydz 517,129 shares (voting) 0.66%
352 Green Acres Drive (Note 3)
Waterloo, Ontario
Canada

Class N Richard Ivanovick 597,722 shares (voting) 0.76%
23 Cottontail Place
Cambridge, Ontario
Canada

Common Garbalizer Corporation 4,489,897 shares (voting & 5.70%
of America investment)
1588 South Main 2nd (Note 4)
Fl. Suite 200
Salt Lake City, Utah
USA

(1) Class N shares are convertible into common
shares on a one for one basis.

(2) Inter-Continental Recycling Inc. is owned and
beneficially held by the immediate family of Mr.
Paul Roszel, a director of the Company.

(3) Mr. Mikael Prydz owns 517,129 Class N shares,
which he holds both personally and through
Investors Retirement Holdings Inc., a company that
he controls.

(4) Garbalizer Corporation of America owns
3,569,897 common shares directly and Garb-Oil &
Power Corporation (a company controlled by
Garbalizer Corporation of America) owns 920,000
common shares equating to 4,489,897 common shares
beneficially owned.
<PAGE>
28

PART 1, ITEM 5
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
------------------------------------------------------------

The directors and officers of the Company are as follows:

Name Age Position Term of Office
------------- ----- ---------------------------------- --------------------
Paul Roszel 42 Chairman of the Board of Directors Inception to Present

Mikael Prydz 35 President, CEO & Director 3/99 to present

Richard R.
Ivanovick 58 Chief Financial Officer & 3/99 to present
Director 3/99 to present

Paul Roszel has been involved with the business engaged in by the
Company since 1988. From 1988 to 1995, Mr. Roszel published a
newsletter entitled "The Recycler's Exchange", which was a
regional industry newsletter circulating to an estimated 3200
recycling based businesses throughout Ontario, Canada. In late
1994, Mr. Roszel began developing the concept of a web site
utilizing the World Wide Web on the Internet to distribute the
information regarding recyclable material markets electronically.
The web site was activated on-line in early May 1995. 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.

<PAGE>
29

Mikael L. Prydz joined the Company in November 1998, and was
appointed President and CEO in March 1999. Mr. Prydz was, and
still is the President of Investors Retirement Holdings Inc., (a
Canadian private investment firm) which holds an equity position
in RecycleNet Corporation. Mr. Prydz brings to the Company
hands-on experience in international finance.

Richard R. Ivanovick also joined the Company in November 1998.
For the twenty three years prior to the present, Mr. Ivanovick has
been serving as President of Marsh Tire Services, Ltd., Ontario,
Canada, which company is involved in automobile service, sales and
leasing and car and truck rentals in the Guelph, Ontario area.
Mr. Ivanovick intends to divest himself of ownership in that
business and devote his whole efforts to the business of the
Company commencing early Year 2000.

<PAGE>
30

PART 1, ITEM 6
EXECUTIVE COMPENSATION
----------------------

The following table shows compensation earned during fiscal 1997
and 1998 by the Officers and Directors of the Company. They are
the only persons who received compensation during those periods.
Other miscellaneous compensation paid or stock options granted
during those periods.

Summary Compensation Table
--------------------------

Name & Principal Positions Fiscal Year Salary
-------------------------- ----------- ----------
Paul Roszel, Chairman of the 1998 $27,000 US
Board of Directors 1997 $NIL

Mikael Prydz, President, CEO
& Director (Note 1) 1998 $NIL
1997 $NIL

Richard Ivanovick, CFO &
Director (Note 2) 1998 $NIL
1997 $NIL

Note 1: For the years ended December 31, 1997 and 1998, Mr.
Mikael Prydz, President and Director did not receive any salary or
benefits of the Corporation. As of May 1, 1999 Mr. Prydz has
started receiving a salary of $33,800 US per year. In addition,
Mr. Prydz received 180,052 Class N shares in RecycleNet Utah in
lieu of wages prior to the March 19, 1999 reverse takeover.
Note 2: For the years ended December 31, 1997 and 1998, Mr.
Richard Ivanovick, CFO and Director did not receive any salary or
benefits of the Corporation. As of this filing date, November
1999, Mr. Ivanovick is not drawing any salary or benefits. Mr.
Ivanovick received 210,721 Class N shares in RecycleNet Utah in
lieu of wages prior to the March 19, 1999 reverse takeover.

<PAGE>
31

PART 1, ITEM 7
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 the immediate family of Mr. Paul Roszel.

Inter-Continental Recycling Inc. operates a pool of qualified
personnel, working on development projects, computer programming
updates and sales activities for various companies.
RecycleNet Corporation is billed $860.00 US 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
of RecycleNet Corporation.

<PAGE>
32

In August 1999, 2,000,000 Class N Shares were gifted to RecycleNet
Corporation by Mr. Paul Roszel, for which he received no compensation.
Subsequently, RecycleNet Corporation issued 2,000,000 common
shares to Mr. John C. Brewer, formerly the President of Garbalizer
Machinery Corporation, in consideration of Mr. Brewer rendering of
service to the Corporation and its new management in connection
with the March 19, 1999 reorganization of Garbalizer Machinery
Corporation into RecycleNet Corporation.

On September 23, 1999 RecycleNet Corporation signed a letter
of intent to purchase 100% of the common shares of fiberglass.com,
inc., a Utah Company. Inter-Continental Recycling Inc. is the
majority owner of fiberglass.com, inc., which is controlled by Mr.
Paul Roszel and his family. Mr. Paul Roszel through his holdings
also controls the majority of the shares in RecycleNet Utah. This
acquisition is expected to be complete prior to December 31, 2000
under the terms included in the agreement.

There are no other transactions during the last two years, 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 near future.
Further, the Company has no formal management or employment
agreements with any of its officers, directors or other employees.

<PAGE>
34

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 business or
entities in the recycling industry.

PART I, ITEM 8
PROMOTERS
---------

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
US ($2.00 Canadian).

<PAGE>
34

PART 1, ITEM 9
DESCRIPTION OF SECURITIES
-------------------------

The Company has authorized 150,000,000 common shares, par value
$.01, of which 10,643,941 common shares are issued and outstanding
and 68,130,269 Class N voting, non-equity shares. The Class N
voting, non-equity shares are convertible on a one for one basis
into common shares of the Company upon the surrender by the holder
of one Class N share and one Class X non-voting, equity share of
RecycleNet Corporation (Ontario). Upon such surrender, 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 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 is entitled to one
vote for each voting, equity 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 Articles of
Incorporation as amended, which means that the holders of a
majority of the shares voted can elect all of the directors then
standing for election. The equity 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.

<PAGE>
35

There are no provisions in the Articles of Incorporation, as
amended, or by-laws 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.

PART II
PART II, ITEM 1
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------

The Company's shares are traded on the over-the-counter bulletin
board market in the USA. 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 and the subsequent
period through September 30, 1999.

Because the Company's shares are traded in the
over-the-counter market, the quotations shown below reflect
inter-dealer prices without retail markup, markdown or commission
and they may not represent actual transactions.

Fiscal Quarter High Bid Low Bid

1st Quarter, 1997 $0.075 $0.035

2nd Quarter, 1997 $0.070 $0.046

3rd Quarter, 1997 $0.070 $0.040

4th Quarter, 1997 $0.070 $0.040

1st Quarter, 1998 $0.070 $0.045

2nd Quarter, 1998 $0.139 $0.046

3rd Quarter, 1998 $0.100 $0.060

4th Quarter, 1998 $0.075 $0.060

1st Quarter, 1999 $1.05 $0.310

2nd Quarter, 1999 $0.850 $0.310

As of November 15, 1999, the number of holders of record of the
Company's common shares was _______.

Neither the Company (nor it's subsidiary) have declared or paid on
common stock for the last two fiscal years any cash dividends.
It is not anticipated that any cash dividends will be declared and
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.

PART II, ITEM 2
LEGAL PROCEEDINGS
-----------------

The Company is not a party to any pending legal proceedings nor is
any of its property the subject of any pending legal proceedings.

<PAGE>
37

PART II, ITEM 3
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
---------------------------------------------

As at September 30, 1999 the company does not have any changes in
or accounting convention disagreements with any of its independent
accountants.

PART II, ITEM 4
RECENT SALES OF UNREGISTERED SECURITIES
---------------------------------------

The only securities sold by the Company within the last three
years occurred as of March 19, 1999 and August 1999. On March 19,
1999, the reverse share acquisition between RecycleNet Corporation
(Ontario) and Garbalizer Machinery Corporation (Utah) was closed.
The Plan of Reorganization between those companies provided for
the Company to issue 70,896,789 Class N voting, non-equity shares
in the Company. In connection with the reorganization, RecycleNet
Corporation (Ontario), which became a wholly owned subsidiary of
RecycleNet Corporation (formerly Garbalizer Machinery Corporation)
and the Ontario corporation issued an identical number of Class X
non-voting, equity participating shares in it. The Class N and
Class X shares are convertible into voting, equity participating
shares of the Company on the basis of one voting-equity
participating share in exchange for one share each of Class N and
Class X. As of the date hereof, the Company has redeemed a total
of 766,520 Class N and Class X shares and has issued 766,520
voting, equity participating shares to those shareholders in the
Company.

<PAGE>
38

All of the Class N and Class X shares, and all shares to be
issued upon exchange of the Class X and Class N shares, will be
"restricted" under the Securities Act of 1933 and the certificates
representing the shares bear and will bear a restrictive legend.
All of the persons issued the shares were former shareholders of
RecycleNet Corporation (Ontario) and are comprised of the
officers, directors and other affiliated persons of the
corporation and include persons who have maintained prior
personal, family, and/or business relations with the Company and
its former proprietor, and later, officers, directors, principal
shareholders and employees of the Company. As applicable, the
Company will rely upon Section 4(2) and/or Rule 506 under
Regulation D of the Securities Act of 1933 for the issuance of all
classes of shares. The issuance of shares by RecycleNet
Corporation (Ontario) prior to the reorganization discussed, were
in full compliance with the applicable securities laws and rules
of the province of Ontario, Canada.

<PAGE>
39

PART II, ITEM 5
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 meet.

<PAGE>
40

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 it's 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.

PART F/S

<PAGE>
41

PART III
PART III, ITEM 1
INDEX TO EXHIBITS
- - - - -----------------
Page
2 Stock Exchange Agreement
3(a) Articles of Amendment to Articles of
Incorporation
3(b) Corrected Articles of Amendment
27 Financial Data Schedule

<PAGE>
42

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities
Exchange of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto
duly authorized.

RECYCLENET CORPORATION

DATE: December 1, 1999 BY: /S/ Mikael Prydz
----------------------------
President

DATE: December 1, 1999 BY:/S/ Rick Ivanovick
----------------------------
Vice President and
Chief Financial Officer

<PAGE>
43

RECYCLENET CORPORATION

INDEX TO FINANCIAL STATEMENTS

Page
RECYCLENET CORPORATION
Consolidated Balance Sheets - September 30, 1999 and
December 31, 1998. . . . . . . . . . . . . . . . . . . . . . . . . . . .F-2
Consolidated Statements of Operations for the Nine Months
Ended September 30, 1999 and 1998, for the Year Ended
December 31, 1998 and for the Period from December 22, 1997
through (Date of Inception) December 31, 1997. . . . . . . . . . . . . .F-3
Consolidated Statements of Stockholders' Equity (Deficit)
for the Period from December 22, 1997 (Date of Inception)
through December 31, 1997, for the Year Ended December 31,
1998 and for the Nine Months Ended September 30, 1999 . . . . . . . . .F-4
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1999 and 1998, for the Year Ended
December 31, 1998 and for the Period from December 22,
1997 (Date of Inception) through December 31, 1997. . . . . . . . . . .F-5
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . .F-6

PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Condensed Consolidated Statements
of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-8
Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the Year Ended December 31, 1998 and for
the Nine Months Ended September 30, 1999 . . . . . . . . . . . . . . . .F-8
Notes to the Unaudited Pro Forma Condensed Consolidated
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . .F-9

GARBALIZER MACHINERY CORPORATION
Report of Independent Certified Public Accountants. . . . . . . . . . . F-10
Balance Sheets - December 31, 1998 and 1997 . . . . . . . . . . . . . . F-11
Statements of Operations for the Years Ended December 31, 1998
and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-12
Statements of Stockholders' Deficit for the Years Ended
December 31, 1998 and 1997 . . . . . . . . . . . . . . . . . . . . . . F-13
Statements of Cash Flows for the Years Ended December 31,
1998 and 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . F-15

RECYCLENET CORPORATION (A CANADIAN CORPORATION)
Auditors' Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . F-18
Balance Sheet as at December 31, 1998 . . . . . . . . . . . . . . . . . F-19
Statement of Loss and Deficit for the 374 Days Ended
December 31, 1998. . . . . . . . . . . . . . . . . . . . . . . . . . . F-20
Statement of Changes in Cash Resources for the 374 Days
Ended December 31, 1998. . . . . . . . . . . . . . . . . . . . . . . . F-21
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . F-22

<PAGE>

RECYCLENET CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

September 30, December 31,
1999 1998
----------- -----------
ASSETS
Current Assets
Cash. . . . . . . . . . . . . . . . . . . . . . . . $ 93,820 $ 55,257
Trade accounts receivable . . . . . . . . . . . . . 52,701 26,505
Receivable from supplier. . . . . . . . . . . . . . 15,000 -
----------- -----------
Total Current Assets . . . . . . . . . . . . . . 161,521 81,762
----------- -----------
Equipment. . . . . . . . . . . . . . . . . . . . . . 13,693 5,351
Less accumulated depreciation. . . . . . . . . . . (3,080) (762)
----------- -----------
Net Equipment. . . . . . . . . . . . . . . . . . 10,613 4,589
----------- -----------

Total Assets . . . . . . . . . . . . . . . . . . . . $ 172,134 $ 86,351
========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Trade accounts payable and accrued liabilities. . . $ 3,409 $ 4,460
Deferred revenue. . . . . . . . . . . . . . . . . . 43,648 31,525
----------- -----------
Total Current Liabilities. . . . . . . . . . . . 47,057 35,985
----------- -----------
Stockholders' Equity
Common shares - $0.001 par value; 150,000,000 shares
authorized; 78,774,210 and 69,462,602 shares issued
and outstanding, respectively. . . . . . . . . . . 78,774 69,463
Additional paid-in capital. . . . . . . . . . . . . 7,229,062 6,188,881
Accumulated deficit . . . . . . . . . . . . . . . . (7,182,759) (6,207,978)
----------- -----------
Total Stockholders' Equity . . . . . . . . . . . 125,077 50,366
----------- -----------

Total Liabilities and Stockholders' Equity Deficit . $ 172,134 $ 86,351
=========== ===========

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

F-2
<PAGE>

RECYCLENET CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>

General and administrative expenses (177,133) (71,363) (95,151) (6,719)
Exchange gain (loss) . . . . . . . 4,699 - (1,250) (55)
----------- ----------- ----------- -----------
Loss Before Special Items. . . . . (34,749) (6,158) (9,460) (6,774)

Special Items Paid with Common Stock
Marketing expense . . . . . . . . (116,100) - - -
Professional fees . . . . . . . . (423,932) - - -
Business development expense. . . - - - (6,191,744)
Merger and acquisition expense. . (400,000) - - -
----------- ----------- ----------- -----------
Net Loss . . . . . . . . . . . . . $ (974,781) $ (6,158) $ (9,460) $(6,198,518)
=========== =========== =========== ===========
Basic and Diluted Loss Per
Common Share. . . . . . . . . . . $ (0.01) $ (0.00) $ (0.00) $ (0.09)
=========== =========== =========== ===========
Weighted-Average Number of
Common Shares Used in Per Share
Calculation. . . . . . . . . . . 76,158,891 69,150,574 69,211,287 68,820,480
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>
F-3
<PAGE>

RECYCLENET CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
<TABLE>
<CAPTION> Total
Common Stock Additional Stockholders'
------------------------ Paid-in Accumulated Equity
Shares Amount Capital Deficit (Deficit)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance - December 22, 1997
(Date of Inception) . . . . . . . . . - $ - $ - $ - $ -

Issuance for services, December
23, 1997, $0.09 per share . . . . . . 68,820,480 68,820 6,122,924 - 6,191,744
Distribution to a shareholder
by issuance of a note payable,
December 23, 1997 . . . . . . . . . . - - (10,443) - (10,443)
Issuance for cash, December 31, 1997,
$0.09 per share. . . . . . . . . . . 154,760 155 13,851 - 14,006
Net loss for the period. . . . . . . . - - - (6,198,518) (6,198,518)
----------- ----------- ----------- ----------- -----------
Balance - December 31, 1997. . . . . . 68,975,240 68,975 6,126,332 (6,198,518) (3,211)

Issuance for cash, January 30, 1998,
$0.09 per share . . . . . . . . . . . 7,738 8 679 - 687
Issuance for cash, February through
October 1998, $0.13 per share . . . . 479,624 480 61,870 - 62,350
Net loss for the year. . . . . . . . . - - - (9,460) (9,460)
----------- ----------- ----------- ----------- -----------
Balance - December 31, 1998. . . . . . 69,462,602 69,463 6,188,881 (6,207,978) 50,366

Issuance for cash, February and
March 1999, $0.51 per share . . . . . 213,570 214 109,261 - 109,475
Issuance for services, March 1999,
$0.51 per share . . . . . . . . . . . 833,717 833 423,084 - 423,917
Issuance to acquire Andela Products
Corporation, March 11, 1999, $0.30
per share . . . . . . . . . . . . . . 386,900 387 115,713 - 116,100
Issuance to acquire Garbalizer Machinery
Corporation, March 19, 1999,
$0.00 per share . . . . . . . . . . . 7,877,421 7,877 (7,877) - -
Contribution of 2,000,000 shares
by principal shareholder and
re-issuance for merger and acquisition
services, August 19, 1999, $0.20
per share . . . . . . . . . . . . . . - - 400,000 - 400,000
Net loss for the period. . . . . . . . - - - (974,781) (974,781)
----------- ----------- ----------- ----------- -----------
Balance - September 30, 1999 . . . . . 78,774,210 $ 78,774 $ 7,229,062 $(7,182,759) $ 125,077
=========== =========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>
F-4
<PAGE>

RECYCLENET CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>

For the Period from
December 22, 1997
For the Nine Months For the (Date of Inception)
Ended September 30, Year Ended Through
------------------------- December 31, December 31,
1999 1998 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities
Net loss. . . . . . . . . . . . . $ (974,781) $ (6,158) $ (9,460) $(6,198,518)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation . . . . . . . . . 2,318 572 762 -
Marketing expense paid with
common stock . . . . . . . . 116,100 - - -
Common stock issued for
services. . . . . . . . . . . 823,932 - - 6,191,744
Exchange (gain) loss . . . . . (4,699) (548) 1,250 55
Changes in assets and liabilities:
Accounts receivable. . . . . . (24,513) (20,585) (27,447) -
Accounts payable . . . . . . . (1,239) 3,464 4,618 -
Deferred revenue . . . . . . . 10,451 24,484 32,645 -
----------- ----------- ----------- -----------
Net Cash Provided by (Used in)
Operating Activities . . . . . . (52,431) 1,229 2,368 (6,719)
----------- ----------- ----------- -----------
Cash Flows From Investing Activities
Loan to related party . . . . . . (15,000) - - -
Purchase of equipment . . . . . . (8,342) (4,012) (5,351) -
----------- ----------- ----------- -----------
Net Cash Used in Investing
Activities. . . . . . . . . . . . (23,342) (4,012) (5,351) -
----------- ----------- ----------- -----------
Cash Flows From Financing Activities
Payment of note payable to
shareholder. . . . . . . . . . . - - (10,103) -
Proceeds of issuance of common
shares . . . . . . . . . . . . . 109,475 30,854 63,036 14,006
----------- ----------- ----------- -----------
Net Cash Provided by Financing
Activities. . . . . . . . . . . . 94,474 30,854 52,933 14,006
----------- ----------- ----------- -----------
Effect of Exchange Rate Changes
on Cash. . . . . . . . . . . . . 4,862 - (1,980) -
----------- ----------- ----------- -----------
Increase in Cash . . . . . . . . . 38,563 28,071 47,970 7,287

Cash at Beginning of Period. . . . 55,257 7,287 7,287 -
----------- ----------- ----------- -----------
Cash at End of Period. . . . . . . $ 93,820 $ 35,358 $ 55,257 $ 7,287
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>

F-5
<PAGE>

RECYCLENET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The audited financial statements of RecycleNet Corporation (a Canadian
corporation) as of and for the period ended December 31, 1998 are
presented elsewhere herein and were prepared in accordance with generally
accepted accounting principles in Canada. The accompanying unaudited
financial statements have been adjusted to present the financial position
of RecycleNet Corporation and subsidiaries and the results of their
operations and their cash flows in accordance with generally accepted
principles in the United States.

ORGANIZATION -RecycleNet Corporation (RecycleNet), was incorporated on
December 22, 1997 under the laws of the Province of Ontario, Canada.
RecycleNet is in the business of designing Internet sites, Internet
advertising and Internet trading of consumable recyclable goods. Its
primary operations are conducted from Ontario. The accompanying
consolidated financial statements include the accounts of RecycleNet
Corporation, a Utah corporation, from the date of its acquisition,
RecycleNet and and Andela Products Corporation, from the date of its
acquisition.

REORGANIZATION AND BASIS OF PRESENTATION- On March 19, 1999, RecycleNet was
reorganized into a wholly-owned Ontario subsidiary of Garbalizer Machinery
Corporation (Garbalizer), a Utah corporation, under the terms of a Stock
Exchange Agreement dated February 25, 1999 (the Agreement). Under the
terms of the Agreement, the shareholders of RecycleNet exchanged each
outstanding common shares of RecycleNet for 3.869 Class X shares (equity
participating and non-voting) of the Ontario subsidiary and 3.869 Class N
(voting non-equity participating) shares of Garbalizer. The RecycleNet
shareholders were issued 70,896,789 Class X and Class N shares. The Class
X and Class N shares are convertible into common shares of Garbilizer on
the basis of one Class X share and one Class N share for each common share
of Garbalizer. Prior to closing the Agreement, the Garbalizer shareholders
held 7,877,421 common shares, after a 2-for-3 reverse stock split, which
remained outstanding after the Agreement. The RecycleNet shareholders
therefore received the equivalent of 90% of the common shares of
Garbalizer. Subsequent to the closing of the Agreement, the Garbalizer
changed its name to RecycleNet Corporation.

For financial reporting purposes, RecycleNet was considered the accounting
acquirer. Accordingly, the accompanying financial statements present the
historical operations of RecycleNet for the periods prior to March 19,
1999. The financial statements have been restated for all periods presented
for the effects of the 3.869-for-1 stock split. In connection with the
Agreement, Garbalizer transferred all of its existing assets and operations
to a corporation under the control of its principal shareholder in exchange
for the assumption of all of the liabilities of Garbalizer. Garbalizer
thereby became a shell corporation with no operations and no assets prior
to the transaction. The common shares of Garbalizer which remained
outstanding were accounted for as having been issued in the transaction and
were valued at zero which was the fair value of the net assets of
Garbalizer. The acquisition of Garbalizer was accounted for under the
purchase method of accounting. The operations of Garbalizer have been
included in the accompanying consolidated financial statements from March
19, 1999.

USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles 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 period. Actual
results could differ from those estimates.

BUSINESS CONDITION - The Company has experienced recurring operating
losses, and has negative cash flows from operations of $52,431 for the
nine months ended September 30, 1999. These situations raise substantial
doubt about the Company's ability to continue as a going concern. The
accompanying financial statements do not include any adjustments relative
to the recoverability and classification of the asset carrying amounts or
the amount and classification of liabilities that might result from the
outcome of this uncertainty.

CURRENCY TRANSLATION - The U.S. dollar is the functional currency for the
Company's consolidated operations. All gains and losses from currency
translations are included in the results of operations.

F-6
<PAGE>

FAIR VALUES OF FINANCIAL INSTRUMENTS - The amounts reported as cash, trade
accounts receivable, accounts payable and accrued liabilities and deferred
revenue are considered to be reasonable approximations of their fair
values. The fair value estimates were based on market information
available to management at the time of the preparation of the financial
statements.

BASIC AND DILUTED LOSS PER COMMON SHARE - Basic and diluted loss per common
share has been computed by dividing net loss by the weighted-average number
of common shares and Class N common equivalent shares outstanding during
the period.

NOTE 2--ACQUISITION OF ANDELA PRODUCTS CORPORATION

At September 30, 1999, the Company has a receivable from Andela T&M as a
results of $15,000 advanced to Andela T&M. The Company intends to acquire
glass recycling equipment from Andela T&M. In addition, the Company
acquired Andela Products Corporation from Andela T&M in exchange for
386,900 shares of common stock on March 11, 1999. The acquisition was
primarily for the purpose of obtaining marketing rights to the glass
recycling equipment. The common shares issued were recorded at their fair
value of $116,100 and were accounted for as marketing expense. The
operations of Andela Products Corporation have been included in the
accompanying consolidated financial statements from March 11, 1999.

NOTE 3--INCOME TAXES

As of September 30, 1999, the Company had Canadian operating loss
carryforwards for tax purposes of $50,983 which expire if not used
beginning in 2005. In addition, the Company has U.S. operating loss
carryforwards of approximately $400,000 which expire if not used in 2014.

NOTE 4--STOCKHOLDERS' EQUITY

On December 23, 1997, the Company issued 68,820,480 shares of common stock
for various services rendered to the Company. The shares were recorded at
their fair value of $0.09 per share based upon the price shares were
issued for cash in December 1997.

During February through March 1999, the Company issued 213,570 shares of
common stock for cash. The proceeds from the issuance was $109,475 or
$0.51 per share. During March 1999, the Company issued 833,717 shares of
common stock for services. The shares were recorded at their fair value of
$0.51 per share based upon the price shares were issued for cash during
that same time.

On March 11, 1999 the Company issued 386,900 shares of common stock for the
acquisition of Andela Corporation. The value assigned to the shares was
$0.30 per share based on the market value at which the Company's shares
traded after the reorganization with Garbalizer.

In conjunction with the reorganization of RecycleNet into Garbalizer, a
principal shareholder contributed 2,000,000 shares of common stock to the
Company on August 19, 1999 which were immediately reissued to an individual
for his assistance in the merger and acquisition of RecycleNet and
Garbalizer. The shares issued were recorded at their fair value of $400,000
or $0.20 per share based upon the market value at which the Company's
shares were trading at the time of issuance. The cost of the related
services were charged to expense.

F-7
<PAGE>

RECYCLENET CORPORATION
CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

On March 19, 1999, RecycleNet was reorganized into a wholly-owned Ontario
subsidiary of Garbalizer under the terms of a Stock Exchange Agreement
dated February 25, 1999. Under the terms of the agreement, the
shareholders of RecycleNet exchanged each outstanding common shares of
RecycleNet for 3.869 Class X shares (equity participating and non-voting)
of the Ontario subsidiary and 3.869 Class N (voting non-equity
participating) shares of Garbalizer. The RecycleNet shareholders were
issued 70,896,789 Class X and Class N shares. The Class X and Class N
shares are convertible into common shares of Garbilizer on the basis of one
Class X share and one Class N share for each common share of Garbalizer.
Prior to closing the agreement, the Garbalizer shareholders held 7,877,421
common shares which remained outstanding after the agreement. The
RecycleNet shareholders therefore received the equivalent of 90% of the
common shares of Garbalizer. The agreement was accounted for as the reverse
acquisition of Garbalizer by RecycleNet. The acquisition was accounted for
under the purchase method of accounting. The purchase price was determined
based upon the fair value of the net assets of Garbalizer, which was zero.

The following condensed pro forma consolidated statements of operations
have been prepared to present the operations of the combined entities as
though the agreement had been completed on January 1, 1998. Pro forma
adjustments have been provided to eliminate non-recurring expenses directly
attributable to the agreement.

The following financial information was derived from, and should be read in
conjunction with the consolidated statements of operations of RecycleNet
and of Garbalizer for the year ended December 31, 1998 and of RecycleNet
for the nine months ended September 30, 1999. The operations of Garbalizer
were included in the consolidated results of operations of RecycleNet from
March 19, 1999. The condensed consolidated pro forma statement of
operations has been included herein for comparative purposes only and does
not purport to be indicative of the results of operations which actually
would have been obtained had the agreement been completed on January 1,
1998, or the results of operations which may be obtained in the future. In
addition, future results may vary significantly from the results reflected
in this pro forma financial statement.

FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
RecycleNet Garbalizer Adjustments Results
---------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Sales. . . . . . . . . . . . . . $ 100,974 $ 195,599 (A)$ (195,599) $ 100,974
Cost of sales. . . . . . . . . . 14,033 134,730 (A) (134,730) 14,033
---------- ---------- ----------
Gross profit . . . . . . . . . . 86,941 60,869 (60,869) 86,941
General and administrative
expenses. . . . . . . . . . . . (95,151) (93,016) (A) 93,016 (95,151)
Exchange gain (loss) . . . . . . (1,250) - - (1,250)
---------- --------- ---------- ----------
Loss from operations . . . . . . (9,460) (32,147) 32,147 (9,460)
Interest expense . . . . . . . . - (19,564) (A) 19,564) -
---------- --------- ---------- ----------
Net Loss from Continuing
Operations. . . . . . . . . . . $ (9,460) $ (51,711) $ 51,711 $ (9,460)
========== ========= ========== ==========
Basic and diluted loss per
common share. . . . . . . . . . $ (0.00) $ (0.00)
========== ==========
Weighted-average number of
common shares used in per
share calculation . . . . . . . 69,211,287 77,088,708
========== ==========
<FN>
Notes to the Condensed Pro Forma Consolidated Statements of Operations are
presented on the following page.
</FN>
</TABLE>
F-8
<PAGE>

RECYCLENET CORPORATION
CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
RecycleNet Garbalizer Adjustments Results
---------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Sales. . . . . . . . . . . . . . $ 316,280 $ - $ - $ 316,280
Cost of sales. . . . . . . . . . 178,595 - - 178,595
---------- ---------- ----------- ----------
Gross profit . . . . . . . . . . 137,685 - - 137,685
General and administrative
expenses. . . . . . . . . . . . (177,133) (37,519) (A) 37,519 (177,133)
Exchange gain (loss) . . . . . . 4,699 - - 4,699
---------- ---------- ----------- ----------
Loss before special items. . . . (34,749) (37,519) 37,519 (34,749)
Special items paid with
common stock. . . . . . . . . . (940,032) - (B) 400,000 (540,032)
---------- ---------- ---------- ----------
Loss from operations . . . . . . (974,781) (37,519) (A) 437,519 (574,781)
Interest expense . . . . . . . . - (4,747) (A) 4,747 -
---------- ---------- ---------- ----------
Net loss . . . . . . . . . . . . $ (974,781) $ (42,266) $ 442,266 $ (574,781)
========== ========== ========== ==========
Basic and diluted loss per
common share. . . . . . . . . . $ (0.01) $ (0.00) $ (0.01)
========== ========== ==========
Weighted average number of
common shares used in per
share calculation . . . . . . . 76,158,891 11,816,132 (A) 11,816,132 76,158,891
========== ========== ========== ==========
</TABLE>

NOTES TO CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

A - The operations of Garbalizer were discontinued upon the
reorganization with RecycleNet and have therefore been excluded
from continuing operations.

B - Merger and acquisition costs were paid by the Company issuing
common stock. The costs were non-recurring and were directly
attributable to the reorganization of RecycleNet into Garbalizer.
Accordingly, the related expense has been eliminated from the pro
forma net loss from continuing operations.

F-9

<PAGE>

HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS

(801) 532-2200
Member of AICPA Division of Firms Fax (801) 532-7944
Member of SECPS 345 East Broadway, Suite 200
Member of Summit International Associates Salt Lake City, Utah 84111-2693

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders
Garbalizer Machinery Corporation

We have audited the accompanying balance sheets of Garbalizer Machinery
Corporation as of December 31, 1998 and 1997, and the related statements of
operations, stockholders' deficit, 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 generally accepted auditing
standards. 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 that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Garbalizer
Machinery Corporation as of December 31, 1998 and 1997 and the results of
its operations and its cash flows for the years then ended, in conformity
with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's operating losses, working capital
deficiency, negative cash flows from operating activities and the lack of
consistent revenues raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans concerning these matters
are also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
November 17, 1999

F-10
<PAGE>

GARBALIZER MACHINERY CORPORATION
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997

ASSETS

1998 1997
----------- -----------
Current Assets
Inventory . . . . . . . . . . . . . . . . . . . . $ - $ 30,000
----------- -----------
Total Current Assets. . . . . . . . . . . . . . - 30,000

Patents, net of accumulated amortization
of $46,458. . . . . . . . . . . . . . . . . . . . - -
----------- -----------
Total Assets . . . . . . . . . . . . . . . . . . . $ - $ 30,000
=========== ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Bank overdraft. . . . . . . . . . . . . . . . . . $ 7,144 $ 259
Notes payable . . . . . . . . . . . . . . . . . . 190,708 156,406
Accrued interest . . . . . . . . . . . . . . . . 56,635 48,363
Payroll taxes payable . . . . . . . . . . . . . . 3,845 -
Accounts payable. . . . . . . . . . . . . . . . . 20,740 31,747
Account payable related party . . . . . . . . . . 180,071 200,657
----------- -----------
Total Current Liabilities . . . . . . . . . . . 459,143 437,432
----------- -----------
Stockholders' Deficit
Common stock - $0.01 par value; 15,000,000
shares authorized; 11,816,132 shares issued
and outstanding. . . . . . . . . . . . . . . . . 118,161 118,161
Additional paid-in capital. . . . . . . . . . . . 543,692 543,692
Accumulated deficit . . . . . . . . . . . . . . . (1,120,996) (1,069,285)
----------- -----------
Total Stockholders' Deficit . . . . . . . . . . (459,143) (407,432)
----------- -----------
Total Liabilities And Stockholders' Deficit. . . . $ - $ 30,000
=========== ===========

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

F-11
<PAGE>

GARBALIZER MACHINERY CORPORATION
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

1998 1997
----------- -----------

Revenues. . . . . . . . . . . . . . . . . . . . . $ 195,599 $ 1,242
Cost of sales, including write-down of carrying
value of inventory of $30,000 during 1998 . . . . 134,730 -
----------- -----------
Gross Profit . . . . . . . . . . . . . . . . . . . 60,869 1,242

General and Administrative Expenses. . . . . . . . 93,016 22,587
----------- -----------
Loss From Operations . . . . . . . . . . . . . . . (32,147) (21,345)

Interest Expense . . . . . . . . . . . . . . . . . 19,564 27,576
----------- -----------
Net Loss . . . . . . . . . . . . . . . . . . . . . $ (51,711) $ (48,921)
=========== ===========

Basic and Diluted Loss Per Share of Common Stock . $ (0.00) $ (0.00)
=========== ===========
Weighted Average Number of Common Shares
Used in Per Share Calculation . . . . . . . . . . 11,816,132 11,816,132
=========== ===========

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

F-12
<PAGE>

GARBALIZER MACHINERY CORPORATION
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

Common Stock Additional
------------------------ Paid-in Accumulated
Shares Amount Capital Deficit
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance - December 31, 1996. . 11,816,132 $ 118,161 $ 543,692 $(1,020,364)

Net loss for the year. . . . . - - - (48,921)
----------- ----------- ----------- -----------
Balance - December 31, 1997. . 11,816,132 118,161 543,692 (1,069,285)

Net loss for the year. . . . . - - - (51,711)
----------- ----------- ----------- -----------
Balance - December 31,1998 . . 11,816,132 $ 118,161 $ 543,692 $(1,120,996)
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
F-13
<PAGE>

GARBALIZER MACHINERY CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

1997 1998
---------- ----------
Cash Flows From Operating Activities
Net loss. . . . . . . . . . . . . . . . . . . . . $ (51,711) $ (48,921)
Adjustments to reconcile net loss to
net cash used by operating activities:
Non cash interest expense . . . . . . . . . . - 8,767
Changes in operating assets and liabilities:
Inventory . . . . . . . . . . . . . . . . . . 30,000 56,900
Accounts payable. . . . . . . . . . . . . . . (11,007) (63,574)
Accrued interest payable. . . . . . . . . . . 8,272 8,569
Payroll taxes payable . . . . . . . . . . . . 3,845 -
---------- ----------
Net Cash Used In Operating Activities. . . . . . (20,601) (38,259)
---------- ----------
Cash Flows From Financing Activities
Advances from related party . . . . . . . . . . . (20,586) 35,242
Proceeds from notes payable . . . . . . . . . . . 42,040 6,245
Payments on notes payable . . . . . . . . . . . . (7,738) (2,297)
Increase (decrease) in bank overdraft . . . . . . 6,885 (931)
---------- ----------
Net Cash Provided By Financing Activities. . . . 20,601 38,259
---------- ----------
Increase (Decrease) in Cash. . . . . . . . . . . . - -

Cash at Beginning of Year. . . . . . . . . . . . . - -
---------- ----------
Cash at End of Year. . . . . . . . . . . . . . . . $ - $ -
========== ==========
Supplemental Cash Flow Information:
Cash paid for interest. . . . . . . . . . . . . . $ 10,798 $ 10,240
========== ==========

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

F-14
<PAGE>

GARBALIZER MACHINERY CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND NATURE OF OPERATIONS -The Company is a subsidiary of
Garbalizer Corporation of America. The Parent Corporation owns 60 percent
of the Company's common stock. The Company manufactures and sells tire
shredders to buyers both in the United States and throughout the world.

BUSINESS CONDITION - The Company has experienced recurring operating
losses, has negative cash flows from operations and has a stockholders'
deficit of $459,143 and a working capital deficiency of $459,143 as of
December 31, 1998. The Company is past due on its debt obligations at
December 31, 1998. These situations raise substantial doubt about the
Company's ability to continue as a going concern. The accompanying
financial statements do not include any adjustments relative to the
recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might result from the outcome of
this uncertainty. See Note 5 for management's actions regarding the
Company to continue as a going concern.

FAIR VALUES OF FINANCIAL INSTRUMENTS - The amounts reported as cash, trade
accounts payable, accrued liabilities and notes payable are considered to
be reasonable approximations of their fair values. The fair value
estimates were based on market information available to management at the
time of the preparation of the financial statements.

INVENTORY - Inventory is valued at the lower of cost or market, with cost
determined by the first-in first-out method. Inventory consists of gear
reducers. All inventory is considered finished goods.

REVENUE RECOGNITION - Revenue from sales is recognized upon shipment and
installation of a shredder. An allowance for returns and discounts is
provided at the time of shipment when needed.

PATENTS - The patents were being amortized over a 17-year period by the
straight-line method.

ADVERTISING COSTS - The Company expenses its advertising costs as incurred.
The Company incurred $0 and $6,700 in advertising costs for the years ended
December 31, 1998 and 1997.

RENTAL COMMITMENTS - The Company rents its office building on a
month-to-month basis. The Company paid $11,228 and $1,268 in rent expense
for the years ended December 31, 1998 and 1997, respectively. The Company
shares office space with another company under common control. The total
rent expense is allocated between the two companies.

RECLASSIFICATIONS - Certain items in the 1997 financial statements have
been reclassified to conform to the current year classifications. Such
reclassifications had no effect on previously reported net income.

BASIC AND DILUTED LOSS PER COMMON SHARE - In 1998, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per
Share. Under SFAS 128, loss per common share is computed by dividing net
loss available to common stockholders by the weighted-average number of
common shares outstanding during the period. Diluted loss per share
reflects the potential dilution which could occur if all contracts to issue
common stock were exercised or converted into common stock or resulted in
the issuance of common stock. In the Company's present position, diluted
loss per share is the same as basic loss per share.

F-15
<PAGE>

NOTE 2--RELATED PARTY TRANSACTIONS

The Company's parent corporation advanced monies on behalf of/or to the
Company in past years. These monies were accounted for as capital
contributions.

The Company received advances of $0 and $35,242 from a publicly traded
company during 1998 and 1997. The amount due this company was $180,071 and
$200,657 at December 31, 1998 and 1997, respectively. There were no terms
of repayment. The companies are related due to common ownership.

The Company's president has advanced monies to the Company. No set terms
were established but the Company has been making payments against loans of

the president, including interest at rates ranging from 8% to 18%. See Note 3.

NOTE 3--NOTES PAYABLE

During 1992 the Company borrowed $150,000 from an individual. The note
carried a 12% interest rate and was due on May 7, 1992. The balance on the
note was $68,493 at December 31, 1998 and 1997.

As mentioned in Note 2, the Company is indebted to its president in the
amount of $102,215 at December 31, 1998 and $82,912 at December 31, 1997,
which includes interest and is due on demand.

During 1997, a $4,000 short-term note was loaned to the Company by a
shareholder. This note bears no interest and is due on demand. During 1997,
a $5,000 short-term note was loaned to the Company. This note carries a 12%
interest rate and is due on demand. The note and interest were paid in
1997. During 1998 two short term notes for $10,000 each were loaned to the
Company. These notes carry a 12% interest rate and are due on demand.

NOTE 4--INCOME TAXES

The major components of the net deferred tax asset as of December 31, 1998
and 1997 are as follows:

1998 1997
---------- ----------
Operating loss carry forwards . . . . . $ 147,462 $ 135,051
---------- ----------
Total Deferred Tax Asset. . . . . . . . 146,462 135,051

Valuation allowance . . . . . . . . . . (146,462) (135,051)
---------- ----------
Net Deferred Tax Asset. . . . . . . . . $ - $ -
========== ==========

The net change in the valuation allowance was an increase of $12,411 and
$11,741 for the years ended December 31, 1998 and 1997, respectively. The
Company has operating loss carry forwards at December 31, 1998 of $726,965
which expire in 2005 through 2013 if unused.

The components of the provision for income taxes were immaterial for all
periods presented. The following is a reconciliation of the income tax at
the federal statutory tax rate with the provision for income taxes for the
years ended December 31, 1998 and 1997:

F-16
<PAGE>

1998 1997
---------- ----------

Income tax benefit at statutory rate (34%). . . $ (17,581) $ (16,633)
Change in valuation allowance . . . . . . . . . 12,411 11,741
State tax net of federal benefit. . . . . . . . (1,706) (1,614)
Benefit from lower tax rates. . . . . . . . . . 6,876 6,506
---------- ----------
Provision for Income Taxes. . . . . . . . . . . $ - $ -
========== ==========

When the Company changes ownership as discussed in Note 5, the net
operating losses will be subject to limitations under Section 382 of the
Internal Revenue Code.

NOTE 5--SUBSEQUENT EVENTS

On March 19, 1999, the Company and its shareholders entered into a
reorganization agreement with of the shareholders of RecycleNet Corporation
(RecycleNet), an Ontario corporation, whereby the Company agreed to
transfer all of its existing assets and liabilities to a company controlled
by the Company's parent corporation, reverse split its common stock on a
2-for-3 basis, increase the authorized common shares to 150,000,000 shares
and agreed to merge a newly-formed, wholly-owned subsidiary with and into
RecycleNet. In the reorganization, the RecycleNet shareholders exchanged
all of the outstanding common shares of RecycleNet for 70,896,789 shares
(post-split) of equivalent common stock of the Company.

The reorganization with RecycleNet has been accounted for as a
reorganization of RecycleNet (RecycleNet being the accounting acquirer)
and the issuance of 7,877,421 shares of common stock (post-split) to the
parent corporation for no consideration. The distribution of the assets,
net of liabilities, was accounted as a capital contribution to the Company
and recorded at the historical cost of the assets and liabilities
transferred, as follows:

Cash . . . . . . . . . . . . . . . . . . . . . . $ (899)
Accounts receivable. . . . . . . . . . . . . . . (11,645)
Accounts payable . . . . . . . . . . . . . . . . 10,584
Accrued expenses . . . . . . . . . . . . . . . . 61,359
Payable to related parties . . . . . . . . . . . 103,215
Payable to Garb Oil & Power. . . . . . . . . . . 221,953
Notes payable. . . . . . . . . . . . . . . . . . 88,493
---------
Net Liabilities Transferred. . . . . . . . . . . $ 473,060
=========

F-17
<PAGE>

Auditors' Report

To the Members of RecycleNet Corporation

We have audited the balance sheet of RecycleNet Corporation as
at December 31, 1998 and the statements of loss and deficit and
changes in cash resources for the 374 days 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 audit.

We conducted our audit in accordance with generally accepted
auditing standards in Canada. those standards require that we plan
and perform an audit to obtain reasonable assurance 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.

In our opinion, these financial statements present fairly, in all
material respects, the financial position of the company as at
December 31, 1998 and the results of its operations and the
changes in its cash resources for the 374 days then ended in
accordance with generally accepted accounting principles in
Canada.

Guelph, Ontario
April 6, 1999 Chartered Accountants

F-18

<PAGE>

RECYCLENET CORPORATION
BALANCE SHEET
AS AT DECEMBER 31, 1998

1998

CURRENT
Cash $ 81,958
Short term investment 3,000
Accounts receivable 40,752
-----------
125,710
-----------
CAPITAL ASSETS (note 2) 6,813
-----------
OTHER
Goodwill (note 3) 11,680
Incorporation and start-up costs (note 4) 8,000
-----------
19,680
-----------

$ 152,203
===========

LIABILITIES

CURRENT
Accounts payable and account liabilities $ 6,857
Deferred revenue 48,470
-----------
55,327
-----------

SHAREHOLDER'S EQUITY (DEFICIT)

SHARE CAPITAL
Authorized
Unlimited common shares
Unlimited preferred shares
Stated Capital
17,994,610 common shares 113,985

(DEFICIT) RETAINED EARNINGS (17,109)
-----------
$ 152,203
===========

APPROVED ON BEHALF OF THE BOARD OF DIRECTORS

_____________________
DIRECTOR

see accompanying notes

F-19
<PAGE>

RECYCLENET CORPORATION
STATEMENT OF LOSS AND DEFICIT
FOR THE 374 DAYS ENDED DECEMBER 31, 1998

1998

SALES
Web advertising $ 68,381
Trader access fees 80,106
Other income 1,435
-----------
149,922
-----------

OPERATING EXPENSES
Internet service 15,040
Sales commissions 5,795
Salaries and benefits 112,545
Office 7,848
Telephone 3,692
Professional fees 5,430
Bank charges and interest 455
Advertising and promotion 702
Bad debt expense 9,472
Amortization 6,052
-----------
167,031
-----------
NET LOSS, for the year (17,109)
-----------
(DEFICIT) RETAINED EARNINGS, end of year $ (17,109)
===========

see accompanying notes

F-20
<PAGE>

RECYCLENET CORPORATION
STATEMENT OF CHANGES IN CASH RESOURCES
FOR THE 374 DAYS ENDED DECEMBER 31, 1998

1998

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net loss $ (17,109)
Add: Items not involving cash
Amortization 6,052
-----------
(11,057)
-----------

CHANGES IN NON-CASH OPERATIONAL BALANCES
Accounts receivable (40,752)
Accounts payable 6,857
Deferred income 48,470
-----------
14,575
-----------

CASH PROVIDED BY OPERATING ACTIVITIES 3,518
-----------

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Purchase of capital assets (7,945)
Purchase of goodwill (14,600)
Incorporation and start up expenditures (10,000
Purchase of short term investment (3,000)
-----------
(35,545)
-----------

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Proceeds of sale of common shares 113,985
-----------

CHANGE IN CASH 81,958

CASH, beginning of year 0
-----------

CASH, end of year $ 81,958
===========

see accompanying notes

F-21
<PAGE>

RECYCLENET CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 374 DAYS ENDED DECEMBER 31, 1998

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RecycleNet Corporation is a company incorporated on December
22, 1997 under the laws of the province of Ontario, Canada.
The company is in the business of designing Internet sites,
Internet advertising and Internet trading of consumable
recyclable goods.

a) CAPITAL ASSETS

Capital assets are recorded at cost less accumulated
amortization. Amortization is provided at the following
rates:

Computer equipment - 30% per year

Amortization is taken at one-half the applicable rate in
the year of acquisition.

b) GOODWILL

Goodwill is recorded at cost less accumulated
amortization. Amortization has been calculated on a
straight-line basis over a five year period.

c) INCORPORATION AND START-UP COSTS

Incorporation and start-up costs incurred in this initial
period have been deferred. Amortization of these deferred
expenses has been calculated on a straight-line basis over
a five year period.

2. CAPITAL ASSETS

Accumulated Net
Cost Amortization 1998

Computer equipment $ 7,945 $ 1,031 $ 6,914
========= ========= ==========

Accumulated Net
Cost Amortization 1998

3. GOODWILL

Goodwill $ 14,600 $ 2,920 $ 11,680
========= ========= =========

Accumulated Net
Cost Amortization 1998

4. INCORPORATION AND START-UP COSTS

Incorporation and start-up
costs $ 10,000 $ 2,000 $ 8,000
========= ========= =========

F-22
<PAGE>

RECYCLENET CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 374 DAYS ENDED DECEMBER 31, 1998

5. DEFERRED REVENUE

Revenue is recognized as the services are provided and all
costs associated thereto are accrued. As at December 31,
1998, $48,470.00 of revenue has been accrued or received for
future provision of services by the company.

6. STATED CAPITAL

During the year, 17,994,610 common shares were issued for a
total of $113,985.00.

7. SUBSEQUENT EVENTS

On March 19, 1999 RecycleNet Corporation amalgamated with an
Ontario Corporation, becoming a subsidiary of Garbalizer
Machinery Corporation, a corporation incorporated under the
laws of the State of Utah, U.S.A. Prior to the amalgamation,
RecycleNet Corporation split its common shares 3.869 to 1. In
consideration of the amalgamation, existing shareholders of
RecycleNet Corporation received one Class X share of the
newly amalgamated company and one Class N share of Garbalizer
Machinery Corporation for each share of RecycleNet
Corporation. One Class X share with one Class N share may be
converted to one common share of Garbalizer Machinery
Corporation.

F-23
<PAGE>

EXHIBIT 2

STOCK EXCHANGE AGREEMENT

Agreement and plan of merger (Agreement), executed and
entered into February 25, 1999:
Between:

RECYCLENET CORPORATION, an
Ontario Corporation
Hereinafter called "RecycleNet"

and
GARBALIZER MACHINERY CORPORATION, a Utah corporation
Hereinafter called "Garbalizer"

PLAN OF REORGANIZATION
In order to consummate the plan of merger herein
contemplated and in consideration of the mutual benefits to
be derived by the parties hereto and of the mutual
agreements herein, the parties hereto represent, warrant,
covenant and agree as follows:

1. REPRESENTATIONS AND WARRANTIES OF RECYCLENET
CORPORATION
RecycleNet warrants and represents that:

(a) RecycleNet is a corporation duly organized and
existing under the laws of the province of Ontario.

(b) The unaudited financial statements of RecycleNet
including applicable reporting documents, as of the 31st day
of December, 1998 (attached hereto and made a part hereof
for all purposes labelled Exhibit "A") have been prepared in
accordance with generally accepted accounting practices and
fairly presents the financial position of RecycleNet at such
date.

(c) RecycleNet has good and marketable title to all
the property it purports to own by this Agreement as
described in the balance sheet as of the 31st day of
December, 1998 herein referred to.

(d) RecycleNet is not a party to any pending or
threatened litigation which might adversely affect the
assets of RecycleNet.

(e) All taxes which RecycleNet is required by law to
pay in regard to its assets have been duly paid for all
periods up to and including the closing of this agreement.

(f) The assets to be transferred by RecycleNet have
not, since negotiations commenced between the parties, been
materially and adversely affected as a result of any fire,
explosion, earthquake, flood, drought, wind storm, accident,
strike, embargo, confiscation of vital equipment, materials
or inventory, transactions, or acts of God.

(g) RecycleNet is acquiring shares of Amalco (as
defined later) and Garbalizer which when converted with
common shares of Garbalizer will represent ninety percent
(90%) of the outstanding voting common shares of post
reorganized Garbalizer.

(h) The board of directors of RecycleNet has duly
authorized and approved the execution of this agreement.

(i) RecycleNet will bear the cost of its own
accountants, attorneys, and other professionals by them
employed.

(j) RecycleNet represents that subsequent to the
herein contemplated transaction, it will have no
encumbrances or liabilities, contingent or otherwise, upon
which a claim upon it could be made or which may
subsequently arise from the activities of RecycleNet prior
to the date of the closing of this transaction and will
fully cooperate with Garbalizer to permit verification on a
basis acceptable to Garbalizer.

(k) RecycleNet hereby represents that neither it nor
its agents or representatives shall, without prior consent
of Garbalizer, sell, agree to sell, enter into negotiations
to sell, or discuss (other than pursuant to unsolicited
inquiries) the sale of the authorized and issued stock of
RecycleNet to or with any party except as disclosed to
Garbalizer in advance and as agreed upon by both parties
except as required by applicable law.

2. REPRESENTATIONS AND WARRANTIES OF GARBALIZER MACHINERY
CORPORATION

Garbalizer warrants and represents that:
(a) Garbalizer is a corporation duly organized and
existing under the laws of the State of Utah, with
authorized capital stock consisting of 15,000,000 share of
common voting stock with a par value of $0.01/share of which
11,816,132 shares are issued and outstanding.

(b) The unaudited financial statements and
accompanying CPA review letter of Garbalizer, including
applicable reporting documents for the accounting period
ending December 31, 1998, (attached hereto and made a part
hereof for all purposes labelled Exhibit "B") have been
prepared in accordance with generally accepted accounting
practices and fairly represent the financial position of
Garbalizer as of the specified dates.

(c) The schedule of patents and other assets to be
transferred to Garb Oil & Power Company by this Agreement
(attached hereto and make a part hereof for all purposes
labelled Exhibit "C") is a true and correct schedule and
brief description of the patents and assets.

(d) Garbalizer is not a party to any pending or
threatened litigation which might adversely affect the
assets of Garbalizer which are being transferred from
Garbalizer to Garb Oil & Power Company.

(e) All taxes which Garbalizer in required by law to
pay in regard to the assets to be transferred to Garb Oil &
Power Company have been duly paid for all prior periods up
to and including the date of the closing of this Agreement.

(f) The assets to be transferred by Garbalizer to
Garb Oil & Power Company have not, since negotiations
commenced between the parties, been materially and adversely
affected as a result of any fire, explosion, earthquake,
flood, drought, wind storm, accident, strike, embargo,
confiscation of vital equipment, materials or inventory,
transactions, or acts of God.

(g) Garbalizer, in acquiring ten percent (10%) of the
post reorganization outstanding and voting shares as herein
contemplated, is acquiring the same in Garbalizer's name,
with no present intention of selling or otherwise
distributing such shares to its individual shareholders.

(h) The board of directors has duly authorized and
approved the negotiation and execution of this agreement.

(i) Garbalizer will bear the cost of any accounting
and legal fees incurred in the negotiation and execution of
this Agreement save and except those fees expressly agreed
upon to be paid by RecycleNet.

(j) Garbalizer represents that subsequent to the
herein contemplated sale of assets and assumption of
indebtedness it will have no encumbrances or liabilities,
contingent or otherwise, upon which a claim upon it could be
made or which may subsequently arise from the activities of
Garbalizer prior to the date of the closing of this
transaction and will fully cooperate with RecycleNet to
permit verification on a basis acceptable to RecycleNet.

(k) Garbalizer hereby represents that neither it nor
its agents or representatives shall, without prior consent
of RecycleNet, sell, agree to sell, enter into negotiations
to sell, or discuss (other than pursuant to unsolicited
inquiries) the sale of the authorized and unissued stock of
Garbalizer to or with any party except as disclosed to
RecycleNet in advance and as agreed upon by both parties
except as required by applicable law.

3. AGREEMENTS OF RECYCLENET CORPORATION

(a) RecycleNet represents that it is a closely held
corporation having less than fifty (50) holders of its
equity securities and is eligible for and will comply with
appropriate exemptions available under the Ontario
Securities Act (or other applicable exemption scheme) for
the exchange of convertible Class "X" shares in Amalco and
Class "N" shares in Garbalizer for common stock of
Garbalizer and Amalco, valued at less than $150,000.00 (U.S.)

(b) RecycleNet shall, immediately upon closing of
this transaction, and at its expense, commence activities to
qualify Garbalizer to become a fully reporting company
pursuant to the provisions of the Securities Exchange Act of
1934 and for NASDAQ listing and trading.

4. AGREEMENTS OF GARBALIZER MACHINERY CORPORATION

(a)

(i) Garbalizer shall, at the expense of RecycleNet,
cause to be incorporated under the Ontario Business
Corporation Act, a subsidiary, hereafter referred to as
"Subco", a company wholly owned by Garbalizer having common
shares entitled to one vote each. Garbalizer shall advise
in due course as to the number of common shares to be
issued. In addition, Garbalizer must authorize an unlimited
quantity of Class "X" shares which are equity participating
and non-voting and shall be convertible to common shares of
Garbalizer as set out hereafter.

(ii) Garbalizer shall amend its constating documents
to create a special class of voting non-equity participating
shares to be called Class "N" shares in Garbalizer.

(iii) Subco and RecycleNet shall thereafter
amalgamate and Garbalizer shall own all the issued and
outstanding common shares of the amalgamated company
(hereafter referred to as "Amalco"). Amalco will assume the
authorized Class "X" special share structure from "Subco".

(iv) The holders of record of common shares in
RecycleNet prior to the amalgamation shall receive one Class
"X" share of Amalco plus one Class "N" share in Garbalizer
for each share in RecycleNet held.

(v) The Class "X" and Class "N" shares shall be
convertible into the common shares of Garbalizer on the
basis of one Class "X" share of Amalco and one Class "N"
share of Garbalizer for each common share of Garbalizer.

(vi) Garbalizer shall enter into an agreement with
Subco in form acceptable to all parties whereby Garbalizer
agreed to the conditions pertaining to the operation and
management of Subco pending issuance, transfer and
conversion of shares prior to amalgamation with RecycleNet.

(b)

(i) Garbalizer will increase authorized common shares
from 15,000,000 (fifteen million) to 100,000,000 (one hundred
million).

(ii) Garbalizer will reverse split it's current issued and
outstanding common shares in a 3 for 2 split, resulting in
the current issued and outstanding shares of 11,816,132 (eleven
million eight hundred and sixteen thousand one hundred and thirty two)
being reduced to 7,877,421(seven million eight hundred and seventy seven
thousand four hundred and twenty one) issued and outstanding common
shares prior to the amalgamation of "Subco" and RecycleNet.

(iii) At the conclusion of the amalgamation of "Subco" and
RecycleNet, the pre-existing common shareholders of Garbalizer will own
10% of the outstanding common shares of the reorganized Garbalizer and
the pre-existing common shareholders of RecycleNet will own 90% of
the outstanding shares of the reorganized Garbalizer.

(iv) It is understood by both parties hereto that this
distribution shall include all options and similar rights to acquire
shares of common stock on a fully diluted basis and that the converted
"X" and "N" convertible shares would represent ninety percent (90%) of
the outstanding common shares of Garbalizer on a fully diluted basis
subsequent to the completion of the transaction.

(c) Garbalizer shall cause the shares and options, if
any, of the pre-merger Garbalizer corporation to be
registered and in reliance upon Regulation D or other
appropriate exemption from the registration requirements of
the Securities Act of 1933.

(d) Garbalizer shall, subsequent to the closing of
this Agreement, cause the name of the surviving corporation
to be changed to a name acceptable to RecycleNet.

(e) Garbalizer shall, upon the execution of this
Agreement, provide to RecycleNet information necessary and
otherwise not readily available to RecycleNet for assistance
in complying with the requirements of becoming a reporting
company, which information shall include recommendations
regarding legal counsel and estimates of time and cost
necessary to obtain such fully reporting status.

5. MUTUAL AGREEMENTS

(a) Garbalizer and RecycleNet shall, subsequent to
the execution of this Agreement cooperate fully in the
completion of this transaction at the earliest possible time
and jointly shall commence preparation and execution of all
documents, agreements, and other relevant matters necessary
to register and trade the securities of the reorganized
corporation pursuant to the requirements of Regulation D and
Form 10 as herein contemplated.

(b) Garbalizer and RecycleNet shall, subsequent to
the creation of said wholly owned Canadian subsidiary
corporation, cooperate in complying with applicable legal,
accounting, and tax requirements of their respective
jurisdictions.

(c) Garbalizer and RecycleNet agree that Garbalizer
shall, subject to verification of value and any required
shareholder approval, and prior to the closing of the herein
contemplated reorganization, sell and convey all existing
assets (including the "Garbalizer" name and logo, patents,
machinery designs, and contract rights) to Garbalizer's
sister corporation Garb Oil & Power in exchange for the
assumption of Garbalizer of all existing indebtedness of
Garbalizer in the approximate amount of $500,000.00 (U.S.).

(d) Garbalizer and RecycleNet agree that immediately
upon closing of this transaction that the currently existing
board of directors shall appoint as their replacements Mr.
Paul Roszel ("Roszel") and two additional persons to be
identified by RecycleNet and forthwith resign.

(e) Garbalizer and RecycleNet agree that immediately
upon closing of this transaction Roszel be appointed to
serve as Chief Executive officer of the reorganized
corporation and that, pursuant to written agreement between
Roszel and the reorganized corporation, Roszel negotiate and
execute an employment agreement with the reorganized
corporation for a term of not less than three (3) years.

(f) Garbalizer and RecycleNet shall jointly exercise
their best efforts to retain continued listing of the
reorganized corporation on the NASD OTC electronic bulletin
board; and further, shall jointly exercise their best
efforts to cause the shares of the reorganized corporation's
common stock to qualify for such continued listing.

(g) Garbalizer and RecycleNet shall jointly provide
and be obligated to provide to the other party all requested
relevant information regarding the operations and activities
of such party for inclusion in proxy materials sent or
provided to shareholders for approval of this Agreement, and
shall, through counsel and other representatives, consult
with each other regarding form and content thereof.

(h) Garbalizer and RecycleNet shall jointly have the
right and obligation to complete such due diligence as
either party may deem appropriate with respect to the other
party including, without limitation, the use of professional
auditors. If, for any reason, the representations of a
party are reasonably deemed to vary substantially from the
information obtained by any such audit and cannot be
reasonably reconciled, then the party relying upon such
representations may terminate this Agreement immediately by
giving written notice to such effect, including therein a
clear concise statement of the nature and extent of such
variance.

(i) Garbalizer and RecycleNet jointly agree that they
each will, prior to the closing of this Agreement, obtain
from the now current principal shareholders (whether
individuals or corporations) of said corporations, personal
warranties and/or guarantees (whether made directly or
indirectly) supporting the written representations and
warranties made by such persons to either of the
corporations party to this Agreement and which have been
relied upon by any party hereto.

(j) Each party hereto shall be responsible for its
own legal and other professionals fees incurred in the
negotiation and preparation of the letter of intent herein
referenced and further, that the shareholders of the parties
hereto shall be obligated for such legal and professional
fees as are incurred by the respective parties.

6. APPROVAL OF SHAREHOLDERS

As an express condition precedent, this Agreement is
subject to the approval of the shareholders (where
necessary) and directors of both RecycleNet and Garbalizer.
Both corporations shall call shareholders' meetings or
otherwise obtain such approval on or before the date set for
closing of this Agreement for the purpose of considering and
approving this Agreement and for purposes of taking all
other action required to be taken to effectuate the objects
of this Agreement.

7. TERMINATION/LETTER OF AGREEMENT

(a) In the event either party hereto, prior to the
execution of this Agreement, terminates the letter of intent
for cause, said party shall do so by giving written notice
to the other party, each party to assume its own costs and
expenses upon such termination.

(b) In the event this Agreement is not, as
contemplated and prior oral agreements upon which it is
based, executed by the parties hereto on or before February
25, 1999, either party shall be entitled to unilaterally and
without cause terminate said letter effective upon two (2)
business days written notice to the other party.

(c) Each party hereto agrees to pay all legal,
accounting and other fees and expenses by it incurred in the
preparation of the letter of intent herein referenced as
contemplated in said letter of intent.

8. CONFIDENTIALITY

Each of the parties hereto shall require their
employees and representatives to be obligated to keep
confidential the existence and contents of the letter of
intent preceding this Agreement, this Agreement itself, and
all other non public information received from either party
to this Agreement unless required to do so by operation of
applicable law.

9. CLOSING

The closing of this Agreement shall take place at the
offices of Garbalizer Machinery Corporation, 507 Newhouse
Building, 10 Exchange Place, Salt Lake City, Utah, on March
19, 1999 at 3:00 p.m. Time is of the essence. All
representations and warranties shall survive the closing.

10. CONSTRUCTION

This Agreement shall be construed and interpreted under
the laws of the State of Utah.

11. BENEFITS

This Agreement shall enure to the benefit of and shall
be binding upon the parties and upon their respective
successors.

12. EXHIBITS

The attached exhibits as herein referenced are attached
hereto and made a part hereof for all purposes identified
and labelled as follows:

(a) Exhibit "A" - RecycleNet unaudited
statements and relevant reporting documents;

(b) Exhibit "B" - Garbalizer unaudited
financial statements and relevant reporting
documents.

IN WITNESS WHEREOF THE PARTIES HAVE SIGNED THIS
AGREEMENT THE DATE ABOVE SHOWN.

GARBALIZER MACHINERY CORPORATION

BY; /s/ John C. Brewer
----------------------------
John C. Brewer
Chief Executive Officer

RECYCLENET CORPORATION

BY: \s\ Paul Roszel
-----------------------------
Paul Roszel
President

EXHIBIT 3 (a)

ARTICLES OF AMENDMENT OF
GARBALIZER MACHINERY CORPORATION

The name of the corporation is Garbalizer Machinery
Corporation, 507 Newhouse Building, Salt Lake City, Utah, 84111.

the amendments adopted are as follows:

ARTICLE I

The name of the corporation is RecycleNet Corporation.

ARTICLE II

The authorized capitalization of the corporation shall be
150,000,000 $ 0.01 par value common shares.

The revised articles of incorporation hereby supersede the
original articles of incorporation and all amendments thereto.

a. the amendments were adopted by the shareholders at a
special shareholders meeting held March 19, 1999.

b. the number of shares outstanding and entitled to voter
are 11,816,132; there are no classes of shares.

c. the number of shares voting for and against such
amendments are as follows:
for 9,267,813 against 0

Dated this the 19th day of March 1999

Garbalizer Machinery Corporation

By /S/ John C. Brewer
----------------------------------
John C. Brewer, President

On the date above shown personally appeared John C.
Brewer and signed the foregoing document as president of
the above corporation.

-------------------------
Notary Public residing at
Salt Lake City, Utah

my commission
expires:

<PAGE>
1

EXHIBIT 3(b)

CORRECTED
ARTICLES OF AMENDMENT OF
GARBALIZER MACHINERY CORPORATION

The name of the corporation is Garbalizer Machinery Corporation,
507 Newhouse Building, Salt Lake City, Utah, 84111.

the amendments adopted are as follows:

ARTICLE I

The name of the corporation is RecycleNet Corporation.

ARTICLE II

The authorized capitalization of the corporation shall be
150,000,000 $ 0.01 par value common shares.

The board of directors is authorized to create and designate one
or more series within the class of common shares and to designate
relative preferences, limitations and rights of the series in
accordance with section 16-10a-602 of the Utah Revised Business
Corporation Act.

The revised articles of incorporation hereby supersede the
original articles of incorporation and all amendments thereto.

a. the amendments were adopted by the shareholders at a special
shareholders meeting held March 19, 1999.

b. the number of shares outstanding and entitled to voter are
11,816,132; there are no classes of shares.

c. the number of shares voting for and against such amendments
are as follows:
for 9,267,813 against 0

Dated this the 19th day of March 1999

Garbalizer Machinery Corporation

By /s/ John C. Brewer
-----------------------------
John C. Brewer, President

On the date above shown personally appeared John C. Brewer
and signed the foregoing document as president of the above
corporation.

------------------------
Notary Public residing at
Salt Lake City, Utah

my commission
expires:

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial informaiton extracted from the balance
sheet as of September 30, 1999 and the statement of operations for the nine
months ended September 30, 1999, and from the balance sheet as of December 31,
1998 and the statement of operations for the year ended December 31, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>

<S> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> JUN-30-1999 DEC-31-1998
<CASH> 93,820 55,257
<SECURITIES> 0 0
<RECEIVABLES> 52,701 26,505
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 161,521 81,762
<PP&E> 13,693 5,351
<DEPRECIATION> (3,080) (762)
<TOTAL-ASSETS> 172,134 86,351
<CURRENT-LIABILITIES> 47,057 35,985
<BONDS> 0 0
0 0
0 0
<COMMON> 78,774 69,463
<OTHER-SE> 46,303 (19,097)
<TOTAL-LIABILITY-AND-EQUITY> 172,134 86,351
<SALES> 316,280 100,974
<TOTAL-REVENUES> 316,280 100,974
<CGS> 178,595 14,033
<TOTAL-COSTS> 178,595 14,033
<OTHER-EXPENSES> 1,112,466 96,401
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (974,781) (9,460)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (974,781) (9,460)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (974,781) (9,460)
<EPS-BASIC> (0.01) (0.00)
<EPS-DILUTED> (0.01) (0.00)

</TABLE>