UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB


(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, 2006

      [ ] 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                                    (IRS Employee
of incorporation or organization)                            Identification No.)


                        1507 Greenland Commercial Centre
                    1258 Yuyuan Road, Shanghai, China 200050
                    (Address of principal executive offices)

                                (+86) 21 51553616
                           (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; 19,914,348 shares issued and
outstanding on June 30, 2006.

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


<PAGE>


<TABLE>
<S> <C>
                             Sancon Resources Recovery, Inc.
                                       FORM 10-QSB


                                          INDEX

                                                                                   PAGE


         Important Notice

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements and Condensed Notes - Quarter Ended June 30, 2006       4

Item 2.  Management's Discussion and Analysis or Plan of Operation                   13

Item 3.  Controls and Procedures                                                     18

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                           18

Item 2.  Changes in Securities and Use of Proceeds                                   19

Item 3.  Default Upon Senior Securities                                              19

Item 4.  Submission of Matters to a Vote of Security Holders                         19

Item 5.  Other Information                                                           19

Item 6.  Exhibits                                                                    20

         Signatures                                                                  21


<PAGE>


Important Notice

The 10QSB and the financial statements have not been reviewed by US auditor. It
is subject to changes after auditor's review. Should any material changes on the
10QSB, we will file amended 10QSB thereafter.


<PAGE>


PART I.   FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

                             SANCON RESOURCES RECOVERY, INC.
                      CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                        UNAUDITED


                                                                          IN US DOLLARS

                                                                          JUNE 30, 2006
ASSETS
       Current assets
           Cash and cash equivalents                                      $     104,423
           Trade receivables                                                     35,531
           Inventory, net                                                         3,598
           Other current assets                                                   5,550
                                                                          -------------
                                                                                149,102

       Fixed assets, net                                                        236,371

                                                                          -------------
           TOTAL ASSETS                                                   $     385,473
                                                                          =============

LIABILITIES
       Current liabilities
           Trade payables                                                 $      39,877
           Tax payables                                                           2,218
           Mortgage Loans                                                        13,727
           Shareholders' loan                                                   300,954
           Other payables                                                        66,828
                                                                          -------------
                                                                                423,604
STOCKHOLDERS' EQUITY (DEFICIENCY)
       Share Capital
           Authorized: 500,000,000 common shares, having a
           par value of $0.001 per share
           Issued and Outstanding: 19,914,348 shares                             19,914
       Additional paid-in capital                                                    --
       Other comprehensive loss                                                  (6,827)
       Retained Deficit                                                         (51,218)
                                                                          -------------
                                                                                (38,131)

                                                                          -------------
           TOTAL LIABILITIES, MINORITY INTEREST, STOCKHOLDERS' EQUITY     $     385,473
                                                                          =============


            The accompanying notes an integral of these financial statements


                                           4
<PAGE>

                                             SANCON RESOURCES RECOVERY, INC.
                                             CONSOLIDATED STATEMENT OF INCOME
                                                        UNAUDITED


                                                                                  IN US DOLLARS

                                                         THREE MONTHS ENDED JUNE 30,          SIX MONTHS ENDED JUNE 30,
                                                            2006              2005              2006              2005

SALES                                                  $    172,725           157,361      $    286,047           488,623
     Cost of sales                                           90,618           168,201           141,345           412,777
                                                       ------------      ------------      ------------      ------------
     Net gross profit/(loss)                                 82,107           (10,840)          144,702            75,846

Operating Expenses
     Depreciation                                            12,380             2,947            19,689             5,885
     Selling, General and Administrative                     75,725            46,819           146,428            85,356
                                                       ------------      ------------      ------------      ------------

OPERATING LOSS                                               (5,998)          (60,606)          (21,415)          (15,395)

Other Income (Expense)
     Other income                                             1,452               316             2,050               604
     Interest expense                                          (749)               --              (757)               --
                                                       ------------      ------------      ------------      ------------
                                                                703               316             1,293               604
                                                       ------------      ------------      ------------      ------------

Gain/(loss) before discontinued operation                    (5,295)          (60,290)          (20,122)          (14,791)

Discontinued Operation
          Gain on Disposal of Subsidiary                     18,041                --            18,041                --

                                                       ------------      ------------      ------------      ------------
NET GAIN/(LOSS) BEFORE MINORITY INTEREST AND TAXES           12,746           (60,290)           (2,081)          (14,791)

     Income tax expense                                          --               183             2,206               183

                                                       ------------      ------------      ------------      ------------
NET OPERATING GAIN/(LOSS)                                    12,746           (60,473)           (4,287)          (14,974)
                                                       ============      ============      ============      ============

Earnings per share
     Basic and fully diluted gain/(loss) per share     $     0.0008           (0.0041)          (0.0003)          (0.0010)
     Weighted average shares outstanding                 16,587,771        14,897,215        15,751,782        14,897,215

                             The accompanying notes an integral of these financial statements


                                                            5
<PAGE>

                              CONSOLIDATED STATEMENTS OF CASH FLOW
                                            UNAUDITED


                                                                         IN US DOLLARS
                                                                    SIX MONTHS ENDED JUNE 30
                                                                     2006              2005
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Loss                                                   $     (4,287)          (14,974)
     Adjustments to reconcile net loss to net cash flows
     provided by (used in) operating activities:
        Depreciation and amortization                                 19,689             5,885
        Gain on disposal of investment / subsidiary                  (18,041)               --
        Changes in current assets and liabilities:
           Decrease (increase) in trade receivables                   35,472               493
           Decrease (increase) in inventory                           (3,598)           (5,018)
           Increase (decrease) in trade payable                       (4,180)             (703)
           Increase (decrease) in other current liabilities           23,259            17,872
                                                                ------------      ------------
        NET CASH FLOWS USED IN OPERATING ACTIVITIES                   48,314             3,555

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of property and equipment                             (150,182)               --
     Cash acquired due to acquisitions                                71,564                --
     Cash decreased due to disposal of subs                          (67,807)               --
                                                                ------------      ------------
                                                                    (146,425)               --

CASH FLOWS FROM FINANCING ACTIVITIES
     Shareholders' loan                                              140,813           (15,992)
     Return of mortgage loans                                         (1,888)               --
                                                                ------------      ------------
                                                                     138,925           (15,992)

EFFECT OF EXCHANGE RATE CHANGES ON CASH                               (4,755)              979

INCREASE (DECREASE) IN CASH                                           36,059           (11,458)

     Cash balance at start of period                                  68,364            41,099
                                                                ------------      ------------
     Cash balance at end of period                              $    104,423            29,641
                                                                ============      ============

Supplemental information for Cash Expenses
     Cash paid for Interest Expenses                            $       (757)               --
                                                                ------------      ------------

                The accompanying notes an integral of these financial statements


                                               6
</TABLE>
<PAGE>

                         Sancon Resources Recovery, Inc.
            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       For the period ended June 30, 2006
                                   (Unaudited)


Note 1.  Nature of Operations

Sancon Resources Recovery, Inc. ("Sancon", or "the Company", or "we", or "us")
is registered in good standing under Chapter 78 of the Nevada Statutes, and its
common stock is traded on the OTCBB under the symbol SRRY.OB. Sancon is an
industrial recycling company with operations based in Melbourne Australia and
Hong Kong (SAR) China. Sancon aims to provide solutions to today's soaring raw
material cost for manufactures and assists in solving our environmental
problems.

The Sancon group comprises the following companies:

<TABLE>
<S> <C>
Registered Name                                              Domicile    Owner      %      Status
(business is conducted under the registered names)                                 held

Digital Financial Service Limited                           Hong Kong    Sancon     100   Inactive
Sancon Recycling Pty Ltd                                    Australia    Sancon     100    Active
</TABLE>

Note 2.  Basis of Presentation

(a) Condensed 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 condensed financial
statements and accompanying notes should be read in conjunction with our annual
financial statements and the notes thereto for the year ended Dec 31, 2005,
included in our Annual Report on Form 10KSB, filed with the Securities and
Exchange Commission.

(b) Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include
all of the accounts of the Company and all of the subsidiaries under its control
as of and for the period ended June 30, 2006 and 2005. All material
inter-company balances and transactions have been eliminated in consolidation.

(c) 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.

Note 3. Business Combination and Corporate Restructure

Effective May 26, 2006, a business combination occurred between Sancon Recycling
Pty Ltd. ("SRPL") and the Company. The combination was effected an exchange of
shares, the Company would exchange its seventy-five percent (75%) equity stake
in MK Aviation, S.A. (hereinafter referred to as "MKA") with one hundred percent
(100%) equity stake in SRPL held by Mr. Jack Chen, Mr. Yiu Lo Chung and Mr. Guy
Waters, ("the Shareholders"). Meanwhile, the Shareholders exchanged its
seventy-five percent (75%) equity stake in MK Aviation, S.A. with 14,897,215
shares of the Registrant's common stock from Mr. Kraselnick and associated
parties.


                                       7
<PAGE>

As a result of the merger, there was a change in control of the public entity.
In accordance with SFAS No. 141, the Company was the acquiring entity. While the
transaction is accounted for using the purchase method of accounting, in
substance the Agreement is a recapitalization of the Company's capital
structure. For accounting purposes, the Company accounted for the transaction as
a reverse acquisition and the Company is the surviving entity. The Company did
not recognize goodwill or any intangible assets in connection with the
transaction.

Effective with the Agreement, the current shareholders of Sancon Resources
Recovery, Inc. will own 14,897,215 shares of the company voting common stock or
74.28% of the Registrant's 20,030,370 issued and outstanding voting common
stock.

All references to common stock, share and per share amounts have been
retroactively restated to reflect the exchange of 100 shares of SRPL common
stock for 14,897,215 shares of the Sancon's common stock outstanding immediately
prior to the merger as if the exchange had taken place as of the beginning of
the earliest period presented.

The accompanying financial statements present the historical financial
condition, results of operations and cash flows of Sancon prior to the merger
with the company.

A change in name for the combined entity was contemplated at the time of
combination. Subsequent to the combination, effective August 4, 2006, the listed
company, MKA Capital Inc., changed its name to Sancon Resources Recovery, Inc.

A summarized financial position for the acquired company, Sancon, at the
acquisition date, is provided below.

                                MKA Capital Inc.
                     Summary Statement of Financial Position
                                 At May 31, 2006

Cash                                                             $      71,564
Other current assets                                                    13,593
Depreciable tangible assets                                                  0
Current liabilities                                                   (180,493)
                                                                 -------------
Net Assets acquired                                              $     (95,336)
                                                                 =============

The accompanying financial statements present on a consolidated basis the
accounts of the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.

The following unaudited condensed combined pro forma results of operations
reflect the pro forma combination of SRPL and the company as if the combination
had occurred at the beginning of the periods presented, compared with the actual
results of operations of SRPL for the same period. The unaudited pro forma
condensed combined results of operations do not purport to represent what the
companies' combined results of operations would have been if the transaction had
occurred at the beginning of the periods presented, and are not necessarily
indicative of the company's future results.

<TABLE>
                                                             OPERATING RESULT FOR THE
                                                             SIX MONTHS ENDED JUNE 30,
                                                             2006              2005
                                                          HISTORICAL         PRO FORMA

<S>                                                      <C>                    <C>
Sales                                                    $    286,047           488,623
Cost of sales                                                 141,345           412,777
                                                         ------------      ------------
Net gross profit/(loss)                                       144,702            75,846
Operating Expenses                                            166,117           207,354
                                                         ------------      ------------
Operating Loss                                                (21,415)         (131,508)
Other Income (Expense)                                          1,293               604
Discontinued Operation                                         18,041                 0
                                                         ------------      ------------
Net gain/(loss) before minority interest and taxes             (2,081)         (130,904)
Income tax expense                                              2,206               183
                                                         ------------      ------------
Net Operating gain/(loss)                                      (4,287)         (131,087)
                                                         ============      ============

       Basic and fully diluted gain/(loss) per share     $    (0.0003)          (0.0010)
</TABLE>


                                         8
<PAGE>

Note 4.  Recent pronouncements regarding accounting standards

In March 2005, the FASB issued interpretation FIN No. 47 "Accounting for
Conditional Asset Retirement Obligations "("FIN 47"). FIN 47 clarifies the term
conditional asset retirement obligation as used in SFAS 143, Accounting for
Asset Retirement Obligations, and defines it to be a legal obligation to perform
an asset retirement activity in which the timing and (or) method of settlement
are conditional on a future event that may or may not be within the control of
the entity. FIN 47 is applicable to fiscal years ending after December 15, 2005.
FIN 47 retains the fundamental provisions of SFAS 143, and the application of
FIN 47 does not materially affect the Company's consolidated financial condition
or results of operations.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections". SFAS No. 154 replaces APB Opinion No. 20 "Accounting Changes" and
SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements". SFAS
No. 154 requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change. The application of SFAS No. 154 does not affect the Company's financial
statements.

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends FASB Statements No. 133, Accounting
for Derivative Instruments and Hedging Activities, and No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
SFAS No. 155 resolves issues addressed in Statement 133 Implementation Issue No.
D1, "Application of Statement 133 to Beneficial Interests in Securitized
Financial Assets." The application of SFAS No. 155 retroactively does not affect
materially the Company's financial statements.

Note 5. Summary of Significant Accounting Policies

Note 5(a). Principles of Consolidation

These consolidated financial statements include the accounts of the Company and
its subsidiaries noted above. The results of subsidiaries acquired during the
periods presented are consolidated from the effective dates of acquisition. All
significant inter-company balances and transactions have been eliminated in
consolidation.

Note 5(b).Property, Equipment, and Furnishings

Property, equipment, and furnishings are stated at cost, less accumulated
depreciation. These assets are depreciated under declining-balance method down
to nil residual values by multiplying annual rates as follows:

            Plant and equipment                                      20.0%
            Motor Vehicles                                           22.5%
            Fixture and Fittings                                     22.0%

Note 5(c). Impairment of Long-lived assets

The Company periodically reviews its portfolio of assets for impairment in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-lived Assets." Such review
necessitates estimates of current market values; re-lease rents, residual values
and component values. The estimates are based on currently available market data
and are subject to fluctuation from time to time. The Company initiates its
review periodically, whenever events or changes in circumstances indicate that
the carrying amount of a long-lived asset may not be recoverable. Recoverability
of an asset is measured by comparison of its carrying amount to the expected
future undiscounted cash flows (without interest charges) that the asset is
expected to generate. Any impairment to be recognized is measured by the amount
by which the carrying amount of the asset exceeds its fair market value.
Significant management judgment is required in the forecasting of future
operating results which are used in the preparation of projected undiscounted
cash flows and, should different conditions prevail, material write downs may
occur.

Note 5(d). Foreign Currency Translation

The reporting currency used in the preparation of these consolidated financial
statements is U.S. dollars. Local currencies are the functional currencies for
the Companies subsidiaries. For the purpose of consolidation: assets and
liabilities of subsidiaries with functional currencies other than U.S. dollars
are translated into U.S. dollars at the applicable rates of exchange in effect
at the balance sheet date; and income and expense items are translated into U.S.
dollars at the average applicable rates during the year.


                                       9
<PAGE>

Translation gains and losses resulting from fluctuations in exchange rates are
recorded as a separate component of other comprehensive income within
stockholders' equity as cumulative translation adjustments. Gains and losses
resulting from foreign currency transactions are included in results of
operations.

Note 5(e). 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.

Note 5(f). Revenue Recognition

Sales revenue is recognised when the significant risks and rewards of the
ownership of goods have been transferred to the buyers. No revenue is recognised
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.

Note 5(g). Income Taxes

The Company has adopted Financial Accounting Standard No. 109 (SFAS 109) 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, 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 of approximately
$300,000 that expire in 2024. 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.

Note 5(h). Allowance for Doubtful Accounts

The Company presents accounts receivable at the net of allowances for doubtful
accounts. The allowances are calculated based on detailed review of certain
individual customer accounts and an estimation of the overall economic
conditions affecting the Company's customer base. The Company reviews a
customer's credit history before extending credit. If the financial condition of
its customers were to deteriorate, resulting in an impairment of their ability
to make payments, additional allowances may be required. No provision for
doubtful accounts has been made in these financial statements, as the accounts
are considered collectible in full.

Note 5(i). Long-term Investments

Long-term investments in equities are recorded at cost, using the cost method of
accounting for investments in equities.

Note 5(j) Segment Information


                                       10
<PAGE>

The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS
131"). SFAS establishes standards for reporting information regarding operating
segments in annual financial statements and requires selected information for
those segments to be presented in interim financial reports issued to
stockholders. SFAS 131 also establishes standards for related disclosures about
products and services and geographic areas. Operating segments are identified as
components of an enterprise about which separate discrete financial information
is available for evaluation by the chief operating decision maker, or decision
making group, in making decisions how to allocate resources and assess
performance. As of the period ended 30 June 2006, the Company only executes the
recycling business.

Note 5 (k) Comprehensive Income

Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income," establishes standards for reporting and displaying of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.

Note 5(l)  Reclassifications

Certain reclassifications have been made in prior years' financial statements to
conform with classifications used in the current year.

Note 5(m)  Stock based payments

During December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amends SFAS No. 123, "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 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 SRPL's first fiscal quarter of 2006,
the Company adopted the fair value recognition provisions of SFAS 123R, 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 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. Results
for prior periods have not been restated, as provided for under the
modified-prospective method.

As of December 31, 2005 and June 30, 2006, the Company did not issue or make
provision through the issuance of stock options to employees and directors.

Note 8.  Concentrations, Contingencies, and Commitments

(a). Concentrations

International Risks. 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.


                                       11
<PAGE>

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.

The Company operates in one business segment, recycling of materials, primarily
foreign, and therefore does not present separate segment information for lines
of business.

(b). Commitments

The Company leases office space in Hong Kong and Australia. The lease for
Australia expires in 2008, and Hong Kong in 2007. Based upon existing leases,
without renewals, the minimum lease payments up to expiry are as follows:

          2006                                               $    38,147
          2007                                               $    71,150
          2008                                               $    31,974
                                                             -----------
          Total                                              $   141,271
                                                             ===========

(c). Contingencies

(i) Possible penalty stock

The investments acquired in the combination with MKA Captial, Inc. ("MKAC") (see
note 3 above) carry contingent obligations on the part of the investor. The
consideration issued by MKAC to acquire the investments was the common stock of
MKAC (which are now Sancon shares following the business combination). The
obligation of the investor is to issue additional Sancon shares to the investee
when the traded price of Sancon shares falls below a floor price for an extended
period of time. The number of shares to be issued is determined by the formula
in the agreements, and will depend on the traded price of the shares at the time
the investee requests additional shares. The timing of the potential penalty
will depend on when the investee makes his request, which can be anytime
following the anniversary date of the investment transaction. However, the
amount of the obligation, and the shares to be issued, are amortized over the
following three years, and therefore the contingent annual expense is
approximately 1/3 the total cost of the penalty. The future price is unknown,
and therefore the actual value of the contingent obligation is unknown at this
time.

The anniversary dates of all investments occur during 2006, and currently
Sancon's stock is trading below the floor price. Should the investees invoke the
penalty clauses, Sancon could be obligated to issue more common stock. During
the quarter ended June 30 2006, Sancon has signed agreements with several
investees to waive off such obligations while quit our investments in these
investees. At the time of filing this 10QSB report, management estimates the
total number shares Sancon could be obligated to issue is 300,000 common shares.

Note 9. Depreciable Assets

(a) Property, equipment and furnishings

Property, equipment and furnishings 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.

                                      Plant and                Office
                                      Machinery   Vehicles   equipment    Total
          At June 30, 2006
          Cost                          242,499     21,538     15,851    279,888
          Accumulated depreciation       32,403      6,221      4,893     43,517
                                      ------------------------------------------
          Net carrying value            210,096     15,317     10,958    236,371
                                      ==========================================

Note 10.  Stock-based Payments

The Company settled payment for salaries to officers by issuing Company stock at
the fair values of the goods or service received. During Q2 2006, 21,733 shares
were subscribed by officers as payment for salaries, valued at $21,000 and
charged to Selling, General and Administrative expense. The number of shares
issued was determined by the average trading price for the 30 days prior to the
transaction. No options, warrants, or conversion rights are attached to the
shares.


                                       12
<PAGE>

Note 11   Disposal of subsidiary

In June of 2006, Fintel Group Limited, a 100% owner of subsidiary of Sancon
Resources Recovery, Inc., was disposal to China Digital Distribution Limited.
According to the sales agreement, China Digital Distribution Limited purchase 78
Common Shares, representing 100% of total outstanding shares of FGL for the
aggregated agreed consideration of US$ 10,000 in cash or payment for and on
behalf of Sancon Resouces Recovery, Inc.

Note 12   Mortgage loan

In 2005 year, the company purchased a vehicle by mortgage loan from Toyota
Financial Service. The totally amount of the loan is $16,882.93 with payment
term of sixty (60) months. The annual interest rate is seven point ninty-nine
percent (7.99%). The install payment of each 59 months is $277.96 and the final
installment of $5,000.

Note 13.  Shareholders' loan

The shareholders' loan is due to Mr. Jack Chen, CEO and director of the Company.
The loan is unsecured, and no payment term and without interest bearing.

Note 14.  Subsequent Events

None

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:

         o        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.
         o        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.
         o        Results of operations. This section provides an analysis of
                  our results of operations for the three months and six months
                  ended June 30, 2006 compared to the same period in 2005. A
                  brief description is provided of transactions and events,
                  including any related party transactions that affect the
                  comparability of the results being analyzed.
         o        Liquidity and capital resources. This section provides an
                  analysis of our financial condition and cash flows for the six
                  months ended June 30, 2006 and 2005.
         o        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.

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.


                                       13
<PAGE>

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.

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 stocks." 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


                                       14
<PAGE>

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 industrial waste recycling company with
operations based in Australia, Hong Kong and China. Sancon currently exports
more than 25,000 tons of recycled industrial waste material annually to its
processing partners and manufacturers in China. Sancon's main operations and
services include industrial eco-friendly consulting, collection and reprocess of
recyclable materials such as plastic, cardboard, and paper before its re-entry
into manufacture cycles as raw materials. 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 and oil
price soars, Chinese manufacturers are increasingly turning to recycled
materials to lower costs, resulting tremendous demand for recycled materials
import. The major markets for Sancon are Chinese manufacturers located mainly in
the provinces of Guangdong, Zhejiang and Fujian in China.

THE TREND IN CHINESE MARKET

The Chinese demand for secondary plastics and recycled plastics already runs
into 8 million tons per year according to China's State Environmental Protection
Agency. Our near-term growth strategy is to first strengthen our relationships
with our existing major suppliers in Japan and the USA to offer large selection
of plastic products; secondly, we aim to increase our processing capacity for
plastic materials at our existing facilities in Australia for export to China.
The well established trust on quality control of the recycled materials with
Sancon's customers in China, and our aggressive expansion plans laid the
groundwork firmly for long-term growth.

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 environmental 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.


                                       15
<PAGE>

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 have identified several key points which will give Sancon the
competitive edge in the market place:

1)       Sancon offers large selection of plastic raw materials to our
         customers.
2)       With our operations in Melbourne Australia and new processing facility
         opened up in Sydney, Sancon will cut out the middle man by selling
         direct to our partners and customs in China to protect our company's
         profit margin.
3)       Hong Kong trading operation will source recycled materials globally for
         to meet the increasing demand from our customers in China.
4)       Working closely with more processing partners in China will add value
         to our products 5) Industry know-how and management team's ability to
         ensure all major milestones are achieved.

EMPLOYEES

At June 30, 2006, the Company had 10 employees in total (excluding consultants),
in sales and marketing, finance, logistic, and administration. None of the
Company's employees is covered by a collective bargaining agreement and the
Company believes its employee relations are satisfactory.

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.

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. The SEC has recently delayed the
implementation date of SOX404 for non-accelerated filers until the fiscal year
ended December 31, 2007. However, should the Company successfully fulfill its
plans to procure financing and expand its operations, the Company may come under
the accelerated filer definition, and be required to comply with SOX404 during
2006. In any case, such costs will likely affect adversely the Company's
business, financial condition and results of operations.

Results of Operations - Comparison between the three and six months ended June
30, 2006 and same periods of 2005

Sales

Sales are generated by the sale of recyclable materials. The sales in Q2 2006
were $172,725, representing a 9.8% increased compared to the sales of $157,361
in same period of 2005. The sales for six months ended on June 30 for year 2006
were $286,047, representing 41.5% decrease compared to the sales amount of
$488,623 in the same period of 2005. The decrease is mainly due to less
processing time when the Company was busy with installing new machinery during
the first 3 months of 2006.

Cost of Sales

The cost of sales is the direct cost for sale of the recycling materials. In Q2
2006, the cost of the recyclable materials was $90,618. It is 77.6% decrease as
compared to the cost of sales of $168,201 in Q2 2005. The significant decrease
of cost of sales is mainly due to that the Company processing more high value
added materials during the quarter ended June 30 2006. The cost of sales for six
months ended on June 30 for year 2006 and 2005 were $141,345 and $412,777
respectively. Apart from the reason mentioned above, the decrease of cost of
sales is also due to the decrease of sales.

Selling, General and Administrative Expenses

SGA expenses increased by $28,906 or 61.7% to $75,725 in Q2 2006 compared to the
same period of 2005, which is due to increased rent and salaries expenses. SGA
expenses increased by $61,071 or 71.5% to $146,427 during six months period
ended on June 30, 2006 compared with the same period of year 2005.

Depreciation Expense

Depreciation expense increased to $12,380 in Q2 2006 from $2,947 in same period
of 2005. The expenses increased from $5,885 to $19,689 during six months period
ended on Jun 30, 2006 compared with same period in year 2005. The increases were
due to the purchase of plant and machinery.

Interest Expenses

The interest expenses in 2006 represent the interest for the mortgage loan.
Please see Note 12 for details.

Discontinued Operation

Discontinued operation in Q2, 2006 represent the gain on disposal of Fintel
Group Limited, a wholly owned subsidiary of Sancon.

Liquidity and Capital Resources

As shown in the accompanying financial statements, we incurred a net loss of
$4,287 for the six months ended June 30, 2006. In addition, our working capital
is negative $274,502 and the Company still suffered accumulated loss of $51,218
and net liability of $38,131 as of June 30 2006. Our ability to continue as a
going concern depends on the success of our plan to seek funding sources and the
success of our future operations.

Operating Activities
The net cash obtained by operating activities from the six months period ended
on June 30, 2006 amounted to $48,314 compared to $3,555 in the same period of
year 2005. The increased cash flow from operating activities was mainly due to
the decrease of trade receivables of $35,472, the increase of other current
liabilities of $23,259 and depreciation of $19,689, netting off gain on disposal
of subsidiary $18,041, increase of inventory of $3,598 and decrease of trade
payable of $4,180.

Investing Activities
Net cash used in investing activities amounted to $146,425 during the six months
period ended on June 30, 2006 compared to zero during the same period of year
2005. The net cash flow primarily consisted of the cash inflow due to acquire of
MKAC of $71,564 and the cash outflow resulting from the purchase of property and
equipment of $150,182 and the disposal of subsidiary.

Financing Activities

Net cash obtained by financing activities amounted to $138,925 during the six
months period ended on June 30, 2006 compared to net cash used by financing
activities of $15,992 during the same period of year 2005. The increased net
cash flow was due to the increase of shareholders' loan to the Company of
$140,813, netting of return of mortgage loan of $1,888.

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 for the purchase of inventory.

Inflation

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


                                       16
<PAGE>

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, Accounting for
Income Taxes. SFAS 109 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.

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.


                                       17
<PAGE>

STOCK-BASED COMPENSATION

In December 2002, the FASB issued SFAS No. 148 - Accounting for Stock-Based
Compensation - Transition and Disclosure. This statement amends SFAS No. 123 -
Accounting for Stock-Based Compensation, providing alternative methods of
voluntarily transitioning to the fair market value based method of accounting
for stock based employee compensation. FAS 148 also require disclosure of the
method used to account for stock-based employee compensation and the effect of
the method in both the annual and interim financial statements. The provisions
of this statement related to transition methods are effective for fiscal years
ending after December 15, 2002, while provisions related to disclosure
requirements are effective in financial reports for interim periods beginning
after December 31, 2002.

For stock options, we elected to continue to account for stock-based
compensation plans using the intrinsic value-based method of accounting
prescribed by APB No. 25, "Accounting for Stock Issued to Employees," and
related interpretations. Under the provisions of APB No. 25, compensation
expense is measured at the grant date for the difference between the fair value
of the stock and the exercise price.

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
anticipated 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 effective such that the
material information required to be included in our Securities and Exchange
Commission ("SEC") reports is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms relating to us,
including our consolidating subsidiaries, and was made known to them by others
within those entities, particularly during the period when this report was being
prepared.

During the six months ended June 30, 2006, there were no changes in our internal
accounting controls or in other factors that materially affected our internal
controls over financial reporting.

PART II.  OTHER INFORMATION

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

<TABLE>
<S>     <C>
   date          type         amount                 person                 consideration           transaction

                                                                                  $
 1-Feb-06    common share      11,283             R. Gorthuis                  14,668                  Salary
                                                                                  $
 1-Feb-06    common share       4,003                R. Yan                    4,166                   Salary
                                                                                  $


                                                     18
<PAGE>

 1-Feb-06    common share       3,753   TWC Corporation Services Limited       3,642            Settlement of debts
                                                                                  $
 1-Feb-06    common share       9,685             Bok, Wai Kee                 9,398            Settlement of debts
                                                                                  $
 1-Feb-06    common share       1,028           Ng, Yu Yan Betty                  998           Settlement of debts
                                                                                  $
10-Feb-06    common share      54,539           Mr. Lu Zhao Hui                68,174       Increase investment holdings
                                                                                 $
10-Feb-06    common share      61,846             Mr. Song Lin                 77,308       Increase investment holdings
                                                                                 $
25-May-06    common share    (54,539)           Mr. Lu Zhao Hui               (68,174)      Decrease investment holdings
                                                                                 $
25-May-06    common share    (61,846)             Mr. Song Lin                (77,308)      Decrease investment holdings
25-May-06    common share     13,110              R. Gorthuis                 $ 12,668                 Salary
                                                                                 $
25-May-06    common share     8,623                  R. Yan                    8,623                   Salary
</TABLE>

The number of shares issued was based on the average closing price of our common
shares on the OTCBB during the six months ended June 30, 2006. The shares were
exempt from registration pursuant to Section 4(2) under the Securities Act of
1933, as amended, pursuant to Rule 903, as a sale by the issuer in an offshore
transaction. No underwriting or other commissions were paid in connection with
the issuance of these shares. No forms of conversion or exercise options are
attached to the shares.

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.


                                       19
<PAGE>

Item 6.  Exhibits

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

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 Longterms
                    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.


                                       20
<PAGE>

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.

                                                 Sancon Resources Recovery, Inc.

Date:  August 18, 2006
                                                               By: /s/ Jack Chen
                                                 -------------------------------
                                                                       Jack Chen
                                                         Chief 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 18, 2006
                                                              By: /s/ David Chen
                                                 -------------------------------
                                                                      David Chen
                                                                        Chairman

Date:  August 18, 2006
                                                              By:  /s/ Jimmy Yiu
                                                      --------------------------
                                                                       Jimmy Yiu
                                                                        Director

Date:  August 18, 2006
                                                           By:  /s/ Helen Bouzas
                                                      --------------------------
                                                                    Helen Bouzas
                                                            Independent Director

Date:  August 18, 2006
                                                            By:  /s/ Cong Yuanli
                                                      --------------------------
                                                                      Cong Yuanl
                                                            Independent Director

Date:  August 18, 2006
                                                              By:  /s/ Jack Chen
                                                      --------------------------
                                                                      Jack. Chen
                                                                        Director


                                       21