UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





(Mark One)



[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011



[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ___ to _______



Commission file number
000-50760





Sancon Resources
Recovery, Inc.

(Exact name of small business issuer as specified
in its charter)





|Nevada                                                         | 58-2670972                       
|-------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or organization) | (IRS Employee Identification No.)







No 2 Yinqing Lu, Songjiang
District,

Shanghai, China, 201615

(Address of principal executive
offices)



(+86) 21 67756099

(Issuer's telephone number)





Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]



APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS

DURING THE PRECEDING FIVE YEARS



Check whether the registrant filed all documents
and reports required by Section l2, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed
by a court. Yes [ ] No [ ]



APPLICABLE ONLY TO CORPORATE ISSUERS



State the number of shares outstanding of each
of the issuer's classes of common equity, as of the latest practicable date:



Common Stock: par value of $0.001; 22,964,996
shares issued and outstanding on June 30, 2011.



Transitional Small Business Disclosure Format
(Check one): Yes [ ] No [X]







1









Sancon
Resources Recovery, Inc.



FORM 10-Q

INDEX



|         |                                                           | PAGE
|-------- | --------------------------------------------------------- | ----
|         |                                                           |     
|         | Important Notice                                          |     
|         |                                                           |     
|PART I.  | FINANCIAL INFORMATION                                     |     
|         |                                                           |     
|Item 1.  | Financial Statements  (Unaudited)                         | 4   
|         |                                                           |     
|Item 2.  | Management's Discussion and Analysis or Plan of Operation | 16  
|         |                                                           |     
|Item 3.  | Controls and Procedures                                   | 23  
|         |                                                           |     
|PART II. | OTHER INFORMATION                                         |     
|         |                                                           |     
|Item 1.  | Legal Proceedings                                         | 24  
|         |                                                           |     
|Item 2.  | Changes in Securities and Use of  Proceeds                | 24  
|         |                                                           |     
|Item 3.  | Default Upon Senior Securities                            | 24  
|         |                                                           |     
|Item 4.  | Submission of Matters to a Vote of Security Holders       | 24  
|         |                                                           |     
|Item 5.  | Other Information                                         | 24  
|         |                                                           |     
|Item 6.  | Exhibits                                                  | 25  
|         |                                                           |     
|         | Signatures                                                | 26  









2









CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION



Certain statements in this report contain or
may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause
actual results, performance or achievements to be materially different from any future results, performance or achievements expressed
or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking
statements. These factors include, but are not limited to, the risk of doing business in the People' Republic of China, or PRC,
our ability to implement our strategic initiatives, our access to sufficient capital, the effective integration of our subsidiaries
in the PRC into a U.S. public company structure, economic, political and market conditions and fluctuations, government and industry
regulation, Chinese and global competition, and other factors. Most of these factors are difficult to predict accurately and are
generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements
that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should
carefully review this report in its entirety. Except for our ongoing obligations to disclose material information under the Federal
securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events
or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report
and you should not rely on these statements without also considering the risks and uncertainties associated with these statements
and our business.





3









PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)





|Sancon
    Resources Recovery,Inc                                                               
|------------------------------------------------------------------------------------------------
|Consolidated
    Balance Sheets                                                                 
|As
    at June 30,2011 and December 31,2010                                                     
|(Unaudited)                                                                                     
|                                                                                                
|Assets                                                                                          
|                                                                                                
|                                                                                                
|Current assets                                                                                  
|Cash and cash equivalents                                                                       
|Trade receivables, net                                                                          
|Inventory                                                                                       
|Deferred tax asset                                                                              
|Other current assets                                                                            
|Advance and prepayment                                                                          
|Held to maturity securities                                                                     
|Due from related parties                                                                        
|Total current assets                                                                            
|                                                                                                
|Property, plant & equipment, net                                                                
|Security deposit                                                                                
|Long Term Deferred Expenses                                                                     
|Total assets                                                                                    
|                                                                                                
|Liabilities and Stockholders' Equity                                                            
|                                                                                                
|Liabilities                                                                                     
|Current liabilities                                                                             
|Trade payables                                                                                  
|Capital lease - current                                                                         
|Tax payables                                                                                    
|Due to related parties                                                                          
|Loan Payable - current                                                                          
|Accrued expenses and other payables                                                             
|Total current liability                                                                         
|                                                                                                
|Long term liability                                                                             
|Loan Payable                                                                                    
|Total liability                                                                                 
|                                                                                                
|Stockholders' equity                                                                            
|Share Capital                                                                                   
|Authorized: 500,000,000 common shares, par value $0.001 per share                               
|Issued and Outstanding: 22,964,996 shares as of June 30, 2011 and December 31, 2010             
|Additional paid-in capital                                                                      
|Deferred Compensation                                                                           
|Other comprehensive income                                                                      
|Retained Earnings                                                                               
|Total                                                                                           
|Non-controlling interest                                                                        
|Total stockholders' equity                                                                      
|Total liabilities & stockholders' equity                                                        
|                                                                                                
|The accompanying notes are an integral part of these unaudited consolidated financial statements







4









|Sancon
    Resources Recovery,Inc                                                               
|------------------------------------------------------------------------------------------------
|Consolidated
    Income Statements                                                              
|For
    the Three-Months and Six-Months Ended June 30, 2011 and 2010                            
|(Unaudited)                                                                                     
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Net sales                                                                                       
|Cost of sales                                                                                   
|Gross profit                                                                                    
|                                                                                                
|Operating Expenses                                                                              
|Depreciation                                                                                    
|Selling, general and administrative                                                             
|Total operating expenses                                                                        
|Operating Income                                                                                
|                                                                                                
|Other income (expense)                                                                          
|Other income/(Expense), net                                                                     
|Investment loss prior to acquisition                                                            
|Gain on acquisition                                                                             
|Interest income, net                                                                            
|Total other income                                                                              
|Income from continued operations before                                                         
|income taxes and non-controlling interest                                                       
|                                                                                                
|Income taxes                                                                                    
|                                                                                                
|Net income (loss) attributed to non-controlling interest                                        
|                                                                                                
|Net income                                                                                      
|                                                                                                
|Other comprehensive item:                                                                       
|Foreign currency translation loss                                                               
|                                                                                                
|Net comprehensive income                                                                        
|                                                                                                
|Earnings per share:                                                                             
|Basic  earnings per share                                                                       
|Basic  weighted average shares outstanding                                                      
|Diluted earnings per share                                                                      
|Diluted weighted average shares outstanding                                                     
|The accompanying notes are an integral part of these unaudited consolidated financial statements







5











|Sancon
    Resources Recovery,Inc                                                               
|------------------------------------------------------------------------------------------------
|Consolidated
    Statements of Cash Flow                                                        
|For
    the Six-Months Ended June 30, 2011 and 2010                                             
|Unaudited                                                                                       
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Cash Flows from Operating Activities                                                            
|Net Income                                                                                      
|Adjustments to reconcile net income to net cash flows                                           
|provided by operating activities:                                                               
|Non-controlling interest                                                                        
|Depreciation                                                                                    
|Investment loss prior to acquisition                                                            
|Gain on acquisition                                                                             
|Amortization of deferred compensation                                                           
|Options grant for compensation                                                                  
|Changes in current assets and liabilities:                                                      
|Decrease in trade receivables                                                                   
|Increase in inventory                                                                           
|Increase in advance to suppliers                                                                
|Decrease in other current assets                                                                
|Increase(Decrease) in tax payable                                                               
|Decrease in trade payable                                                                       
|Increase in other current liabilities                                                           
|Net cash provided by operating activities                                                       
|                                                                                                
|Cash Flows from Investing Activities                                                            
|Investment in securities                                                                        
|Purchase of property and equipment                                                              
|Investment in Shengrong                                                                         
|Net cash used in investing activities                                                           
|                                                                                                
|Cash Flows from Financing Activities                                                            
|Proceeds from Shareholder loans                                                                 
|Payments to Shareholder loans                                                                   
|Infusion of capital from non controlling shareholder                                            
|Repayments of mortgage loan                                                                     
|Net cash flows used in (provided by) financing activities                                       
|                                                                                                
|Effect of exchange rate changes on cash                                                         
|                                                                                                
|Net increase in cash & cash equivalents                                                         
|                                                                                                
|Cash & cash equivalent at start of period                                                       
|Cash & cash equivalent at end of period                                                         
|                                                                                                
|Supplemental information for cash flow information                                              
|Cash paid for interest                                                                          
|Cash paid for income taxes                                                                      
|                                                                                                
|                                                                                                
|The accompanying notes are an integral part of these unaudited consolidated financial statements







6







Sancon
Resources Recovery, Inc.

Notes
to the Consolidated Financial Statements

(Unaudited)





Note 1. Nature of Operations



Sancon Resources Recovery, Inc. ("Sancon",
or "the Company", or "we", or "us") is registered in the State of Nevada Sancon Resources Recovery,
Inc. is an environmental service and waste management company that operates recycling facilities in China and Australia. Sancon
specializes in the collection and recovery of industrial and commercial solid wastes such as plastic, paper, cardboard, and glass.



On April 1, 2011, Sancon approved an infusion
of equity in to Sancon Resources Recovery (Shanghai) Co., Ltd. (“Sancon SH”) for a total of USD 2,000,000, of which
Sancon invested USD1,400,000 to Sancon SH and the minority shareholder invested USD 600,000. After completion of this transaction,
ownership % remains unchanged.



As of June 30, 2011, the Sancon group comprises
of the following companies:



|Registered Name
        (business is conducted under the registered
        names)        | Domicile              | Owner     | % held | Status
|----------------------------------------------------------------------------------------- | --------------------- | --------- | ------ | ------
|Sancon Recycling Pty Ltd.                                                                 | Australia             | Sancon    | 100    | Active
|Sancon Resources Recovery (Shanghai) Co., Ltd. ("Sancon SH" hereinafter)                  | Shanghai              | Sancon    | 70     | Active
|Crossover Solutions Inc. ("CS" hereinafter)                                               | British Virgin Island | Sancon    | 100    | Active
|Sheng Rong Environment Protection Technology Co.,Ltd. (“Shanghai Sheng Rong” hereinafter) | Shanghai              | Sancon SH | 52     | Active



Note 2. Basis of Presentation



(a)Interim Consolidated Financial Statements



The accompanying unaudited consolidated financial
statements have been prepared in conformity with generally accepted accounting principles in the United States of America. However,
certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted or condensed, pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC"). In the opinion of Sancon management, all adjustments of a normal recurring nature necessary for a fair presentation
have been included. The results for periods are not necessarily indicative of results for the entire year. These financial statements
and accompanying notes should be read in conjunction with our annual financial statements and the notes thereto for the year ended
December 31, 2010, included in our Annual Report on Form 10K, filed with the Securities and Exchange Commission.



(b) Principles of Consolidation



The accompanying unaudited consolidated financial
statements include all of the accounts of the Company and all of the subsidiaries under its control, which include Sancon Recycling
Pty Ltd., Sancon SH (70%), CS and Shanghai Sheng Rong (52% owned by Sancon SH) as of June 30, 2011. All material inter-company
balances and transactions have been eliminated in consolidation.



The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery
of the Company's assets and the satisfaction of liabilities in the normal course of business.



Note 3. Summary of Significant Accounting
Policies



Use of Estimates



These financial statements are prepared in
accordance with accounting principles accepted generally in the USA. These principles require management to use its best judgment
in determining estimates and assumptions that: affect the reported amounts of assets and liabilities; disclosure of contingent
assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting
period. Management makes its best estimate of the ultimate outcome for such items based on historical trends and other information
available when the financial statements are prepared. Changes in estimates are recognized in accordance with the relevant accounting
rules, typically in the period when new information becomes available to management. Actual results in the future could differ
from the estimates made in the prior and current periods.





7









Earnings Per Share



Basic earnings per share ("EPS")
is calculated using net earnings (the numerator) divided by the weighted-average number of shares outstanding (the denominator)
during the reporting period. Diluted EPS includes the effect from potentially dilutive securities. Diluted EPS is equal to basic
EPS for all periods presented, as the Company has no potentially dilutive securities.



Revenue Recognition



The Company's revenue recognition policies
are in compliance with Staff Accounting Bulletin (SAB) 104. Sales revenue is recognized when the significant risks and rewards
of the ownership of goods have been transferred to the buyers. No revenue is recognized if there are significant uncertainties
regarding the recovery of the consideration due, the possible return of goods, or when the amount of revenue and the costs incurred
or to be incurred in respect of the transaction cannot be measured reliably.



The Company now is organized into two business
segments while it was three in the last year: material recycling and waste management service.



(1) Material Recycling refers to the activities
of collecting and processing of waste materials, then selling them to customers in China. The plant is located in Australia.

(2) Waste management Service refers the activities
of providing waste management service with operations located in China.



Income Taxes



The Company has adopted Financial Accounting
Standard No. 109 (SFAS 109) (ASC 740) which requires the recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to reverse.



The Company operates in several countries.
As a result, we are subject to numerous domestic and foreign tax jurisdictions and tax agreements and treaties among the various
taxing authorities. Our operations in these jurisdictions are taxed on various bases: income before taxes, deemed profits and withholding
taxes based on revenue. The calculation of our tax liabilities involves consideration of uncertainties in the application and interpretation
of complex tax regulations in a multitude of jurisdictions across our global operations.



We regularly assess our position with regard
to individual tax exposures and record liabilities for our uncertain tax positions and related interest and penalties according
to the principles of FAS 5, (ASC 450) Accounting for Contingencies. These accruals reflect management's view of the likely outcomes
of current and future audits. The future resolution of these uncertain tax positions may be different from the amounts currently
accrued and therefore could impact future tax period expense.



The Company has U.S. federal net operating
loss carry forwards that if unused could expire in varying amounts in the years through 2020 to 2026. However, as a result of the
acquisition, the amount of net operating loss carry forward available to be utilized in reduction of future taxable income was
reduced pursuant to the change in control provisions of Section 382 of the Internal Revenue Code.



A 100% valuation allowance has been established
as a reserve against the deferred tax assets arising from the net operating losses and other net temporary differences since it
cannot, at this time, be considered more likely than not that their benefit will be realized in the future.



Changes in tax laws, regulations, agreements
and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could
have an impact upon the amount of income taxes that we provide during any given year.



Non-controlling Stockholders’ Interest



The Company owns 70% interest in Sancon SH
and Sancon SH owns 52% interest in Shanghai Sheng Rong. As at June 30, 2011 and December 31, 2010, Non-controlling interest amounted
to $970,101 and $356,706 respectively.



Reclassifications



Certain reclassifications have been made in
prior period's financial statements to conform to classifications used in the current period.





8







Held to maturity securities



Held to maturity debt securities are those debt securities in which
the Company has the ability and intent to hold the security until maturity. Held to maturity debt securities are recorded at amortized
cost, adjusted for the amortization or accretion of premiums or discounts. Premiums and discounts are amortized or accreted over
the life of the related held to maturity or available for sale security as an adjustment to yield using the effective interest
method. Such amortization and accretion is included in the “Interest Expense” line item in the consolidated statements
of income. Dividend and interest income are recognized when earned.



A decline in the market value of any security below cost that is
deemed to be other than temporary results in an impairment to reduce the carrying amount to fair value. The impairment is charged
to earnings and a new cost basis for the security is established. To determine whether an impairment is other than temporary, the
Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether
evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment
includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year end,
forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates
in.



The held to maturity securities of $129,489 will be mature on August
22, 2011. So they are classified under current assets in the accompanied financial statements



Recent pronouncements



In January 2010, FASB issued ASU No. 2010-01- Accounting for Distributions
to Shareholders with Components of Stock and Cash. The amendments in this Update clarify that the stock portion of a distribution
to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that
all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and
is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this update
are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis.
The adoption of this ASU did not have a material impact on its consolidated financial statements.



In January 2010, FASB issued ASU No. 2010-02 – Accounting
and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification. The amendments in this Update affect accounting
and reporting by an entity that experiences a decrease in ownership in a subsidiary that is a business or nonprofit activity. The
amendments also affect accounting and reporting by an entity that exchanges a group of assets that constitutes a business or nonprofit
activity for an equity interest in another entity. The amendments in this update are effective beginning in the period that an
entity adopts SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements – An Amendment of ARB No.
51.” If an entity has previously adopted SFAS No. 160 as of the date the amendments in this update are included in the Accounting
Standards Codification, the amendments in this update are effective beginning in the first interim or annual reporting period ending
on or after December 15, 2009. The amendments in this update should be applied retrospectively to the first period that an entity
adopted SFAS No. 160. The adoption of this ASU did not have a material impact on the Company’s consolidated financial
statements.



In January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures
about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers
in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of
Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements.
In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present
separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number).
This update provides amendments to Subtopic 820-10 that clarifies existing disclosures as follows: 1) Level of disaggregation.
A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often
a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment
in determining the appropriate classes of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting
entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring
fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3. The
new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after
December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity
in Level 3 fair value measurements. These disclosures are effective for fiscal years beginning after December 15, 2010, and for
interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU, however, the Company does
not expect the adoption of this ASU to have a material impact on its consolidated financial statements.



In February 2010, FASB issued ASU No. 2010-9 –Amendments to
Certain Recognition and Disclosure Requirements. This update addresses certain implementation issues related to an entity’s
requirement to perform and disclose subsequent-events procedures, removes the requirement that public companies disclose the date
of their financial statements in both issued and revised financial statements. According to the FASB, the revised statements include
those that have been changed to correct an error or conform to a retrospective application of U.S. GAAP. The amendment is effective
for interim and annual reporting periods in fiscal year ending after June 15, 2010. The Company does not expect the adoption of
this ASU to have a material impact on the Company’s consolidated financial statements.





9







In March 2010, FASB issued ASU No. 2010-10 –Amendments for
Certain Investment Funds. This update defers the effective date of the amendments to the consolidation requirements made by FASB
Statement 167 to a reporting entity’s interest in certain types of entities. The deferral will mainly impact the evaluation
of reporting enterprises’ interests in mutual funds, private equity funds, hedge funds, real estate investment entities that
measure their investment at fair value, real estate investment trusts, and venture capital funds. The ASU also clarifies guidance
in Statement 167 that addresses whether fee arrangements represent a variable interest for all service providers and decision makers.
The ASU is effective for interim and annual reporting periods in fiscal year beginning after November 15, 2009. The adoption of
this ASU did not have a material impact on the Company’s consolidated financial statements.



In March 2010, FASB issued ASU No. 2010-11 –Scope Exception
Related to Embedded Credit Derivatives. Embedded credit-derivative features related only to the transfer of credit risk in the
form of subordination of one financial instrument to another are not subject to potential bifurcation and separate accounting as
clarified by recently issued FASB guidance. Other embedded credit-derivative features are required to be analyzed to determine
whether they must be accounted for separately. This update provides guidance on whether embedded credit-derivative features in
financial instruments issued by structures such as collateralized debt obligations (CDOs) and synthetic CDOs are subject to bifurcation
and separate accounting. The guidance is effective at the beginning of a company’s first fiscal quarter beginning after June
15, 2010. The Company does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financial
statements.



Note 4. Concentrations and commitments



(a). Concentrations



The Company has focused on business in overseas
markets, which the Company believes present opportunities. A business with a foreign lessee is subject to risks related to the
economy of the country or region in which such lessee is located, which may be weaker than the U.S. economy. On the other hand,
a foreign economy may remain strong even though the U.S. economy does not. A foreign economic downturn may impact a foreign lessee's
ability to make business payments, even though the U.S. and other economies remain stable. Furthermore, foreign lessees are subject
to risks related to currency conversion fluctuations.



Foreign laws, regulations and judicial procedures
may be more or less protective of lessor rights than those which apply in the United States. The Company could experience collection
or repossession problems related to the enforcement of its business agreements under foreign local laws and the remedies in foreign
jurisdictions. The protections potentially offered by Section 1110 of the Bankruptcy Code do not apply to non-U.S. carriers, and
applicable local law may not offer similar protections.



(b). Commitments



Office space:

The Company leases office space in Australia
and China. The lease for Australia will expire in October 2011 while leases for China will expire on various dates between April
2011 and July 2013. Based upon existing leases, without renewals, the minimum lease payments up for the next three years after
June 30, 2011 to expiry are as follows:



|2011  | $ | 236,819 
|----- | - | --------
|2012  |   | 62,313  
|2013  |   | 1 7,815 
|Total | $ | 3 16,947





The following schedule shows the composition
of toral rental expense for all operaring leases except those with terms of a month or less that were not renewed:



|                |  | Year
    Ending December 31
|--------------- |  | ---------------------------
|                |  | 2011                       
|Minimum Rentals |  | $                          







10









Equipment:



In year 2006, the company purchased a vehicle
by mortgage loan from CBFC Limited ABN. The annual interest rate is 8.32% with payment term of sixty (60) months. The payment is
to be made in 59 equal monthly installments of $569 each and the final installment of $10,417. The balance as of June 30, 2011
amounted to $11,886 as current liability.



In September 2007, the company purchased a
vehicle by mortgage loan from CBFC Limited ABN. The annual interest rate is 8.6% with payment term of forty-eight (48) months.
The payment is to be made in 47 equal monthly installments of $498 each and the final installment of $8,190. The balance as of
June 30, 2011 amounted to $8,569 as current liability.



The Company pays approximately $1,067 per month
under these leases, the last of which expires in September 2011.



Total minimum lease payments under the above
leases are as follows:



|                                        |  | Capital Leases
|--------------------------------------- |  | --------------
|2011                                    |  | $             
|                                        |  |               
|Less: Amount representing interest      |  |               
|Present value of minimum lease payments |  | $             





Legal Proceeding:



The company involved in the following litigation.



Dragon Wings Communications Limited, a Hong
Kong corporation and Wong Yee Tat, an individual are the first and second plaintiff. They filed a complaint on July 25, 2008 in
the District Court of the Hong Kong special Administrative Region, Civil Action No. 3251, against the first defendant, Fintel Group
Limited for breach of contract. The Company is the second defendant because plaintiff claimed Fintel Group Limited is a wholly
owned subsidiary of the Company. Under the writ, the plaintiff claimed that pursuant to a written stock purchase agreement, the
first defendant shall purchase the first plaintiff’s common stock by common shares of Financial Telecom Limited (USA) inc.
(replaced by shares of MKA Capital Inc. from June 2006) or pay to the plaintiff cash of $94,172 in lieu of the shares. Pluses the
interest and cost of litigation, the total amount claimed by plaintiff were $104,966. The court adjudged that the first defendant
do pay the plaintiffs damages on September 08, 2008 and also adjudged that the second defendant do pay the plaintiffs damages on
December 10, 2008. The Company has denied all allegations in the complaint because Fintel Group Limited was not a subsidiary at
the time of the since November 27, 2006.



On November 19, 2010, an involuntary bankruptcy
petition was filed against the company in the United States Bankruptcy Court for Nevada, Case No. 10-54572-gwz. The petitioner
is Dragon Wings Communications Limited and the amount of the claim is $149,015. The Company has retained a Nevada law firm to oppose
the involuntary petition and have the case dismissed. The Company accrued $149,015 of potential liability in the accompanied financial
statements based on the amount of the claim.



Note 5. Property, plant & equipment



Property, plant, & equipment are stated
at cost, less accumulated depreciation and any impairment in value. The carrying values are reviewed for impairment when events
or changes in circumstances indicate the carrying value may not be recoverable. Impairment losses are recognized in the income
statement.



Below is the table of Property, Plant and Equipment
as at June 30, 2011:



|Item                     |  |   | Plant and Machinery |   |  |   | Vehicles |   |  |   | Office Equipment |   |  |   | Total     |  
|------------------------ |  | - | ------------------- | - |  | - | -------- | - |  | - | ---------------- | - |  | - | --------- | -
|Cost                     |  | $ | 1,380,714           |   |  | $ | 609,066  |   |  | $ | 41,807           |   |  | $ | 2,031,586 |  
|Accumulated Depreciation |  |   | (539,895            | ) |  |   | (341,399 | ) |  |   | (25,790          | ) |  |   | (907,084  | )
|Net Carrying Value       |  | $ | 840,819             |   |  | $ | 267,667  |   |  | $ | 16,017           |   |  | $ | 1,124,502 |  



Included in property and equipment is approximately
$60,603 of assets, which are leased under non-cancelable leases and accounted for as capital leases, which expire through September
2011. The accumulated depreciation included in the property and equipment for these leases is approximately $52,873.



11









As of December 31, 2010, the property and equipment
of the Company consisted of the following:



|Items                    |  |   | Plant and Machinery |   |  |   | Vehicles |   |  |   | Office Equipment |   |  |   | Total     |  
|------------------------ |  | - | ------------------- | - |  | - | -------- | - |  | - | ---------------- | - |  | - | --------- | -
|Cost                     |  | $ | 1,324,477           |   |  | $ | 606,877  |   |  | $ | 40,847           |   |  | $ | 1,972,201 |  
|Accumulated Depreciation |  |   | (479,369            | ) |  |   | (282,223 | ) |  |   | (20,503          | ) |  |   | (782,095  | )
|Net Carrying Value       |  | $ | 845,108             |   |  | $ | 324,654  |   |  | $ | 20,344           |   |  | $ | 1,190,106 |  



Included in property and equipment at December
31, 2010 is approximately $58,132 of assets, which are leased under non-cancelable leases and accounted for as capital leases,
which expire through September 2011. The accumulated depreciation included in the property and equipment for these leases is approximately
$56,321.



Depreciation and amortization
expense for the six months period ended June 30, 2011 and 2010 was $111,489 and $121,644 respectively.



Note 6. Short Term and Long
Term Loan Payable



On November 19, 2009, Sancon SH purchased a
vehicle with a total loan principle amount of $88,014, unsecured, with an annual interest rate of 7.60%. The payment is to be made
in thirty-six (36) equal monthly installments of $2,773 expiring in November 2012. The Company classified the loan balance under
current and noncurrent liabilities respectively in the accompanied financial statements. As of June 30, 2011 and December 31, 2010,
short term loan payable amounted to $30,953 and $29,224 and long term loan payable amounted to $13,605 and $28,805 respectively.



For the six months ended June 30, 2011, Sancon
SH accrued and paid interest $1,993 for the loan.



The future payment schedule for this term loan
is as follows:



|2011  |  | $ | 16,638 | 
|----- |  | - | ------ | 
|2012  |  |   | 30,503 | 
|Total |  | $ | 47,141 | 





Note 7. Due from/to related parties



Due from/to related parties are as follows:



|                                        |  | 6/30/2011 |         | 12/31/2010
|--------------------------------------- |  | --------- | ------- | ----------
|Due from current CEO                    |  | $         | 296,603 |           
|Total Due from Related Party            |  | $         | 296,603 |           
|                                        |  |           |         |           
|Due to Former CEO and major shareholder |  | $         | 76,349  |           
|Due to Independent Director             |  |           | 5,021   |           
|Due to Current CEO                      |  |           | —       |           
|Total Due to Related Parties            |  | $         | 81,370  |           





On April 1, 2011, Crossover Solutions Inc.,
a 100% owned subsidiary of the Company, loaned $600,000 to an individual shareholder for his additional investment to Sancon SH.
The loan was interest free, unsecured and due on demand.



Other related party notes receivables and payables
were interest free, unsecured and due on demand.





12









Note
8. Stockholders equity



Common
Stock



On
October 15, 2007, the Company entered into a ten years service agreement with Lyons Capital LLC. In connection with this agreement,
Lyons Capital LLC will receive 300,000 shares of Restricted, RULE 144 Stock, for services rendered or to be rendered in the future.
The Company issued shares on March 10, 2008 and recorded at the fair market value of $156,000. This amount will be amortized over
a period of ten years from January 01, 2008. For the six months periods ended June 30, 2011, the Company recorded $7,800 in consulting
expense. The unamortized amount of $101,400 is included under deferred compensation as at June 30, 2011.



On
January 01, 2008, the Company entered in a four years employment agreement with Mr. Jack Chen, current CEO. In connection with
this agreement, Mr. Jack Chen will receive corporate salary of $90,000 per year that paid in stock. On August 01, 2008 and April
13, 2009, the Company issued 250,000 shares and 350,000 shares of Restricted, RULE 144 Stock to Mr. Jack Chen. The shares recorded
at the fair market value of $37,500 and $52,500 respectively. As of the June 30, 2011, the Company recorded $225,000 in due to
related parties. This is a stock subscription liability.



On
January 01, 2010, the Company entered in a two years employment agreement with Mr. David Chen, former CEO and major shareholder.
In connection with this agreement, Mr. David Chen will receive corporate salary of $42,000 per year that paid in stock. As of
the June 30, 2011, the Company recorded $63,000 in due to related parties. This is a stock subscription liability.



Stock
Options



Options
outstanding as of June 30, 2011 and related weighted average price and intrinsic value are as follows:



|Exercise Prices |  | Total Options Outstanding |         | Weighted Average Remaining Life (Years) |  | Total Weighted Average Exercise Price |      | Options Exercisable |  | Weighted Average Exercise Price |      | Aggregate Intrinsic Value
|--------------- |  | ------------------------- | ------- | --------------------------------------- |  | ------------------------------------- | ---- | ------------------- |  | ------------------------------- | ---- | -------------------------
|$0.33           |  |                           | 900,000 |                                         |  |                                       | 3.50 |                     |  | $                               | 0.33 |                          





On
January 01, 2010, the Company entered in an option agreement with Mr. Jack Chen, current CEO. In connection with this agreement,
the Company granted a total of 600,000 options with an exercise price of $0.33 per share to Mr. Jack Chen. These options expire
and vest in 5 years.



On
January 01, 2010, the Company entered in an option agreement with Mr. David Chen, former CEO and major shareholder. In connection
with this agreement, the Company granted a total of 300,000 options with an exercise price of $0.33 per share to Mr. David Chen.
These options expire and vest in 5 years.



The
Company valued the stock options by the Black-Scholes model with the following assumptions:



|Expected |  | Expected   |       | Dividend |  | Risk  Free     |   | Grant  Date
|-------- |  | ---------- | ----- | -------- |  | -------------- | - | -----------
|Term     |  | Volatility |       | Yield    |  | Interest  Rate |   | Fair Value 
|3.50     |  |            | 96.29 | %        |  |                | 0 | %          
|         |  |            |       |          |  |                |   |            





The following
summary presents the options granted, exercised, expired and outstanding at June 30, 2011:



|                                   | Options
        Outstanding
|---------------------------------- | ---------------------------
|Outstanding, December 31,
    2010 | 90
    0,000               
|Granted                            |                            
|Forfeited/Canceled                 |                            
|Exercised                          | 0                          
|Outstanding, June 30, 2011         | 900,000                    



The
Company has not recognized compensation expenses for its stock option plan for the six months ended June 30, 2011 because it was
expensed in the year 2010.





13







Note
9. Segmental information



Statement
of Financial Accounting Standards No. 131 ("SFAS 131"),(ASC 250) "Disclosure About Segments of an Enterprise and
Related Information" requires use of the "management approach" model for segment reporting. The management approach
model is based on the way a company's management organizes segments within the company for making operating decisions and assessing
performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any
other manner in which management disaggregates a company.



During
the six months periods ended June 30, 2011 and 2010, the Company is organized into two business segments: (1) material recycling,
(2) waste service. The following table presents a summary of operating information and certain quarter-end balance sheet information
for the six months periods ended June 30, 2011 and 2010:



|                               |  | For the six months periods ended June 30,
|------------------------------ |  | -----------------------------------------
|                               |  | 2011                                     
|Revenues from various areas:   |  |                                          
|Material Recycling             |  | $                                        
|Waste Service                  |  |                                          
|Consolidated                   |  | $                                        
|Net income:                    |  |                                          
|Material Recycling             |  | $                                        
|Waste Service                  |  |                                          
|Un-allocted                    |  |                                          
|Consolidated                   |  | $                                        
|Identifiable assets:           |  | June 30,2011                             
|Material Recycling             |  | $                                        
|Waste Service                  |  |                                          
|Un-allocted                    |  |                                          
|Consolidated                   |  | $                                        
|Depreciation and amortization: |  |                                          
|Material Recycling             |  | $                                        
|Waste Service                  |  |                                          
|Consolidated                   |  | $                                        
|Capital expenditures:          |  |                                          
|Material Recycling             |  | $                                        
|Waste Service                  |  |                                          
|Consolidated                   |  | $                                        



Note
10. Income Tax



The
Company is registered in the State of Nevada and has operations in primarily five four jurisdictions - the Australia, China, British
Virgin Island and the United States. For certain operations in the United States of America, the Company has incurred net accumulated
operating losses for income tax purposes. The Company believes that it is more likely than not that these net accumulated operating
losses will not be utilized in the future. Therefore, the Company has provided full valuation allowance for the deferred tax assets
arising from the losses from its US public shell as of June 30, 2011 and 2010. The Company has deferred tax asset from its Australian
operations amounted to $39,216 and $37,617 respectively as of June 30, 2011 and December 31, 2010. No valuation allowance is recorded
against the deferred tax asset as at June 30, 2011 and December 31, 2010 under this entity.





14







The
components of income before income taxes and non-controlling interest are as follows:





|                                        |  | For the six months periods ended June 30,
|--------------------------------------- |  | -----------------------------------------
|                                        |  | 2011                                     
|Loss subject to Australia               |  | $                                        
|Income subject to Hong Kong             |  |                                          
|Income subject to China                 |  |                                          
|Loss subject to United States           |  |                                          
|Income subject to British Virgin Island |  |                                          
|Income before taxes                     |  | $                                        



United
States of America

As
of June 30, 2011, the Company in the United States of America had approximately $5,494,720 in
net operating loss carry forwards available to offset future taxable income. Federal net operating losses can generally be carried
forward 20 years. The Tax Reform Act of 1986 limits the use of net operating loss and tax credit carry forwards in certain situations
when changes occur in the stock ownership of a company. In the event the Company has a change in ownership, utilization of carry
forwards could be restricted. The deferred tax assets for the United States entity at June 30, 2011 consists mainly of net operating
loss carry forwards and were fully reserved as the management believes it is more likely than not that these assets will not be
realized in the future.



The
following table sets forth the significant components of the net deferred tax assets for operation in the United States of America
as of June 30, 2011 and 2010.





|                                  |  | For the six months periods ended June 30,
|--------------------------------- |  | -----------------------------------------
|                                  |  | 2011                                     
|Net Operating Loss Carry forwards |  | $                                        
|Total Deferred Tax Assets         |  |                                          
|Less: Valuation Allowance         |  |                                          
|Net Deferred Tax Assets           |  | $                                        



Australia

As
of June 30, 2011 and 2010 the Company’s Australian subsidiary had accumulated loss of $289,205and $53,324. Pursuant to Australian income tax laws, the Company has made income tax provision of $0 for
the six months periods ended June 30, 2011 and 2010 respectively.



The
following table sets forth the significant components of the net deferred tax assets for operation in the Australia as of June
30, 2011 and 2010.





|                                  |  | For the six months periods ended June 30,
|--------------------------------- |  | -----------------------------------------
|                                  |  | 2011                                     
|Net Operating Loss Carry forwards |  | $                                        
|Total Deferred Tax Assets         |  |                                          
|Less: Valuation Allowance         |  |                                          
|Net Deferred Tax Assets           |  | $                                        



China

As
of June 30, 2011 and 2010, the Company’s China subsidiary had accumulated profit of $692,361 and $358,965 respectively.
The Company has net income before income tax and non-controlling interest of $131,071 during the six
months periods ended June 30, 2011. Pursuant to Chinese income tax laws, the Company has made income tax provision of $11,851
and $11,385 for the six months periods ended June 30, 2011 and 2010.



British
Virgin Island

The
Company’s British Virgin Island subsidiary had net profit of $813,448 and $1,236,054 for the six
months periods ended June 30, 2011 and 2010. There is no income tax levied in British Virgin Island.





15







The
following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected
in the Statement of Operations:



|                                                   |  | For
    the six months periods ended June 30,
|-------------------------------------------------- |  | ---------------------------------------------
|                                                   |  | 2011                                         
|Tax expense
    (credit) at statutory rate-federal |  | -34%                                         
|State
    tax expense (credit) net of federal tax  |  | -6%                                          
|Valuation
    allowance                            |  | 40%                                          
|Foreign
    income tax:                            |  |                                              
|British
    Virgin Island                          |  | -                                            
|Australia                                          |  | 30%                                          
|Shanghai                                           |  | 25%                                          
|Valuation
    allowance                            |  | 56.67%                                       
|Effective
    tax rate                             |  | 1.67%                                        



As
of June 30, 2011, the Company does not have any unrecognized tax benefits and no corresponding interest or penalties. The Company's
policy is to record interest and penalties as income tax expense.





Note
11. Major Customers and Vendors



Our
top customer provided approximately 61% of net sales for the six month periods ended June 30, 2011. Total accounts receivable
due from this customer was 0% of total accounts receivable as of June 30, 2011.



Our
two major vendors provided approximately 25% of total purchases for the six month periods ended June 30, 2011. Total accounts
payable due to these vendors was approximately 33% of total accounts payable as of June 30, 2011.



ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION



Item
2(a). Discussion for the Interim Operations and Financial Condition



Introduction



Management's
discussion and analysis of results of operations and financial condition ("MD&A") is provided as a supplement to
the accompanying financial statements and footnotes to help provide an understanding of our financial condition, changes in financial
condition and results of operations. The MD&A is organized as follows:



- Caution concerning
forward-looking statements and risk factors. This section discusses how certain forward-looking statements made by us throughout
the MD&A and in the financial statements are based on our present expectations about future events and are inherently susceptible
to uncertainty and changes in circumstances.
- Overview. This
section provides a general description of our business, as well as recent developments that we believe are important in understanding
the results of operations and to anticipate future trends in those operations.
- Results of
operations. This section provides an analysis of our results of operations for the six months period ended June 30, 2011 compared
to the same period in 2010. A brief description is provided of transactions and events, including any related party transactions
that affect the comparability of the results being analyzed.
- Liquidity and
capital resources. This section provides an analysis of our financial condition and cash flows for the six months period ended
June 30, 2011 and 2010.
- Critical accounting
policies. This section provides an analysis of the significant estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.



Caution
Concerning Forward-looking Statements and Risk Factors



We
have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to
what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise.
Investors should carefully consider all of such risk factors before making an investment decision with respect to our Common Stock.



16







The
following discussion should be read in conjunction with our financial statements and the notes thereto, and the other financial
information appearing elsewhere in this document. In addition to historical information, the following discussion and other parts
of this document contain certain forward-looking information. When used in this discussion, the words "believes", "anticipates",
"expects", and similar expressions are intended to identify forward-looking statements. Such statements are subject
to certain risks and uncertainties, which could cause actual results to differ materially from projected results, due to a number
of factors beyond our control. We do not undertake to publicly update or revise any of our forward-looking statements, even if
experience or future changes show that the indicated results or events will not be realized. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date hereof. Readers are also urged to carefully
review and consider our discussions regarding the various factors, which affect our business, included in this section and elsewhere
in this report.



Factors
that might cause actual results, performance or achievements to differ materially from those projected or implied in such forward-looking
statements include, among other things: (i) the impact of competitive products; (ii) changes in law and regulations; (iii) limitations
on future financing; (iv) increases in the cost of borrowings and unavailability of debt or equity capital; (v) our inability
to gain and/or hold market share; (vi) managing and maintaining growth; (vii) customer demands; (viii) market and industry conditions,
(ix) the success of product development and new product introductions into the marketplace; (x) the departure of key members of
management; as well as other risks and uncertainties that are described from time to time in our filings with the Securities and
Exchange Commission.



We
provide the following cautionary discussion of risks, uncertainties and possible inaccurate assumptions relevant to our business
and our products. These are factors that we think could cause our actual results to differ materially from expected results. Other
factors besides those listed here could adversely affect us.



Potential
Fluctuations in Periodic Operating Results



Our
periodic operating results may fluctuate significantly in the future as a result of a variety of factors, most of which are outside
our control, including: the demand for our products; seasonal trends in purchasing, the amount and timing of capital expenditures
and other costs relating to the development of our products; price competition or pricing changes in the industry; technical difficulties
or system downtime; general economic conditions, and economic conditions specific to the industry. Our results may also be significantly
impacted by the impact of the accounting treatment of acquisitions, financing transactions or other matters. Particularly at our
early stage of development, such accounting treatment can have a material impact on the results for any period. Due to the foregoing
factors, among others, it is likely that our operating results will fall below our expectations or those of investors in some
future period.



Dependence
upon Management



Our
future performance and success is dependant upon the efforts and abilities of our Management. To a very significant degree, we
are dependent upon the continued services of Jack Chen, CEO & Director of the Company. If the Company lost the services of
Mr. Chen, or other key employees before we could get qualified replacements that loss could materially adversely affect our business.
We do not maintain key man life insurance on any of our Management.



Limitation
of Liability and Indemnification of Officers and Directors



Our
officers and directors are required to exercise good faith and high integrity in our Management affairs. Our Articles of Incorporation
provide, however, that our officers and directors shall have no liability to our shareholders for losses sustained or liabilities
incurred which arise from any transaction in their respective managerial capacities unless they violated their duty of loyalty,
did not act in good faith, engaged in intentional misconduct or knowingly violated the law, approved an improper dividend or stock
repurchase, or derived an improper benefit from the transaction. Our Articles and By-Laws also provide for the indemnification
by us of the officers and directors against any losses or liabilities they may incur as a result of the manner in which they operate
our business or conduct the internal affairs, provided that in connection with these activities they act in good faith and in
a manner that they reasonably believe to be in, or not opposed to, the best interests of the Company, and their conduct does not
constitute gross negligence, misconduct or breach of fiduciary obligations. To further implement the permitted indemnification,
we have entered into Indemnity Agreements with our officers and directors.



Management
of Potential Growth



We
anticipate rapid growth, which will place a significant strain on our managerial, operational, and financial systems resources.
To accommodate our current size and manage growth, we must continue to implement and improve our financial strength and our operational
systems, and expand, train and manage our sales and distribution base. There is no guarantee that we will be able to effectively
manage the expansion of our operations, or that our facilities, systems, procedures or controls will be adequate to support our
expanded operations. Our inability to effectively manage our future growth would have a material adverse effect on the Company.





17







Limited
Market Due To Penny Stock



The
Company's stock differs from many stocks, in that it is a "penny stock". The Securities and Exchange Commission has
adopted a number of rules to regulate "penny stock". These rules include, but are not limited to, Rules 3a5l-l, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act of 1934, as amended. Because our securities
probably constitute "penny stock" within the meaning of the rules, the rules would apply to us and our securities. The
rules may further affect the ability of owners of our stock to sell their securities in any market that may develop for them.
There may be a limited market for penny stocks, due to the regulatory burdens on broker-dealers. The market among dealers may
not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups
or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads,
investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor.
In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if
they can sell it at all. Stockholders should be aware that, according to the Securities and Exchange Commission Release No. 34-
29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. These patterns include: - Control
of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; - Manipulation
of prices through prearranged matching of purchases and sales and false and misleading press releases; - "Boiler room"
practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; - Excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and - The wholesale dumping of the same securities
by promoters and broker- dealers after prices have been manipulated to a desired level, along with the inevitable collapse of
those prices with consequent investor losses. Furthermore, the "penny stock" designation may adversely affect the development
of any public market for the Company's shares of common stock or, if such a market develops, its continuation. Broker-dealers
are required to personally determine whether an investment in "penny stock" is suitable for customers. Penny stocks
are securities (i) with a price of less than five dollars per share; (ii) that are not traded on a "recognized" national
exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must still meet requirement
(i) above); or (iv) of an issuer with net tangible assets less than $2,000,000 (if the issuer has been in continuous operation
for at least three years) or $5,000,000 (if in continuous operation for less than three years), or with average annual revenues
of less than $6,000,000 for the last three years. Section 15(g) of the Exchange Act and Rule 15g-2 of the Commission require broker-dealers
dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually
signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor‘s account.
Potential investors in the Company‘s common stock are urged to obtain and read such disclosure carefully before purchasing
any shares that are deemed to be "penny stock". Rule 15g-9 of the Commission requires broker-dealers in penny stocks
to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure
requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience
and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable
for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks
of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer
made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming
that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for the Company's stockholders to resell their shares to third parties or to otherwise
dispose of them.



Overview
of the Company and its Operations



Sancon
Resources Recovery, Inc. is an environmental service and waste management company that operates recycling facilities in China
and Australia. Sancon specializes in the collection and recovery of industrial and commercial solid wastes such as plastic, paper,
cardboard, and glass. The recycled materials are re-used by Sancon's manufacturing customers in China to make a wide variety of
new products including outdoor furniture, construction materials, building materials, road surface, and various new products.
Sancon's China operation is licensed by the Chinese government for waste management services, and is certified with ISO 9001 and
ISO14001 standards. Sancon currently ships more than 4,000 tons of recycled industrial and commercial waste material annually
to its customers in China. Sancon's main operations and services include industrial waste management consulting, collection and
reprocess of recyclable materials such as plastic, glass, cardboard, and paper before its re-entry into manufacture cycles as
raw materials. Sancon also provides its full waste management services to large consumer products maker such as Pernod Ricard.
The use of recycled material is both environmentally friendly and is a key part of today's competitive manufacturing process to
lower costs. As China gains global manufacturing dominance, Chinese manufacturers are increasingly turning to recycled materials
to lower its costs, resulting tremendous demand for recycled materials import. The major customers for Sancon are Chinese manufacturers
and recycled material traders which are located mainly in the Chinese provinces of Shanghai, Guangdong, Zhejiang and Fujian.



The
Trend in Chinese Market



The
amount of materials recycled in China in 2007 was 142.3 million metric tons. This is expected to increase to 244.8 million metric
tons in 2013. Moreover, there are $30-$35 billion waste materials can be recycled but without recycling in China. There are 5
million tons of used steel and iron, over 200,000 tons of non-ferrous metal, 14 million tons of waste paper and a great volume
of waste plastic and waste glass that could be recycled and utilized within China each year.



The
Chinese Government is emphasizing environmental policies & projects for all sectors and entities. On August 2008, China's
top legislature passed a law to promote circular economy and will come into force on January 1, 2009. The aim of the law is to
boost sustainable development through energy saving and reduction of pollutant discharges. At present China’s environmental
industry is highly fragmented and at its infancy stage.





18







Promulgated
on 25 February 2009 and effective as of January 1, 2011, the Chinese regulations on the administration of the recovery and disposal
of waste electrical and electronic products (“WEEE Regulations”) are aiming at establishing a system for the disposal
and recovery of waste electrical and electronic products, facilitating comprehensive utilization of resources and circular economy
development, protecting the environment and safeguarding human health.



Sancon's
Visions and Goals



The
long-term objective of Sancon is to seek and develop further alternative resources recovery solutions, which will protect our
environment and maximize sustainable usage for industrial waste materials. At Sancon we believe reducing the environmendal impact
of manufactured products is through both professional services offered to manufacturers and commercial entities to increase recyclability
of waste materials, and efficient redeployment of waste materials.



Services
Offered To Our Clients



Sancon
strives to take an all-inclusive approach to provide eco-friendly solutions leading to the sustainable use of waste materials.
Our services include collection from manufacturing and commercial sites; re-process waste materials to increase recyclability,
end-of-life disassembly, redeployment of recyclable materials, and destruction of sensitive materials and products.



Competition



The
markets for the Company's products and services are competitive, and the Company faces competition from a number of sources. Many
of the Company's competitors have substantially greater resources than the Company. Those resources may include greater name recognition;
larger product lines; complementary lines of business; and greater financial, marketing, information systems, and other resources.
The Company can give no assurance competitive pressures will not materially and adversely affect the Company's business, financial
condition, and results of operations.



But
the management has identified several key points which will give Sancon the competitive edge in the market place:



|1) |  | Sancon
                                                                                                                                                  offers large selection of plastic, paper and glass raw materials to our customers.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2) |  | With
                                                                                                                                                  the expansion of our operations in Melbourne Australia, Sancon will be able to serve greater number of customers and sell direct
                                                                                                                                                  to our customs in both Australia and China.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3) |  | Sancon
                                                                                                                                                  has 6 strategically positioned recycling plants and about 40 depots in China and it will enable Sancon to meet the demand for
                                                                                                                                                  nationwide environmental services.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4) |  | Industry
                                                                                                                                                  know-how and management team’s ability to ensure all operating and environmental standards are achieved. Our team's experience
                                                                                                                                                  in logistic management and waste management operations are key factors enabling the delivery of a high standard of service to
                                                                                                                                                  Sancon's clients.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Employees



As
of June 30, 2011, the Company employed 20 full time and part time people in Australia subsidiaries. Our subsidiary in China employed
around 200 full time and part time people. To make our work more efficient, we outsourced a few other functions, such as logistics,
bookkeeping and administration, to certain professional firms to enable our resource being focused on sales and processing functions.



Factors
That May Affect Future Results



The
business in which the Company is engaged is capital supportive. Accordingly, the Company's ability to execute its business strategy
and to sustain its operations depends upon its ability to maintain or procure capital. There can be no absolute assurance the
necessary amount of capital will continue to be available to the Company on favorable terms, or at all. The Company's inability
to obtain sufficient capital or to renew its credit facilities would limit the Company's ability to: (i) add new equipment to
its portfolio, (ii) fund its working capital needs, and (iii) finance possible future acquisitions. The Company's access to capital
may have a material adverse effect on the Company's business, financial condition and/or results of operations.



There
can be no absolute assurance the Company will be able to effectively manage its existing or the possible future expansion of its
operations, or the Company's systems, procedures or controls will be adequate to support the Company's operations. Consequently,
the Company's business, financial condition and/or results of operations could be possibly and adversely affected.



The
Company does not foresee changes in tax laws for the jurisdictions in which the Company and its subsidiaries operate. There can
be no absolute assurance that changes will not occur, and therefore no absolute assurance such changes will not materially and
adversely affect the Company's business, financial condition and results of operations.



19







As
a public company, Sancon is subject to certain regulatory requirements including, but not limited to, compliance with Section
404 of the Sarbanes-Oxley Act of 2002 ("SOX404"). Such compliance results in significant additional costs to the Company
by increased audit and consulting fees, and the time required by management to address the regulations.



Results
of Operations - Comparison between the six months ended June 30, 2011 and the same periods in 2010.



Revenue



Revenue
is generated by service charges and the sale of recyclable materials. Revenue for the six months period ended June 30, 2011 were
$6,972,770, representing $836,962 or 14% increase compared to the revenue of $6,135,808 in the same period of 2010. The revenues
in the waste service business increased from $4,789,548 for the six months period ended June 30, 2010 to $5,682,048 for the six
months period ended June 30, 2010, an increase of $892,500 or 19%. The revenue in the material recycling business decreased $55,538
or 4% from $1,346,260 for the six months period ended June 30, 2010 to $1,290,722 for the six months period ended June 30, 2011.



Cost
of Revenue



The
cost of revenue is the direct cost for sale of the recycling materials. For the six months period ended June 30, 2011, the cost
of revenue was $4,247,405. It was $1,093,591 or 35% increase as compared to the cost of sales of $3,153,814 for the six months
period ended June 30, 2010. Among which, cost of revenue in the waste service business increased $1,212,230 or 48% from $2,551,158
for the six months period ended June 30, 2010 to $3,763,388 for the six months period ended June 30, 2011. The increase mainly
contained $547,164 of waste materials expenses and $986,032 shipping fee and $633,699 labor fee for sub contractors. The increase
was related to our new business of waste cardboard collection which started from June 2010. Cost of revenue in the material recycling
business for the six months period ended June 30, 2011 and 2010 was $484,017 and $602,656 respectively, a decrease of $118,639
or 20%. The decrease of cost of sales in our material recycling business was in line with the sales.



For
the six months period ended June 30, 2011 and 2010, cost of revenue was 61% and 51% of sales respectively.



Gross
profit



The
gross profit for the six months period ended June 30, 2011 was $2,725,365, representing $256,629 or 9% decrease compared to $2,981,994
for the six months period ended June 30, 2010. The gross margin reduced from 49% for the six months period ended June 30, 2010
to 39% for the six months period ended June 30, 2011. Gross profit in the waste service business decreased $319,730 or 14% from
$2,238,390 for the six months period ended June, 2010 to $1,918,660 for the same periods in 2011. The low gross profit in our
waste paper collection is the main reason for this decrease. However, our management believes the gross margin will be increased
along with the expansion of the market in waste paper collection. Gross profit in the material recycling business increased $63,101
or 8% from $743,604 for the six months period ended June 30, 2010 to $806,705 for the same period in 2011. Our material recycling
business still suffers from the global economic crisis.



Selling,
general and administrative expenses



Selling,
general and administrative expenses increased to $1,918,848 for the six months period ended June 30, 2011, from $1,799,625 for
the six months period ended June 30, 2010, an increase of $119,223 or 7%. The SG&A expenses in the waste service business
was $966,618 for the six months period ended June 30, 2010; this number decreased to $962,452 for the six months period ended
June 30, 2011. It slightly decreased $4,166 or 0.4%. The SG&A expenses in the material recycling business increased $116,034
or 16% from $732,388 for the six months period ended June 30, 2010 to $848,422 for the six months period ended June 30, 2011.



The
SG&A expenses were 28% and 29% of the revenue for the six months period ended June 30, 2011 and 2010 respectively.



Depreciation
Expense



Depreciation
expense increased to $85,540 for the six months period ended June 30, 2011 from $81,926 for the six months period ended June 30,
2010. It increased $3,614 or 4%. The increases were mainly due to the purchase of equipment for the six months period ended June
30, 2011. The depreciation expense in the waste service business increased $2,776 or 8% to $35,633 for the six months period ended
June 30, 2011 from $32,857 for the six months period ended June 30, 2010. The depreciation expense in the material recycling business
increased $838 or 2%. For the six months period ended June 30, 2011 and 2010, depreciation expense was 1% of the revenue respectively.



20







Other
Income (Expense)



For
the six months period ended June 30, 2011, the Company booked net other income of $431 compared to net other expense of $9,014
for the six months period ended June 30, 2010, an increase of $9,445 or 105%. The increase was mainly because the company received
tax subsidies of 21,958 in waste service business.



For
the six months period ended June 30, 2011, net other income was 0.006% of the revenue while it was (0.1%) for the six months period
ended June 30, 2010.



Income
Tax



The
income tax was $11,851 for the six months period ended June 30, 2011, an increase of $466 or 4% from $11,385 for the six months
period ended June 30, 2010. For the six months period ended June 30, 2011 and 2010, income tax was 0.2% of the revenue respectively.



Non-Controlling
interest in subsidiaries



On
August 15, 2007, the Company completed the acquisition of 70% of the equity interest in Sancon Resources Recovery (Shanghai) Co.,
Ltd by exercising its option to convert $200,000 of convertible promissory note. On May 26, 2010, Sancon Shanghai invested an
additional RMB1, 000,000 or $151,700 in Shanghai Sheng Rong. Previously, Sancon SH had invested $44,010 (RMB 300,000) in return
for a 20% equity interest. After the completion of this current transaction, Sancon SH now holds 52% of the equity interest in
Shanghai Sheng Rong. Net loss attributed to non-controlling interest was $13,396 and $9,627 for the six months period ended June
30, 2011 and 2010 respectively. For the six months period ended June 30, 2011 and 2010, no controlling interest was 0.2% of the
revenue respectively.



Net
income



Net
income for the six months period ended June 30, 2011 was $696,410, compared to $1,104,572 for the six months period ended June
30, 2010, a decrease of $408,162 or 37%. The decrease in net income was mainly due to the increase of net loss in the material
recycling business of $63,800 or 125%. The net income in the waste service business also decreased $337,007 or 27%. For the six
months period ended June 30, 2011, net income was 10% of the revenue while it was 18% for the six months period ended June 30,
2010.



Liquidity
and Capital Resources



As
shown in the accompanying financial statements, the Company has accumulated profit of $6,057,617 as of June 30, 2011 compared
to $5,361,208 as of December 31, 2010. In addition, we have positive working capital $6,995,978 as of June 30, 2011 and it was
$5,611,049 as of December 31, 2010. It increased $1,384,929 or 25%. That is mainly due to the increase of $961,501 in cash and
cash equivalents and the increase of $215,233 in Due from related parties. The strong sales for the six months period ended June
30, 2011 lead to the great increase in cash.



Operating
Activities



The
net cash provided by operating activities for the six months period ended June 30, 2011 amounted to $1,309,295 compared to $1,202,412
for the six months period ended June 30, 2010, an increase $106,883 or 9%. The increase mainly included trade receivables decrease
of $195,645 and other current liabilities increase of $333,934.



Investing
Activities



Net
cash used in investing activities amounted to $49,968 for the six months period ended June 30, 2011 compared to $170,315 for the
six months period ended June 30, 2010, a decrease of $120,347 or 71%. It’s due to the decrease on investment in Sheng Rong
Company which occurred in year 2010.



Financing
Activities



Net
cash used in financing activities amounted to $316,615 and net cash provided by financing activities amounted to $71,268 for the
six months period ended June 30, 2011 and 2010 respectively, a decrease of $387,883 or 544%. The decrease mainly included payments
of shareholders’ loans of $912,263.



The
Company has financed its growth by utilizing cash reserves and loan from directors. Loan from directors usually was unsecured,
and no payment term and without interest bearing. The Company's primary use of funds is for the purchase of equipment for operation
and the purchase of inventory.





21







Inflation



In
the opinion of management, inflation has not had a material effect on the Company's financial condition or results of its operations.



Trends
and uncertainties



Management
believes there are no known trends, events, or uncertainties that could, or reasonably be expected to, adversely affect the Company's
liquidity in the short and long terms, or its net sales, revenues, or income from continuing operations.



The
Company's operations are not affected by seasonal factors.



Critical
Accounting Policies and Estimates



The
preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United
States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the
disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other
assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current
expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial
statements; we believe the following critical accounting policies involve the most complex, difficult and subjective estimates
and judgments: allowance for doubtful accounts; income taxes; stock-based compensation; asset impairment.



Allowance
for doubtful accounts

We
maintain an allowance for doubtful accounts to reduce amounts to their estimated realizable value. A considerable amount of judgment
is required when we assess the realization of accounts receivables, including assessing the probability of collection and the
current credit-worthiness of each customer. If the financial condition of our customers were to deteriorate, resulting in an impairment
of their ability to make payments, an additional provision for doubtful accounts could be required. We initially record a provision
for doubtful accounts based on our historical experience, and then adjust this provision at the end of each reporting period based
on a detailed assessment of our accounts receivable and allowance for doubtful accounts. In estimating the provision for doubtful
accounts, we consider: (i) the aging of the accounts receivable; (ii) trends within and ratios involving the age of the accounts
receivable; (iii) the customer mix in each of the aging categories and the nature of the receivable; (iv) our historical provision
for doubtful accounts; (v) the credit worthiness of the customer; and (vi) the economic conditions of the customer's industry
as well as general economic conditions, among other factors.

Income
taxes

We
account for income taxes in accordance with SFAS No. 109 (ASC 740), Accounting for Income Taxes. SFAS 109 (ASC 740) prescribes
the use of the liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities.
Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. We then assess the likelihood that our deferred
tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we establish
a valuation allowance. To the extent we establish a valuation allowance, or increase or decrease this allowance in a period, we
increase or decrease our income tax provision in our statement of operations. If any of our estimates of our prior period taxable
income or loss prove to be incorrect, material differences could impact the amount and timing of income tax benefits or payments
for any period. In addition, as a result of the significant change in the Company's ownership, the Company's future use of its
existing net operating losses may be limited.

The
Company operates in several countries. As a result, we are subject to numerous domestic and foreign tax jurisdictions and tax
agreements and treaties among the various taxing authorities. Our operations in these jurisdictions are taxed on various bases:
income before taxes, deemed profits and withholding taxes based on revenue. The calculation of our tax liabilities involves consideration
of uncertainties in the application and interpretation of complex tax regulations in a multitude of jurisdictions across our global
operations.



We
recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions
based on our estimate of whether, and the extent to which, additional taxes will be due. The tax liabilities are reflected net
of realized tax loss carry forwards. We adjust these reserves upon specific events; however, due to the complexity of some of
these uncertainties, the ultimate resolution may result in a payment that is different from our current estimate of the tax liabilities.
If our estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result.
If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result
in tax benefits being recognized in the period when the contingency has been resolved and the liabilities are no longer necessary.



22







Changes
in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability
in each taxing jurisdiction could have an impact upon the amount of income taxes that we provide during any given year.



Stock-Based
Compensation

During
December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment
of SFAS 123(ASC 718)". This statement amends SFAS No. 123(ASC 718), "Accounting for Stock-Based Compensation",
to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, this statement amends the disclosure requirements of SFAS No. 123(ASC 718) to require prominent
disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. The Company has chosen to continue to account for stock-based compensation
using the intrinsic value method prescribed in APB Opinion No. 25 and related interpretations. Accordingly, compensation expense
for stock options is measured as the excess, if any, of the fair market value of the Company's stock at the date of the grant
over the exercise price of the related option. The Company has adopted the annual disclosure provisions of SFAS No. 148 in its
financial reports for the year ended December 31, 2005 and has adopted the interim disclosure provisions in its financial reports
for the subsequent periods.



Effective
January 1, 2006, the beginning of Sancon's first fiscal quarter of 2006, the Company adopted the fair value recognition provisions
of SFAS 123R (ASC 718), using the modified-prospective transition method. Under this transition method, stock-based compensation
expense was recognized in the consolidated financial statements for granted stock options, since the related purchase discounts
exceeded the amount allowed under SFAS 123R(ASC 718) for non-compensatory treatment. Compensation expense recognized included:
the estimated expense for stock options granted on and subsequent to January 1, 2006, based on the grant date fair value estimated
in accordance with the provisions of SFAS 123R; and the estimated expense for the portion vesting in the period for options granted
prior to, but not vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions
of SFAS 123(ASC 718). Results for prior periods have not been restated, as provided for under the modified-prospective method.



As
of December 31, 2010, the Company issued 900,000 shares of stock options to directors and accrued $218,751 of related expenses.
For the six months period ended June 30, 2011, the Company did not issue any stock options.



For
other items paid for by common stock, the value of the transaction is determined by the value of the goods or services received,
measured at the time of the transaction. The corresponding stock value, used to determine the number of share to be issued, is
the value of the average price for the 20 to 30 days prior to the transaction date.



Asset
Impairment

We
periodically evaluate the carrying value of other long-lived assets, including, but not limited to, property and equipment and
intangible assets, when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered
impaired when the anticipated undiscounted cash flows from such asset is less than its carrying value. In that event, a loss is
recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined
primarily using the anticipaded cash flows discounted at a rate commensurate with the risk involved. Significant estimates are
utilized to calculate expected future cash flows utilized in impairment analyses. We also utilize judgment to determine other
factors within fair value analyses, including the applicable discount rate.



Item
2(b). Off-Balance Sheet Arrangements



There
are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources, that are material to investors.



ITEM
3. CONTROLS AND PROCEDURES



Under
the supervision and with the participation of our management, including our principal executive officer and the principal financial
officer, we conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures,
as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by
this report (the "Evaluation Date"). Based on this evaluation, our principal executive officer and principal financial
officer concluded as of the Evaluation Date, that our disclosure controls and procedures were not effective.



During
the six months ended June 30, 2011, there were no changes in our internal accounting controls or in other factors that materially
affected our internal controls over financial reporting.





23







PART
II. OTHER INFORMATION



Item
1. Unregistered Sales of Equity Securities and Use of Proceeds.



None



Item
2 Changes in Securities and Use of Proceeds



None



Item
3. Defaults Upon Senior Securities.



None.



Item
4. Submission of Matters to a Vote of Security Holders.



Matters
for a vote of security holders were submitted to security holders in the Company's Proxy Statement, filed upon December 6, 2005.
The remainder of the information required by this item is incorporated by reference to the Company's Proxy Statement.



Item
5. Other Information.



None.





24







Item 6. Exhibits



The
following list describes the exhibits filed as part of this Report on Form 10-Q.



|Exhibit
    Number | Note     | Description
    of Document                                                                                                                                
|------------------ | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |          |                                                                                                                                                            
|3.1                | (1)      | Articles
    of Incorporation of Financial Telecom Limited (USA), Inc.                                                                                     
|3.2                | (1)      | Amended
    and Restated Bylaws of Financial Telecom Limited (USA), Inc.                                                                                   
|10.1               | (1)      | Agreement
    between Hong Kong Futures Exchange Limited and Financial Telecom Limited.                                                                    
|10.2               | (1)      | Market
    Service Datafeed Agreement between Stock Exchange Information Services Limited and Financial Telecom Limited.                                   
|10.3               | (2)      | Option
    agreement dated December 14, 2004 between Fintel Group Limited and shareholders of Shanghai Long terms Technology Limited.                      
|10.4               | (2)      | Option
    agreement dated January 5, 2005 between Fintel Group Limited and shareholders of Beijing JCL Technology Commerce Limited.                       
|10.5               | (2)      | Option
    agreement dated January 20, 2005 between Fintel Group Limited and shareholders of Shanghai Qianhou Computer Technology Limited.                 
|10.6               | (2)      | Independent
    contractor agreement between Fintel Group Limited and Mr. Sam Chong Keen.                                                                  
|10.7               | (2)      | Independent
    contractor agreement between Fintel Group Limited and Info Media Company.                                                                  
|10.8               | (2)      | Independent
    contractor agreement between Fintel Group Limited and China Digital Distribution Limited.                                                  
|10.9               | (3)      | Sales and purchase
    agreement dated March 25, 2005 between Fintel Group Limited and shareholders of Enjoy Media Holdings Limited.                       
|10.10              | (4)      | Sales
    and purchase agreement dated April 25, 2005 between Fintel Group Limited and shareholders of Beijing Genial Technology Co. Ltd.                  
|10.11              | (4)      | Option
    agreement dated March 7, 2005 between Fintel Group Limited and shareholders of Beijing Sinoskyline technology Trading Co. Ltd.                  
|14.1               | (
    9) | Code
    of Ethics.                                                                                                                                        
|16.1               | (7)      | Change
    in Certifying Accountants.                                                                                                                      
|16.2               | (10)     | Incorporated
    herein by reference to registrant's Current Report on Form 8K/A (File No. 000-50760) filed July 7, 2006.                                  
|17.1               | (6)      | Correspondence
    on departure of Directors.                                                                                                              
|20.1               | (8)      | Proxy
    Statement dated December 6, 2005.                                                                                                                
|21.1               | (
    5) | Subsidiaries
    of the registrant.                                                                                                                        
|24.1               | (
    5) | Power
    of Attorney.                                                                                                                                     
|31.1               | (
    5) | Certification
    of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
    2002.
|31.2               | (
    5) | Certification
    of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
    2002.
|32.1               | (
    5) | Certification
    of Officers, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                   
|                   |          |                                                                                                                                                            
|                   |          |                                                                                                                                                            

______________________



|(1) |  | Incorporated
                                                                                                                                                   herein by reference to the registrant's initial Registration Statement on Form 10-SB (File No. 000-50760) filed on May 13, 2004.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Incorporated
                                                                                                                                                   herein by reference to the registrant's Annual Report on Form 10-KSB (File No. 000-50760) filed April 15, 2005.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Incorporated
                                                                                                                                                   herein by reference to the registrant's Quarterly Report of Form 10-QSB (File No. 000-50760) filed May 6, 2005.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Incorporated
                                                                                                                                                   herein by reference to the registrant's Quarterly Report of Form 10-QSB (File No. 000-50760) filed August 6, 2005.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Filed
                                                                                                                                                   herewith.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | Incorporated
                                                                                                                                                   herein by reference to the registrant's Current Report on Form 8K/A (File No. 000-50760) filed November 29, 2005.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Incorporated
                                                                                                                                                   herein by reference to the registrant's Current Report on Form 8K/A (File No. 000-50760) filed January 25, 2006.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) |  | Incorporated
                                                                                                                                                   herein by reference to the registrant's Proxy Statement (File No. 000-50760) filed December 6, 2005.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) |  | Incorporated
                                                                                                                                                   herein by reference to the registrant's Annual Report on Form 10-KSB (File No. 000-50760) filed April 26, 2006.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) |  | Incorporated
                                                                                                                                                    herein by reference to the registrant's Current Report on Form 8K/A (File No. 000-50760) filed July 7, 2006.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



25







SIGNATURES







In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.







|Date:
     August 15, 2011 | Sancon
     Resources Recovery, Inc. 
|-------------------------- | -------------------------------------
|                           | By: /s/ Jack
     Chen               
|                           | Jack
     ChenChief Executive Officer





In accordance
with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.





|                          | Sancon
    Resources Recovery, Inc.
|------------------------- | -----------------------------------
|                          |                                    
|Date:
    August 15, 2011 |                                    
|                          | By:
    /s/ David Chen             
|                          | David Chen                         
|                          | Chairman                           
|                          |                                    
|Date:
    August 15, 2011 |                                    
|                          | By:  /s/
    Jimmy Yiu             
|                          | Jimmy Yiu                          
|                          | Independent
    Director           
|                          |                                    
|Date:
    August 15, 2011 |                                    
|                          | By:  /s/
    Cong Yuanli           
|                          | Cong Yuanli                        
|                          | Independent
    Director           
|                          |                                    
|Date:
    August 15, 2011 |                                    
|                          | By:  /s/
    Jack Chen             
|                          | Jack. Chen                         
|                          | Director                           









26