<PAGE>

                                 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, 2007

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


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

                                (+61) 3 97922555
                           (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; 20,414,996 shares issued and outstanding on
August 14, 2007.

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

<PAGE>

Sancon Resources Recovery, Inc.

                                   FORM 10-QSB


                                      INDEX

                                                                            Page
                                                                            ----


PART I.   FINANCIAL INFORMATION                                                3

Item 1.   Financial Statements  (Unaudited)                                  3-5

Item 2.   Management's Discussion and Analysis or Plan of Operation           11

Item 3.   Controls and Procedures                                             17

PART II.  OTHER INFORMATION                                                   18

Item 1.   Legal Proceedings                                                   18

Item 2.   Changes in Securities and Use of  Proceeds                          18

Item 3.   Default Upon Senior Securities                                      18

Item 4.   Submission of Matters to a Vote of Security Holders                 18

Item 5.   Other Information                                                   18

Item 6.   Exhibits                                                            19

          Signatures                                                          20


                                       2
<PAGE>
<TABLE>

PART I.   FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

                         SANCON RESOURCES RECOVERY, INC.
                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)

                            Assets                                JUNE 30, 2007
                                                                 ---------------

  Current assets
    Cash and cash equivalents                                    $       19,259
    Trade receivables                                                   121,951
    Advance to suppliers                                                265,096
    Inventory                                                           137,492
    Prepaid expenses                                                     30,883
    Due from related parties                                             30,000
    Investment in convertible notes                                     200,000
                                                                 ---------------
      TOTAL CURRENT ASSETS                                              804,681

  Property, plant & equipment, net                                      260,190
  Security deposit                                                        9,337
                                                                 ---------------
      TOTAL ASSETS                                               $    1,074,208
                                                                 ===============

                Liabilities & Stockholders' Equity

  Current liabilities
    Trade payables                                               $      445,902
    Capital lease - current                                               6,359
    Accrued expenses                                                     25,569
    Advances                                                             16,650
    Due to related parties                                              129,953
    Other payables                                                       47,493
                                                                 ---------------
      TOTAL CURRENT LIABILITY                                           671,926

  Long term liability
    Due to related parties                                              333,224
    Capital lease                                                        33,990
                                                                 ---------------
      TOTAL LIABILITY                                                 1,039,140
                                                                 ---------------

STOCKHOLDERS' EQUITY
  Share Capital
    Authorized: 500,000,000 common shares, par value $0.001
    per share Issued and Outstanding: 20,414,996 shares                  20,415
  Additional paid-in capital                                            115,499
  Shares to be issued                                                   240,000
  Other comprehensive loss                                               (5,709)
  Accumulated deficit                                                  (335,137)
                                                                 ---------------
      TOTAL STOCKHOLDERS' EQUITY                                         35,068
                                                                 ---------------
      TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                   $    1,074,208
                                                                 ===============


The accompanying notes form an integral part of these unaudited financial statements.

                                       3
<PAGE>

                                                SANCON RESOURCES RECOVERY, INC.
                                             CONSOLIDATED STATEMENTS OF OPERATIONS
                                                          (UNAUDITED)


                                                   THREE MONTH PERIODS ENDED JUNE 30,       SIX MONTH PERIODS ENDED JUNE 30,
                                                        2007                2006                2007                2006
                                                  ----------------    ----------------    ----------------    ----------------
<S>                                               <C>                 <C>                 <C>                 <C>
Net Sales                                         $     1,689,650     $       172,725     $     2,897,829     $       286,047
  Cost of sales                                         1,516,097              90,618           2,532,248             141,345
                                                  ----------------    ----------------    ----------------    ----------------
  Gross profit                                            173,553              82,107             365,581             144,702

Operating Expenses
  Depreciation                                             21,343              12,380              35,659              19,689
  Selling, General and Administrative                     208,365              75,725             553,728             146,428
                                                  ----------------    ----------------    ----------------    ----------------
  Total operating expenses                                229,708              88,105             589,387             166,117

  Operating Loss                                          (56,155)             (5,998)           (223,806)            (21,415)

Other Income (Expense)
  Other income (expenses)                                  (1,301)              1,452               9,450               2,050
  Interest income                                           1,018                (749)              1,910                (757)
                                                  ----------------    ----------------    ----------------    ----------------
  Total other income (loss)                                  (238)                703              11,360               1,293

Loss from continued operations before income
  taxes and discontinued operations                       (56,438)             (5,295)           (212,446)            (20,122)

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

                                                  ----------------    ----------------    ----------------    ----------------
Income/(loss) before income taxes                         (56,438)             12,746            (212,446)             (2,081)

  Income taxes                                              4,716                   -               5,976               2,206

                                                  ----------------    ----------------    ----------------    ----------------
Net income (loss)                                 $       (61,154)    $        12,746     $      (218,422)    $        (4,287)
                                                  ================    ================    ================    ================

Other comprehensive loss                                   (3,670)                  -              (4,462)                  -

                                                  ----------------    ----------------    ----------------    ----------------
Net comprehensive income/(loss)                           (64,824)             12,746            (222,884)             (4,287)
                                                  ================    ================    ================    ================


Earnings (loss) per share:
  Basic & diluted earnings/(loss) per share       $         (0.00)    $          0.00     $         (0.01)    $         (0.00)
                                                  ================    ================    ================    ================
  Basic & diluted weighted average shares
    outstanding                                        20,414,996          16,587,771          20,383,403          15,751,782
                                                  ================    ================    ================    ================


                     The accompanying notes form an integral part of these unaudited financial statements.

                                                               4
<PAGE>

                                       SANCON RESOURCES RECOVERY, INC.
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 (UNAUDITED)


                                                                           FOR THE SIX MONTH PERIODS ENDED
                                                                            JUNE 30,            JUNE 30,
                                                                              2007                2006
                                                                        ----------------    ----------------

CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss                                                              $      (218,422)    $        (4,287)
  Adjustments to reconcile net loss to net cash flows
  provided by (used in) operating activities:
    Depreciation and amortization                                                35,659              19,689
    Gain on disposal of investment/subsidiary                                         -             (18,041)
    Shares issued in lieu of compensation                                        88,500                   -
    Changes in current assets and liabilities:
       Decrease (increase) in trade receivables                                 323,230              35,472
       Decrease (increase) in inventory                                        (137,492)             (3,598)
       Decrease (increase) in advance to suppliers                             (247,678)                  -
       Decrease (increase) in other current assets                               49,407                   -
       Increase (decrease) in tax payable                                         1,046              26,077
       Increase (decrease) in trade payable                                     141,921              (4,180)
       Increase (decrease) in other current liabilities                         (65,769)             (2,818)
                                                                        ----------------    ----------------
    Net cash flows provided by (used in) operating activities                   (29,598)             48,314
                                                                        ----------------    ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                                            (25,674)           (150,182)
  Cash acquired due to acquisitions                                                   -              71,564
  Cash decreased due to investment in convertible notes                        (200,000)                  -
  Cash decreased due to disposal of subs                                              -             (67,807)
                                                                        ----------------    ----------------
    Net cash flows used in investing activities                                (225,674)           (146,425)

CASH FLOWS FROM FINANCING ACTIVITIES
  Cash acquired due to subscription                                             240,000                   -
  Loan from related parties                                                     (59,282)            140,813
  Proceeds from (payment of) mortgage loan                                       34,675              (1,888)
                                                                        ----------------    ----------------
    Net cash flows provided by financing activities                             215,393             138,925
                                                                        ----------------    ----------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                          (4,462)             (4,755)
                                                                        ----------------    ----------------

NET INCREASE(DECREASE) IN CASH & CASH EQUIVALENT                                (44,341)             36,059

  Cash & Cash Equivalent at start of period                                      63,600              68,364
                                                                        ----------------    ----------------
  Cash & Cash Equivalent at end of period                               $        19,259     $       104,423
                                                                        ================    ================

Supplemental disclosure:
Interest paid                                                           $         1,865     $           757
Income tax paid                                                         $             -     $             -


            The accompanying notes form an integral part of these unaudited financial statements.

                                                      5
</TABLE>
<PAGE>

                         Sancon Resources Recovery, Inc.
            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       For the period ended June 30, 2007
                                   (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       % held     Status
    (business is conducted under the registered names)
    Digital Financial Service Limited ("DFSL" hereinafter)        Hong Kong     Sancon      100        Active
    Sancon Recycling Pty Ltd.                                     Australia     Sancon      100        Active
    Guang Cheng Int'l Trading Ltd. ("Guang Cheng" hereinafter)    Hong Kong     Sancon      100        Active
</TABLE>

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, 2006,
included in our Annual Report on Form 10KSB, 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 as of and
for the period ended June 30, 2007. While the historical results for the six
month period ended June 30, 2006 only include Sancon Recycling Pty Ltd. All
material inter-company balances and transactions have been eliminated in
consolidation.

(c) Going Concern

As shown in the accompanying consolidated financial statements, the Company
incurred accumulated losses of $335,137 as of June 30, 2007 and net loss of
$218,422 for the nine month period ended June 30, 2007. These matters raise
substantial doubt about the Company's ability to continue as a going concern.

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.

The Company has taken certain restructuring steps to provide the necessary
capital to continue its operations. These steps included:

o    Look for growth opportunities through acquisitions & merger with profitable
     companies
o    Raise capital through public offering
o    Take measures to control cost and operating expenses

                                       6
<PAGE>

Note 3.  Recent pronouncements

In September 2006, FASB issued SFAS 157 "Fair Value Measurements". This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practice. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Management is currently
evaluating the effect of this pronouncement on financial statements.

In September 2006, FASB issued SFAS 158 "Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans--an amendment of FASB Statements
No. 87, 88, 106, and 132(R)". This Statement improves financial reporting by
requiring an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. An employer with publicly traded equity securities is required to
initially recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after December 15, 2006. An employer without publicly traded equity securities
is required to recognize the funded status of a defined benefit postretirement
plan and to provide the required disclosures as of the end of the fiscal year
ending after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes to
financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements:

     a.   A brief description of the provisions of this Statement
     b.   The date that adoption is required
     c.   The date the employer plans to adopt the recognition provisions of
          this Statement, if earlier.

The requirement to measure plan assets and benefit obligations as of the date of
the employer's fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008. The management is currently
evaluating the effect of this pronouncement on financial statements.

In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to
specific requirements outlined in the new Statement. Therefore, calendar-year
companies may be able to adopt FAS 159 for their first quarter 2007 financial
statements.

The new Statement allows entities to choose, at specified election dates, to
measure eligible financial assets and liabilities at fair value that are not
otherwise required to be measured at fair value. If a company elects the fair
value option for an eligible item, changes in that item's fair value in
subsequent reporting periods must be recognized in current earnings. FAS 159
also establishes presentation and disclosure requirements designed to draw
comparison between entities that elect different measurement attributes for
similar assets and liabilities. The management is currently evaluating the
effect of this pronouncement on financial statements.

Note 4. Summary of Significant Accounting Policies

Note 4(a). 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 4(b). 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.

                                       7
<PAGE>

Note 4(c). Revenue Recognition

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.

Note 4(d). 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 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.

Note 4(e).  Reclassifications

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

Note 4(f).  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 Sancon'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.

                                       8
<PAGE>

As of June 30, 2007 and 2006, the Company did not issue or make provision
through the issuance of stock options to employees and directors.

Note 5.  Concentrations 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.

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

Office space:
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:


                2007                    $       52,030
                2008                           104,060
                                        ---------------
                Total                   $      156,090
                                        ===============

Equipment:
In year 2005, the company purchased a vehicle under capital lease from Toyota
Financial Service. The annual interest rate is 7.99% with payment term of sixty
(60) months. The payment is to be made in 59 equal monthly installments of
$277.96 each and the final installment of $5,000. The balance as of June 30,
2007 amounted to $15,188 with $2,394 as current liability.

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 $404 each and the
final installment of $7,443. The balance as of June 30, 2007 amounted to $25,161
with $3,965 as current liability.

The Company pays approximately $682 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
                                                ------------------
2008                                                       10,117
2009                                                       10,117
2010                                                       14,010
2011                                                       13,350
                                                ------------------
                                                $          47,594
Less: Amount representing interest                          7,245
Present value of minimum lease payments                    40,349
Less: Current portion                                       6,359
                                                ------------------
                                                $          33,990
                                                ==================

                                       9
<PAGE>

Note 6.  Convertible Notes

The Company invested in the Convertible Note of US$200,000, which issued on June
1, 2007 by Sancon Resource Recovery (Shanghai) Co., Ltd. ("Sancon SH"), a
corporation organized under the laws of the People's Republic of China. The
convertible note with 0% interest bearing shall become due and payable on the
first anniversary of the issue date. At any time prior to the issue date, at the
option of Sancon USA in its sole discretion, the convertible note may be
converted into 70% equity interest in Sancon SH.

Note 7.  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.

<TABLE>
                                  Plant and Machinery       Vehicles          Office Equipment          Total
<S>                                          <C>                   <C>                  <C>                 <C>
    At June 30, 2007
    Cost                                     $319,088              $25,063              $19,371             $363,522
    Accumulated Depreciation                   84,824               10,345                8,163              103,332
                                  -------------------  -------------------  -------------------  -------------------
    Net Carrying Value                       $234,264              $14,718              $11,208             $260,190
                                  ===================  ===================  ===================  ===================
</TABLE>

Included in property and equipment is approximately $44,700 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 $12,504.

Depreciation and amortization expense for the six-month period ended June 30,
2007 and 2006 was $35,659 and $19,689, respectively.

Note 8.  Due to related parties

The amount due to related parties was due to Mr. Jack Chen, CEO and director of
the Company, Mr. Cheng Guangliang, shareholder of the Company, Mr. David Chen,
former CEO and shareholder, and Jimmy Yiu, directors of the Company.

Included in the amount due to related parties, there were loans due to Mr. David
Chen, Mr. Jimmy Yiu and Mr. Chen Guangliang, amounting of $35,853, $5,021 and
$89,079 respectively.

Other than those convertible loans, the amount due to and from related parties
represented:

a)   loan from Mr. Jack Chen of $299,224, without interest, unsecured and due on
     demand, for the Company's normal operation.
b)   loan from Mr. David Chen of $34,000, without interest, unsecured and due on
     demand, for the Company's normal operation.
c)   loan to Mr. Jack Chen of $30,000, without interest, unsecured and due on
     demand for the Company's normal operation.

Guang Cheng International Trading Ltd sold $457,332 worth of goods to Shenzhen
Sanjiang Plastic Factory, owned by the father of the sole director of Guang
Cheng International Trading Ltd during the period ended June 30, 2007.

Note 9.  Stockholders equity

During the six month period ended June 30, 2007, the Company issued 250,000
shares to consultants recorded at the fair market value of $88,500.

Note 10. Segmental information

Following is a summary of segment information by geographic unit for the six
month period ended June 30, 2007:

                        Australia     Hong Kong     Un-allocated        Total

Sales, net                576,572     2,321,257                -      2,897,829
Net income (loss)         (89,068)       25,112         (154,466)      (218,422)
Total assets              407,032       426,114          241,062      1,074,208
Capital expenditure        25,674             -                -         25,674
Depreciation               35,659             -                -         35,659

During the six month period ended June 30, 2006, the Company operated under one
segment.

                                       10
<PAGE>

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, 2007 compared to the same period in 2006. 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, 2007 and 2006.
     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.

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.

                                       11
<PAGE>

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 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

                                       12
<PAGE>

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 Chinese 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.

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 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.

                                       13
<PAGE>

EMPLOYEES

At June 30, 2007, 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 before
December 31, 2007. 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, 2007 and same periods of 2006.

Sales

Sales are generated by the sale of recyclable materials. The sales in Q2 2007
were $1,689,650, representing a 878% increase compared to the sales of $172,725
in same period of 2006. The sharp increases were mainly due to the significant
sales amount contributed from DFSL and Guangcheng, which started their operation
in Q3 2006. In 2006, the Company set up its wholly-owned subsidiary Guangcheng
in Hong Kong and restructured DFSL's business. The both companies are engaged in
recycling material trading business. And sales for six months ended on June 30
for the year 2007 and 2006 were $2,897,829 and $286,047 respectively.

Cost of Sales

The cost of sales is the direct cost for sale of the recycling materials. In Q2
2007, the cost of the recyclable materials was $1,516,097. It is 1573% increase
as compared to the cost of sales of $90,618 in Q2 2006. The significant increase
of cost of sales is in line with the increase of sales during the quarter ended
June 30, 2007. And cost of sales for six months ended on June 30 for the year
2007 and 2006 were $2,532,248 and $141,345 respectively.

Selling, General and Administrative Expenses ("SG&A expenses")

SG&A expenses increased by $132,640 or 175% to $208,365 in Q2 2007 compared to
the same period of 2006. The increased amounts were composed of $59,895
increased SG&A of Sancon Recycling Party Ltd. and $72,745 of Sancon USA, DFSL
and Guang Cheng which were consolidated as a result of reverse takeover in
December 2005. SG&A expenses increased by $407,300 to $553,728 during six months
period ended on June 30, 2007 compared with the same period of year 2006.

                                       14
<PAGE>

Depreciation Expense

Depreciation expense increased to $21,343 in Q2 2007 from $12,380 in same period
of 2006. The expenses increased from $19,689 to $35,659 during six months period
ended on June 30, 2007 compared with same period in year 2006. The increases
were due to the purchase of plant and machinery.

Liquidity and Capital Resources

As shown in the accompanying financial statements, the Company still suffered
accumulated loss of $335,137 as of June 30, 2007. In addition, our working
capital is positive $132,755.

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 used by operating activities from the six months period ended on
June 30, 2007 amounted to $29,598 compared to $48,314 provided in the same
period of year 2006. The net cash outflow from operating activities in the six
months period ended on June 30, 2007 was mainly due to the increase of inventory
of $137,492, increase of advance to suppliers $247,678, and other current
liabilities of $65,769, and netting of net operating loss of $218,422.

Investing Activities

Net cash used in investing activities amounted to $225,674 during the six months
period ended on June 30, 2007 compared to $146,425 during the same period of
year 2006. The net cash outflows primarily resulted from the purchase of
property and equipment, and the investment in convertible notes.

The Company invested in the Convertible Note of US$200,000, which issued on June
1, 2007 by Sancon Resource Recovery (Shanghai) Co., Ltd. ("Sancon SH"), a
corporation organized under the laws of the People's Republic of China. The
convertible note with 0% interest bearing shall become due and payable on the
first anniversary of the issue date. At any time prior to the issue date, at the
option of Sancon USA in its sole discretion, the convertible note may be
converted into 70% equity interest in Sancon SH.

Financing Activities

Net cash provided by financing activities amounted to $215,393 during the six
months period ended on June 30, 2007 compared to net cash obtained from
financing activities of $138,925 during the same period in year 2006. The net
cash inflow in the six months period ended on June 30, 2007 was mainly due to
stock subscription of $240,000.

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.

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.

                                       15
<PAGE>

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.

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". 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.

                                       16
<PAGE>

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,
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 June 30, 2007 and 2006, the Company did not issue or make provision
through the issuance of stock options to employees and directors.

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, 2007, there were no changes in our internal
accounting controls or in other factors that materially affected our internal
controls over financial reporting.

                                       17
<PAGE>

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.

                                       18
<PAGE>

Item 6.  Exhibits

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

<TABLE>

Exhibit
Number    Note                            Description of Document
------    ----                            -----------------------
<S>                                                                             <C>
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.
</TABLE>
______________________

(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.

                                       19
<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 14, 2007
                                                               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 14, 2007                                         By: /s/ David Chen
                                                 -------------------------------
                                                                      David Chen
                                                                        Chairman


Date: August 14, 2007                                          By: /s/ Jimmy Yiu
                                                 -------------------------------
                                                                       Jimmy Yiu
                                                                        Director


Date:  August 14, 2007                                       By: /s/ Cong Yuanli
                                                 -------------------------------
                                                                     Cong Yuanli
                                                            Independent Director


Date:  August 14, 2007                                         By: /s/ Jack Chen
                                                 -------------------------------
                                                                      Jack. Chen
                                                                        Director

                                       20