<PAGE>

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


                                    FORM 10-Q


(Mark One)

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

                  For the quarterly period ended JUNE 30, 2009

      [_] 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 Employer
      incorporation or organization)            Identification No.)


                      No 2 Yinqing Lu, Songjiang District,
                             Shanghai, China, 201615
                    (Address of principal executive offices)

                                (+86) 21 67756099
                           (Issuer's telephone number)


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

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes [_] No [_]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [_]                        Accelerated filer [_]
Non-accelerated filer   [_]                        Smaller reporting company [X]
(Do not check if a smaller reporting company)



          APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                         DURING THE PRECEDING FIVE YEARS

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

Common Stock: par value of $0.001; 22,964,996 shares issued and outstanding on
June 30, 2009.

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



<PAGE>


                        Sancon Resources Recovery, Inc.
                                    FORM 10-Q


                                      INDEX

                                                                            PAGE

          Important Notice....................................................3

PART I.   FINANCIAL INFORMATION...............................................4

Item 1.   Financial Statements  (Unaudited)...................................4

Item 2.   Management's Discussion and Analysis or Plan of Operation...........15

Item 3.   Controls and Procedures.............................................23

PART II.  OTHER INFORMATION...................................................24

Item 1.   Legal Proceedings...................................................24

Item 2.   Changes in Securities and Use of Proceeds...........................24

Item 3.   Default Upon Senior Securities......................................24

Item 4.   Submission of Matters to a Vote of Security Holders.................24

Item 5.   Other Information...................................................24

Item 6.   Exhibits............................................................25

          Signatures..........................................................26


                                       2
<PAGE>


CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

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


                                       3
<PAGE>


PART I.   FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

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


                                                  ASSETS
                                                                             JUNE 30, 2009  DECEMBER 31, 2008
                                                                              ----------        ----------
     Current assets
        Cash and cash equivalents                                             $2,799,998        $2,220,509
        Trade receivables, net                                                   880,858           289,240
        Inventory                                                                  3,860             7,270
        Deferred Tax Asset                                                        25,759            22,107
        Other receivables                                                        238,901            64,929
        Advances and prepayments                                                 132,393            75,389
        Current assets of entity disposed off                                       --             156,994
                                                                              ----------        ----------
           TOTAL CURRENT ASSETS                                                4,081,769         2,836,438

     Property, plant & equipment, net                                          1,000,098           927,044
      Other receivable                                                            12,724              --
     Security deposit                                                              8,853             7,598
     Marketable securities                                                       129,000           128,938
     Investment                                                                   43,950              --
                                                                              ----------        ----------
        TOTAL ASSETS                                                          $5,276,394        $3,900,018
                                                                              ==========        ==========

                                  LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
     Current liabilities
        Trade payables                                                        $  944,316        $  747,786
        Capital lease - current                                                    5,194             8,735
        Accrued expenses and other payables                                      178,762           252,424
        Tax payables                                                             166,763           110,314
        Due to related parties                                                   368,675           415,304
        Other payables                                                           113,886           116,178
        Current liability of entity disposed off                                    --              24,950
                                                                              ----------        ----------
           TOTAL CURRENT LIABILITY                                             1,777,596         1,675,691

     Long term liability
        Capital lease                                                             33,995            29,175
                                                                              ----------        ----------
        TOTAL LIABILITY                                                        1,811,591         1,704,866
                                                                              ----------        ----------


     Commitment & Contingency                                                       --                --



                                                     4
<PAGE>


                                                  SANCON RESOURCES RECOVERY, INC.
                                                    CONSOLIDATED BALANCE SHEETS
                                                       (UNAUDITED)(CONTINUED)

STOCKHOLDERS' EQUITY
     Share Capital
        Authorized: 500,000,000 common shares, par value $0.001 per share
        Issued and Outstanding: 22,964,996 shares as of June 30, 2009 and          22,965              22,615
        22,614,996 December 31, 2008 respectively
     Additional paid-in capital                                                   860,449             808,299
     Noncontrolling stockholders' interest                                        142,678             127,829
     Deferred Compensation                                                       (132,600)           (194,400)
     Other comprehensive income                                                    95,914              62,854
     Retained Earnings                                                          2,475,397           1,367,955
                                                                              -----------         -----------
        TOTAL STOCKHOLDERS' EQUITY                                              3,464,803           2,195,152
                                                                              -----------         -----------
        TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                              $ 5,276,394         $ 3,900,018
                                                                              ===========         ===========

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



                                                     5
<PAGE>


                                                 CONSOLIDATED STATEMENTS OF INCOME
                                                            (UNAUDITED)


                                                             FOR THE THREE MONTHS PERIODS          FOR THE SIX MONTHS PERIODS
                                                                    ENDED JUNE 30                           ENDED JUNE 30,
                                                               2009               2008                2009                 2008
                                                          --------------     --------------      --------------      --------------

Net Sales                                                 $    2,743,132     $    2,413,283      $    5,337,627      $    4,992,386
Cost of sales                                                  1,324,657          1,069,472           2,606,589           2,104,743
                                                          --------------     --------------      --------------      --------------
     Gross profit                                              1,418,475          1,343,811           2,731,038           2,887,643

Operating Expenses
     Depreciation                                                 46,011             40,585              90,310              78,206
     Selling, General and Administrative                         821,652            813,162           1,519,605           1,487,161
                                                          --------------     --------------      --------------      --------------
         Total operating expenses                                867,663            853,747           1,609,915           1,565,367
                                                          --------------     --------------      --------------      --------------
Operating income                                                 550,812            490,064           1,121,123           1,322,276

Other Income (Expense)
     Other income                                                 10,977           (151,247)             37,651                (875)
     Interest income                                                 128             24,082               1,413              26,536
                                                          --------------     --------------      --------------      --------------
     Total other income                                           11,105           (127,165)             39,064              25,661
                                                          --------------     --------------      --------------      --------------

Income from continued operations before income taxes
and
Discontinued Operation                                           561,917            362,899           1,160,187           1,347,937

Discontinued Operation
     Loss from Discontinuing Operation                                --               (193)                (50)            (40,221)
     Gain/(Loss) on Disposal of Subsidiary                            --                 --              (1,834)              3,820
                                                          --------------     --------------      --------------      --------------
Gain(loss)on Discontinued Operations                                  --               (193)             (1,884)            (36,401)
                                                          --------------     --------------      --------------      --------------


Income before income taxes                                       561,917            362,706           1,158,303           1,311,536

Less: Income taxes                                                19,247             75,508              36,012             168,532

Less: Net income attributed to noncontrolling interest             7,945             68,739              14,849             151,990

                                                          --------------     --------------      --------------      --------------
Net income                                                       534,725            218,459           1,107,442             991,014

Other comprehensive item:
Foreign currency translation gain                                 34,754             20,140              33,060              42,463

                                                          --------------     --------------      --------------      --------------
Net comprehensive income                                  $      569,479            238,599      $    1,140,502      $    1,033,477
                                                          ==============     ==============      ==============      ==============

Earnings per share:
     Basic & diluted earnings/(loss) per share
     continued operations                                 $         0.02     $         0.02      $         0.05      $         0.06
                                                          ==============     ==============      ==============      ==============
     Basic earnings/(loss) per share discontinued
     operations                                           $           --     $        (0.00)     $        (0.00)     $        (0.00)
                                                          ==============     ==============      ==============      ==============
     Basic & diluted earnings/(loss) per share            $         0.02     $         0.01      $         0.05      $         0.05
                                                          ==============     ==============      ==============      ==============
     Basic & diluted weighted average shares
     outstanding                                              22,918,329         21,714,996          22,766,663          21,219,146
                                                          ==============     ==============      ==============      ==============

                           The accompanying notes is an integral of these unaudited financial statements.

                                                     6
<PAGE>


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


                                                              FOR THE SIX MONTHS PERIODS ENDED JUNE 30,
                                                                         2009              2008
                                                                      -----------      -----------

CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income                                                       $ 1,107,442      $   991,014
     Adjustments to reconcile net income to net cash flows
     provided by operating activities:
        Depreciation and amortization                                      90,310           78,206
        Shares issued in lieu of compensation & service                    61,800           75,000
        Noncontrolling stockholders' interest                              14,849          151,990
        Changes in current assets and liabilities:
          Decrease (increase) in trade receivables                       (590,328)         341,595
          Decrease (increase) in inventory                                  3,410          (11,819)
          Decrease (increase) in advance to suppliers                     (47,147)          (6,772)
          Decrease (increase) in other current assets                     (59,705)        (174,253)
          Increase (decrease) in tax payable                               56,449          115,272
          Increase (decrease) in trade payable                            196,530         (115,263)
          Increase (decrease) in other current liabilities                 18,533         (220,590)
                                                                      -----------      -----------
        Net cash provided by continued operations                         852,143        1,224,380
                                                                      -----------      -----------
        Net cash used in discontinued operations                               --          (45,670)
                                                                      -----------      -----------
        Net cash flows provided by operating activities                   852,143        1,178,710
                                                                      -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of property and equipment                                  (207,475)        (140,873)
     Cash decreased due to investment                                     (43,950)              --
        Net cash flows used in investing activities                      (251,425)        (140,873)
                                                                      -----------      -----------
        Net cash provided by discontinued operations                        1,854               38
                                                                      -----------      -----------
        Net cash flows used in Investing activities                      (249,571)        (140,835)
                                                                      -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Shareholders' loan                                                   (88,616)         129,008
     Proceeds from (payment of) mortgage loan                               1,279              435
                                                                      -----------      -----------
        Net cash flows provided by (used in) financing activities         (87,337)         129,443
                                                                      -----------      -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                    64,254           42,463
                                                                      -----------      -----------

NET INCREASE IN CASH & CASH EQUIVALENT                                    579,489        1,209,781

     Cash & Cash Equivalent at start of period                          2,220,509          238,576
                                                                      -----------      -----------
     Cash & Cash Equivalent at end of period                          $ 2,799,998      $ 1,448,357
                                                                      ===========      ===========

Supplemental information for Cash Expenses
     Cash paid for Interest Expenses                                  $     1,559      $    12,366
                                                                      ===========      ===========
     Cash paid for Income Taxes                                       $     8,337      $        --
                                                                      ===========      ===========

           The accompanying notes is an integral of these unaudited financial statements.
</TABLE>


<PAGE>


                         Sancon Resources Recovery, Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       For the period ended June 30, 2009
                                   (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 Resources
Recovery, Inc. is an environmental service and waste management company that
operates recycling facilities in China and Australia. Sancon specializes in the
collection and recovery of industrial and commercial solid wastes such as
plastic, paper, cardboard, and glass. The recycled materials are re-used by
Sancon's manufacturing customers in China to make a wide variety of new products
including outdoor furniture, construction materials, building materials, road
surface, and various new products. Sancon's China operation is licensed by the
Chinese government for waste management services, and is certified with ISO 9001
and ISO14001 standards. Sancon aims to provide solutions to today's soaring raw
material cost for manufactures and assists in solving our environmental
problems.

On August 15, 2007, the Company completed the acquisition of 70% of the equity
interest in Sancon Resources Recovery (Shanghai) Co., Ltd by exercising its
option to convert $200,000 of convertible promissory note

On November 17, 2006 , the company completed the acquisition of 100% equity
interest in Crossover Solutions Inc ("Crossover" or "CS") from Fintel Group by
paying $1 for the transfer of one share of Crossover Solutions Inc. being the
total number of outstanding share of Crossover.

Since its acquisition, Crossover solution Inc has begin the operation of
providing services for management and granulation of waste materials for its
clients located in China.

On March 31, 2008, the company sold 100% equity interest of Digital Financial
Service Limited ("DFSL") for $7.8 plus the assumption of certain liabilities,
resulting in gain of $1,865 on disposal of the entity.

On March 31, 2009, the company sold 100% equity interest of Guang Cheng Int'l
Trading Ltd. ("Guang Cheng") for $1,290 plus the assumption of certain
liabilities, resulted in loss of $1,884 on disposal of the entity.

As of June 30, 2009, the Sancon group comprises of the following companies:

<TABLE>
<CAPTION>
<S>     <C>
Registered Name                                                                       Domicile           Owner     % held     Status
(business is conducted under the registered names)
Sancon Recycling Pty Ltd.                                                             Australia         Sancon       100      Active
Sancon Resources Recovery (Shanghai) Co., Ltd. ("Sancon SH" hereinafter)              Shanghai          Sancon       70       Active
Crossover Solutions Inc. ("CS" hereinafter)                                     British Virgin Island   Sancon       100      Active
</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, 2008,
included in our Annual Report on Form 10K, filed with the Securities and
Exchange Commission.


                                       7
<PAGE>


(b) Principles of Consolidation

The accompanying unaudited consolidated financial statements include all of the
accounts of the Company and all of the subsidiaries under its control, which
include Sancon Recycling Pty Ltd., Sancon SH (70%) and CS as of and for the
period ended June 30, 2009. While the historical results for the three months
and six months period ended June 30, 2008 include the Company, Sancon Recycling
Pty Ltd., Guang Cheng, Sancon SH (70%) and CS. All material inter-company
balances and transactions have been eliminated in consolidation.

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

Note 3.  Summary of Significant Accounting Policies

USE OF ESTIMATES

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

EARNINGS PER SHARE

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

REVENUE RECOGNITION

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

Due to the disposal of subsidiary Guang Cheng Int'l Trading Ltd., the Company
now is organized into two business segments while it was three in the last year:
material recycling and waste management service. Their revenue recognition is as
follows:

(1) Material Recycling refers to the activities of collecting and processing of
waste materials, then selling them to customers in China. The plant is located
in Australia. The revenue is recognized when delivery of the material is
occurred and invoice issued.
(2) Waste management Service refers the activities of providing waste management
service with operations located in Shanghai China. The revenue is recognized
when service is completed and invoice is issued.

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.


                                       8
<PAGE>

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

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

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

NON-CONTROLLING STOCKHOLDERS' INTEREST

The Company owned 70% interest in Sancon Shanghai. As at June 30, 2009 and
December 31, 2008 minority interest amounted to $142,678 and $127,829
respectively.

Certain amounts presented for prior periods that were previously designated as
minority interests have been reclassified to conform to the current year
presentation. Effective January 1, 2009, the Company adopted SFAS No. 160,
"Non-controlling Interests in Consolidated Financial Statements, an amendment of
ARB No. 51," which established new standards governing the accounting for and
reporting of non-controlling interests (NCIs) in partially owned consolidated
subsidiaries and the loss of control of subsidiaries. Certain provisions of this
standard indicate, among other things, that NCIs (previously referred to as
minority interests) be treated as a separate component of equity, not as a
liability (as was previously the case); that increases and decreases in the
parent's ownership interest that leave control intact be treated as equity
transactions, rather than as step acquisitions or dilution gains or losses; and
that losses of a partially owned consolidated subsidiary be allocated to the NCI
even when such allocation might result in a deficit balance. This standard also
required changes to certain presentation and disclosure requirements. The
provisions of the standard were applied to all NCIs prospectively, except for
the presentation and disclosure requirements, which were applied retrospectively
to all periods presented. As a result, upon adoption, the Company retroactively
reclassified the "Non-controlling stockholders' interest" balance previously
included in the "Other liabilities" section of the consolidated balance sheet to
a new component of equity with respect to NCIs in consolidated subsidiaries. The
adoption also impacted certain captions previously used on the consolidated
statement of income, largely identifying net loss including NCI and net loss
attributable to Octavian.

RECLASSIFICATIONS

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

RECENT PRONOUNCEMENTS

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements". This Statement amends ARB 51 to establish
accounting and reporting standards for the noncontrolling (minority) interest in
a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. SFAS No. 160 is effective for the Company on January 1,
2009.

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations". This
Statement replaces SFAS No. 141, Business Combinations. This Statement retains
the fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement 141 called the purchase method) be used for all
business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree; b) recognizes and measures the goodwill acquired in
the businesc combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS
No.141(R) is effective for the Company on January 1, 2009.

On December 30, 2008 FASB issued FIN 48-3, "Effective Date of FASB
Interpretation No. 48 for Certain Nonpublic Enterprises". This FSP defers the
effective date of FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes, for certain non-public enterprises as defined in paragraph 289, as
amended, of FASB Statement No. 109, Accounting for Income Taxes, including
non-public not-for-profit organizations. However, non-public consolidated
entities of public enterprises that apply U. S. GAAP are not eligible for the
deferral. Nonpublic enterprises that have applied the recognition, measurement,
and disclosure provisions of Interpretation 48 in a full set of annual financial
statements issued prior to the issuance of this FSP also are not eligible for
the deferral. This FSP shall be effective upon issuance. The Company does not
believe this pronouncement will impact its financial statements.


                                       9
<PAGE>

On January 12, 2009 FASB issued FSP EITF 99-20-01, "Amendment to the Impairment
Guidance of EITF Issue No. 99-20". This FSP amends the impairment guidance in
EITF Issue No. 99-20, "Recognition of Interest Income and Impairment on
Purchased Beneficial Interests and Beneficial Interests That Continue to be Held
by a Transferor in Securitized Financial Assets," to achieve more consistent
determination of whether an other-than-temporary impairment has occurred. The
FSP also retains and emphasizes the objective of an other-than-temporary
impairment assessment and the related disclosure requirements in FASB Statement
No. 115, Accounting for Certain Investments in Debt and Equity Securities, and
other related guidance. The FSP shall be effective for interim and annual
reporting periods ending after December 15, 2008, and shall be applied
prospectively. Retrospective application to a prior interim or annual reporting
period is not permitted. The Company does not believe this pronouncement will
impact its financial statements.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, "Interim
Disclosures about Fair Value of Financial Instruments" ("FSP FAS 107-1 and APB
28-1"). FSP FAS 107-1 and APB 28-1 require companies to disclose in interim
financial statements the fair value of financial instruments within the scope of
FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments.
However, companies are not required to provide in interim periods the
disclosures about the concentration of credit risk of all financial instruments
that are currently required in annual financial statements. The fair-value
information disclosed in the footnotes must be presented together with the
related carrying amount, making it clear whether the fair value and carrying
amount represent assets or liabilities and how the carrying amount relates to
what is reported in the balance sheet. FSP FAS 107-1 and APB 28-1 also requires
that companies disclose the method or methods and significant assumptions used
to estimate the fair value of financial instruments and a discussion of changes,
if any, in the method or methods and significant assumptions during the period.
The FSP shall be applied prospectively and is effective for interim and annual
periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009. An entity early adopting FSP FAS 107-1 and APB 28-1
must also early adopt FSP FAS 157-4 as well as FSP FAS 115-2 and FAS 124-2. The
Company will adopt the disclosure requirements of this pronouncement for the
quarter ended June 30, 2009, in conjunction with the adoption of FSP FAS 157-4,
FSP FAS 115-2 and FAS 124-2.

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165").
SFAS 165 sets forth the period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements, and the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. SFAS 165 will be effective for interim or
annual period ending after June 15, 2009 and will be applied prospectively. The
Company will adopt the requirements of this pronouncement for the quarter ended
June 30, 2009. The Company does not anticipate the adoption of SFAS 165 will
have an impact on its consolidated results of operations or consolidated
financial position.

MARKETABLE SECURITIES

Company classifies investment in marketable securities as `Held to Maturity' in
accordance with SFAS 115. Non temporary decline in the fair value of securities
is charged to earnings while unrealized gains or losses are not recognized as at
June 30, 2009 investment in securities amounted to $129,000 and gross
unrecognized holding loss amounted to $9,933.

The marketable securities will be matured on August 19, 2010 and classified
under non current assets in the accompanied financial statements.

Note 4.  Concentrations and commitments

(a). Concentrations

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

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

(b). Commitments


                                       10
<PAGE>

Office space:
The Company leases office space in Australia and China. The lease for Australia
expires in October 2011 while leases for China expire on various dates between
January 2009 to November 2018. Based upon existing leases, without renewals, the
minimum lease payments up to expiry are as follows:

                          2009          $  296,036
                                        ----------
                          2010             317,541
                                        ----------
                          2011             261,245
                                        ----------
                          2012             161,187
                                        ----------
                          2013             162,322
                                        ----------
                         Thereafter        732,000
                                        ----------
                         Total          $1,930,331
                                        ==========

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 $313
each and the final installment of $5,320. The balance as of June 30, 2009
amounted to $8,214 with $1,575 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 $432 each and the
final installment of $7,913. The balance as of June 30, 2009 amounted to $17,172
with $1,911 as current liability.

In September 2007, the company purchased a vehicle by mortgage loan from CBFC
Limited ABN. The annual interest rate is 8.6% with payment term of sixty (48)
months. The payment is to be made in 47 equal monthly installments of $379 each
and the final installment of $6,221. The balance as of June 30, 2009 amounted to
$13,803 with $1,708 as current liability.

The Company pays approximately $1,124 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
------------------------------------------------------
2010                                         23,404
2011                                         20,672
                                            -------
                                            $44,076
Less: Amount representing interest           (4,887)
Present value of minimum lease payments      39,189
Less: Current portion                        (5,194)
                                            -------
                                            $33,995
                                            =======

Legal Proceeding:

The company involved in the following litigation.

Dragon Wings Communications Limited, a Hong Kong corporation and Wong Yee Tat,
an individual are the first and second plaintiff. They filed a complaint on July
25, 2008 in the District Court of the Hong Kong special Administrative Region,
Civil Action No. 3251, against the first defendant, Fintel Group Limited for
breach of contract. The Company is the second defendant because plaintiff
claimed Fintel Group Limited is a wholly owned subsidiary of the Company. Under
the writ, the plaintiff claimed that pursuant to a written stock purchase
agreement, the first defendant shall purchase the first plaintiff's common stock
by common shares of Financial Telecom Limited (USA) inc. (replaced by shares of
MKA Capital Inc. from June 2006) or pay to the plaintiff cash of $94,172 in lieu
of the shares. Plus the interest and cost of litigation, the total amount
claimed by plaintiff were $104,966. The court adjudged that the first defendant
do pay the plaintiffs damages on September 08, 2008 and also adjudged that the
second defendant do pay the plaintiffs damages on December 10, 2008. The Company
denied all allegations in the complaint because Fintel Group Limited is no
longer our subsidiary since November 27, 2006. The Company accrued $104,966 of
potential liability in the accompanied financial statements based on the letter
of claim received from the plaintiff.


                                       11
<PAGE>


Note 5. Discontinued operation

On March 31, 2009, the company sold 100% equity interest of Guang Cheng Int'l
Trading Ltd. ("Guang Cheng") for $1,290 plus the assumption of certain
liabilities, resulting in loss of $1,884 on disposal of the entity.

Following is the Gain/Loss Calculation for disposal of Guang Cheng Int'l Trading
Ltd.

                                   Guang Cheng Gain/Loss calculation

                                                             -------
Net assets of the Company as on January 1, 2009              $ 3,174

Loss from discontinued operations through March 31, 2009         (50)
                                                             -------

Total book value as of March 31, 2009                          3,124

Proceeds from disposal                                         1,290

                                                             -------
Gain (loss) on Disposal                                      $(1,834)
                                                             -------

                                                             -------
Total Gain (loss) on Discontinued Operations                 $(1,884)
                                                             -------

Note 6  Acquisition & Investment

Investment in Shanghai Sheng Rong

During the three months ended June 30, 2009, Sancon SH, a 70% owned subsidiary
of the company, invested $43,950(or RMB 300,000) in a new local Chinese
enterprise named Shanghai Sheng Rong Environmental Protection Technology Co.,
Ltd which representing 20% of the total equity interest. Sheng Rong is an early
stage business development company focused on developing opportunities in the
environmental services industry in China. As of June 30, 2009 the Company did
not have significant influence over Sheng Rong, accordingly, the investment in
Sheng Rong is carried at cost and is evaluated for any imapirement.

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.

Below is the table of Property, Plant and Equipment as at June 30, 2009:

<TABLE>
<CAPTION>
<S>     <C>
Total                             Plant and Machinery  Vehicles    Office Equipment     Total
                                     ----------      ----------      ----------      ----------
Cost                                    881,075         441,756          29,623       1,352,454
Accumulated Depreciation               (226,650)       (118,850)         (6,856)       (352,356)
                                     ----------      ----------      ----------      ----------
Net Carrying Value                      654,425         322,906          22,767       1,000,098
                                     ==========      ==========      ==========      ==========
</TABLE>

Included in property and equipment is approximately $65,057 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 $31,020.

Below is the table of Property, Plant and Equipment for the fiscal year ended
2008:

<TABLE>
<CAPTION>
<S>     <C>

Total                             Plant and Machinery   Vehicles    Office Equipment    Total
                                      ----------      ----------      ----------      ----------
Cost                                     749,355         383,759          24,589       1,157,703
Accumulated Depreciation                (143,029)        (83,582)         (4,048)       (230,659)
                                      ----------      ----------      ----------      ----------
Net Carrying Value                       606,326         300,177          20,541         927,044
                                      ==========      ==========      ==========      ==========
</TABLE>


                                       12
<PAGE>

Included in property and equipment is approximately $55,833 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 $21,960.

Depreciation and amortization expense for the six months period ended June 30,
2009 and 2008 was $90,310 and $78,206, respectively.

Note 8.  Due to related parties

The amount due to related parties comprised of loan from Mr.Jack Chen, CEO, Mr.
David Chen, former CEO and major shareholder, and Jimmy Yiu, independent
director of the Company.

Included in the amount due to related parties, there were loans due to Mr. David
Chen of $22,134 and loans due to Mr. Jimmy Yiu, independent director of the
Company, amounting of $5,021 and loans due to Mr. Jack Chen of $341,520 (net)
without interest, unsecured and due on demand.

The shareholder's loan of Mr. Jack Chen included amount due from him of $15,000
and amount due to him of $356,520. We combined these two amounts and result in
loans due to Mr. Jack Chen of $341,520. The offsetting amounts due to and due
from Mr. Jack Chen are appropriate and comply with FASB Interpretation No. 39.

Note 9.  Stockholders equity

On October 15, 2007, the Company entered into a ten years service agreement with
Lyons Capital LLC. In connection with this agreement, Lyons Capital LLC will
receive 300,000 shares of Restricted, RULE 144 Stock, for services rendered or
to be rendered in the future. The Company issued shares on March 10, 2008 and
recorded at the fair market value of $156,000. This amount will be amortized
over a period of ten years from January 01, 2008. For the six month period ended
June 30, 2009, the Company recorded $7,800 in consulting expense. The
unamortized amount of $132,600 is included under deferred compensation as at
June 30, 2009.

On May 15, 2008, the Company entered in a one year service agreement with
CEOcast, Inc to provide investor relations services. In connection with this
agreement, CEOcast will receive total 600,000 shares of Restricted, RULE 144
Stock. On August 1 and September 30, 2008, the Company issued 300,000 shares to
CEOcast separately and recorded at the fair market value of $144,000. This
amount will be amortized over a period of twelve months. As of December 31,
2008, the Company recorded $90,000 in consulting expense. The unamortized amount
of $54,000 is included under deferred compensation as at December 31, 2008. As
of June 30, 2009, the Company recorded $54,000 in consulting expense. There is
no unamortized amount under deferred compensation as of June 30, 2009.

On January 01, 2008, the Company entered in a four years employment agreement
with Mr. Jack Chen, current CEO. In connection with this agreement, Mr. Jack
Chen will receive corporate salary of $90,000 per year that paid in stock. On
August 01, 2008 and April 13, 2009, the Company issued 250,000 shares and
350,000 shares of Restricted, RULE 144 Stock to Mr. Jack Chen. The shares
recorded at the fair market value of $37,500 and $52,500 respectively. As of the
June 30, 2009, the Company recorded $45,000 in due to related parties.

Note 10. Segmental information

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

During the six months periods ended June 30, 2009, the Company is organized into
two business segments: (1) material recycling, (2) waste service. During the six
months periods ended March 31, 2008, the Company is organized into three
business segments: (1) material recycling, (2) material trade, (3) waste
service. The following table presents a summary of operating information and
certain quarter-end balance sheet information for the six month period ended
June 30, 2009 and 2008:


                                       13
<PAGE>

<TABLE>
<CAPTION>
<S>     <C> <C>

                                               FOR THE SIX MONTHS PERIODS ENDED JUNE 30,
                                                     2009                    2008
                                               -----------------      -----------------
Revenues from various areas:
                Material Recycling             $         918,401           1,341,943.00
                Material Trade                                 0
                Waste Service                          4,419,226              3,650,443
                                               -----------------      -----------------
                              Consolidated     $       5,337,627      $       4,992,386
                                               =================      =================

Net income (loss):
                Material Recycling             $          45,529                147,861
                Material Trade
                Waste Service                          1,170,597                979,726
                Un-allocted                             (108,684)              (136,573)
                                               -----------------      -----------------
                              Consolidated     $       1,107,442      $         991,014
                                               =================      =================

Identifiable assets:                                                  December 31, 2008
                                                                      -----------------
                Material Recycling             $         904,871      $         761,133
                Material Trade                           157,022
                Waste Service                          4,370,225              2,970,350
                Un-allocted                                1,298                 11,513
                                               -----------------      -----------------
                              Consolidated     $       5,276,394      $       3,900,018
                                               =================      =================

Depreciation and amortization:
                Material Recycling             $          47,853      $          44,567
                Material Trade                                --                     --
                Waste Service                             42,457                 33,639
                Un-allocted                                   --                     --
                                               -----------------      -----------------
                              Consolidated     $          90,310      $          78,206
                                               =================      =================

Capital expenditures:
                Material Recycling             $         124,267      $          39,990
                Material Trade                                --                     --
                Waste Service                             83,208                100,883
                Un-allocted                                   --                     --
                                               -----------------      -----------------
                              Consolidated     $         207,475      $         140,873
                                               =================      =================
</TABLE>

Note 11. Major Customers and Vendors

Pernod Ricard, Yuewu and Hing Yang Hong, our three top customers, provided 74%
of net revenue for the six months period ended June 30, 2009 respectively. Total
accounts receivable due from these customers was approximately $609,412 as of
June 30, 2009.

Normally, the payment terms of our accounts receivable is about one month and
will not be more than two months.

Shuizhou Jiangnan, Astron and Aperio Group are our major vendors. Total accounts
payable due to these vendors was $722,537 as of June 30, 2009.



                                       14
<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 period ended June 30,
         2009 compared to the same period in 2008. 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 period ended
         June 30, 2009 and 2008.
     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.

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.


                                       15
<PAGE>

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
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


                                       16
<PAGE>

setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for the Company's stockholders to
resell their shares to third parties or to otherwise dispose of them.

Overview of the Company and its Operations

Sancon Resources Recovery, Inc. is an environmental service and waste management
company that operates recycling facilities in China and Australia. Sancon
specializes in the collection and recovery of industrial and commercial solid
wastes such as plastic, paper, cardboard, and glass. The recycled materials are
re-used by Sancon's manufacturing customers in China to make a wide variety of
new products including outdoor furniture, construction materials, building
materials, road surface, and various new products. Sancon's China operation is
licensed by the Chinese government for waste management services, and is
certified with ISO 9001 and ISO14001 standards. Sancon currently ships more than
25,000 tons of recycled industrial and commercial waste material annually to its
customers in China. Sancon's main operations and services include industrial
waste management consulting, collection and reprocess of recyclable materials
such as plastic, glass, cardboard, and paper before its re-entry into
manufacture cycles as raw materials. Sancon also provides its full waste
management services to large consumer products maker such as Pernod Ricard. The
use of recycled material is both environmentally friendly and is a key part of
today's competitive manufacturing process to lower costs. As China gains global
manufacturing dominance and current economic crisis, Chinese manufacturers are
increasingly turning to recycled materials to lower its costs, resulting
tremendous demand for recycled materials import. The major customers for Sancon
are Chinese manufacturers and recycled material traders which are located mainly
in the Chinese provinces of Guangdong, Zhejiang and Fujian.

THE TREND IN CHINESE MARKET

According to China National Resources Recycling Association, recyclable solid
waste import to China has experienced a dramatic increase in the last 2 decades.
During early 1990's, China imported 1-2 million tons of recyclable wastes per
year. By 1999, China imported 10 million tons of recyclable solid wastes per
year. In 2006 China imported 37 million tons of recyclable wastes. China's
total domestic recycled volume is estimated to have reached over 50 million tons
in 2007, with an estimated total worth of US$6 billion.

The State Development and Reform Commission of China promotes the recycling
industry with a four-pronged solution ranging from energy saving and clean
production to integrated use of resources and developing environmental
protection industry, to accelerate the development of the recycling economy. The
concept of recycling economy is included in the 11th Five-year Plan.

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

Due to the serious environment pollution problems faced in China, the 11th
Five-year plan emphasis energy saving, emission reduction and environmental
protection at the highest level ever. At the end of the 11th Five-year plan, the
annual production of the environmental industry will exceed 1.1 trillion RMB, of
which environmental equipment spending is 120 billion RMB, environmental
services is 100 billion RMB, resources recovery is 660 billion RMB, cleaning
products spending is 250 billion RMB.

In the past 30 years of development, environmental production value in China
increased from 0.5% of GDP to the current 1.6%. China will expedite the
demonstration and promotion of technologies for energy saving and emission
reduction; actively promote the development of the environmental services
industry; and also intensify the financial services for the environmental
industry; and tax benefit policies for the environmental industry. During the
11th Five-year period, investment for environmental protection will reach 1.4
trillion RMB. Central government financing is investing in environmental
industry at annual compound growth rate of 18%. Chinese government set out
policies supports 4 key areas: developing a resources recovery and recycling
economy; pollution reduction and ecological protection; environment testing
instruments; environmental services and the development of the environmental
industry.

Sancon is uniquely position to benefits from these initiatives as an early mover
in the industry and one of the few foreign companies being awarded a waste
management license in China. Sancon has for the past years developed one of the
largest collection and recovery network in China for commercial wastes and
expects to expand into other areas of environmental services.

SANCON'S VISIONS AND GOALS

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


                                       17
<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 has identified several key points which will give Sancon the
competitive edge in the market place:

1)       Sancon offers large selection of plastic and glass raw materials to our
         customers.
2)       With the expansion of our operations in Melbourne Australia, Sancon
         will be able to serve greater number of customers and sell direct to
         our customs in both Australia and China.
3)       Sancon has 6 strategically positioned recycling plants and about 40
         depots in China and it will enable Sancon to meet the demand for
         nationwide environmental services.
4)       Industry know-how and management team's ability to ensure all operating
         and environmental standards are achieved. Our team's experience in
         logistic management and waste management operations are key factors
         enabling the delivery of a high standard of service to Sancon's
         clients.

EMPLOYEES

As of June 30, 2009, the Company employed 15 people in Australia subsidiaries.
Our joint venture in China employed 20 people full time, and all other personnel
of the China joint venture are employed as sub contractors. To make our work
more efficient, we outsourced a few other functions, such as logistics,
bookkeeping and administration, to certain professional firms to enable our
resource being focused on sales and processing functions.

FACTORS THAT MAY AFFECT FUTURE RESULTS

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

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

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

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, 2009. 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, 2009. In any case, such cocts will likely affect adversely the
Company's business, financial condition and results of operations.


                                       18
<PAGE>


Results of Operations - Comparison between the three and six months ended June
30, 2009 and the same periods of 2008.

Sales

Sales are generated by service charges and the sale of recyclable materials. The
sales for the three months period ended June 30, 2009 were $2,743,132,
representing $329,849 or 14% increase compared to the sales of $2,413,283 in the
same period of 2008. The sales of Sancon SH increased from $1,514,421 for the
three months period ended June 30, 2008 to $1,666,090 for the three months
period ended June 30, 2009, an increase of $151,669 or 10%. CS contributed
$541,023 sales during the three months period ended June 30, 2009 while it was
$157,586 for the three months period ended June 30, 2008, representing
$383,437or 243% increase. However, the sales of Sancon AU decreased $205,257 or
28% from $741,276 for the three months period ended June 30, 2008 to $536,019
for the three months period ended June 30, 2009. The decrese of sales in Sancon
AU was mainly due to the reduce of economic activities which caused by current
economic crisis.

The sales for the six months period ended June 30, 2009 were $5,337,627,
representing $345,241 or 7% increase compared to the sales of $4,992,386 in the
same period of 2008. The sales of Sancon SH increased from $3,062,357 for the
six months period ended June 30, 2008 to $3,275,518 for the six months period
ended June 30, 2009, an increase of $213,161 or 7%. The sales of CS was
$1,143,708 during the six months period ended June 30, 2009 while it was
$588,086 for the six months period ended June 30, 2008, representing $555,622or
94% increase. The sales of Sancon AU decreased $423,542 or 32% from $1,341,943
for the six months period ended June 30, 2008 to $918,401 for the six months
period ended June 30, 2009.

Cost of Sales

The cost of sales is the direct cost for sale of the recycling materials. For
the three months period ended June 30, 2009, the cost of sales was $1,324,657.
It was $255,185 or 24% increase as compared to the cost of sales of $1,069,472
for the three months period ended June 30, 2008. Among which, the cost of sales
in Sancon SH increased $289,988 or 35% from $832,002 for the three months period
ended June 30, 2008 to $1,121,990 for the three months period ended June 30,
2009. The increase mainly contained $228,445 of shipping expenses and $43,739 of
labor service fee for sub contractors. All these costs were related to our
chinese market expandant. Cost of revenue in Sancon AU for the three months
period ended June 30, 2008 and 2009 was $226,220 and $202,667 respectively, a
decrease of $23,553 or 10%. The decrease of cost of sales in Sancon AU was in
line with the sales.

For the three months period ended June 30, 2008 and 2009, cost of sales was 44%
and 48% of sales respectively.

For the six months period ended June 30, 2009, the cost of sales was $2,606,589.
It was $501,846 or 24% increase as compared to the cost of sales of $2,104,743
for the six months period ended June 30, 2008. Among which, the cost of sales in
Sancon SH increased $608,891 or 37% from $1,651,841 for the six months period
ended June 30, 2008 to $2,260,732 for the six months period ended June 30, 2009.
The increase mainly contained $444,390 of shipping expenses, $67,255 for worshop
rental fee and $74,263 of labor service fee for sub contractors. Cost of revenue
in Sancon AU for the six months period ended June 30, 2008 and 2009 was $430,402
and $345,857 respectively, a decrease of $84,545 or 20%.

For the six months period ended June 30, 2008 and 2009, cost of sales was 42%
and 49% of sales respectively.

Gross profit

The gross profit for the three months period ended June 30, 2009 was $1,418,475,
representing $74,664 or 6% increase compared to $1,343,811 for the three months
period ended June 30, 2008. The gross margin reduced from 56% for the three
months period ended June 30, 2008 to 52% for the three months period ended June
30, 2009. The increase of the gross profit is mainly due to its rise in CS of
$383,437 or 243% although the gross profit in Sancon SH decreased $138,319 or
20% and in Sancon AU of $181,704 or 35%.

The gross profit for the six months period ended June 30, 2009 was $2,731,038,
representing $156,605 or 5% decrease compared to $2,887,643 for the six months
period ended June 30, 2008. The gross margin reduced from 58% for the six months
period ended June 30, 2008 to 51% for the six months period ended June 30, 2009.
The decrease of the gross profit is mainly due to its reduce in Sancon SH of
$395,730 or 28% and Sancon AU of $338,997 or 37% although gross profit of CS
increased $555,622 or 94% from $588,086 for the six months period ended June 30,
2008 to $1,143,708 for the six months period ended June 30, 2009.

Selling, general and administrative expenses

Selling, general and administrative expenses increased to $821,652 for the three
months period ended June 30, 2009, from $813,162 for the three months period
ended June 30, 2008, an increase of $8,490 or 1%. The SG&A expenses of Sancon SH
was $344,159 for the three months period ended June 30, 2008, this number
increased to $487,995 for the three months period ended June 30, 2009. It
increased $143,836 or 42%. The increase was mainly contained $107,663 of
consulting fee and $60,031 of travelling fee which is for developing new market
and customer. The SG&A expenses of Sancon AU decreased $125,686 or 31% from
$410,736 for the three months period ended June 30, 2008 to $285,050 for the
three months period ended June 30, 2009. The decrease was mainly due to the

                                       19
<PAGE>

falling of sales. The SG&A expenses also included investor relationship expenses
which decreased $13,867 or 24% from $58,267 for the three months period ended
June 30, 2008 to $44,400 for the three months period ended June 30, 2009.

The SG&A expenses was 34% of the sales for the three months period ended June
30, 2009 while it was 30% for the three months period ended June 30, 2008.

Selling, general and administrative expenses increased to $1,519,605 for the six
months period ended June 30, 2009, from $1,487,161 for the six months period
ended June 30, 2008, an increase of $32,444 or 2%. The SG&A expenses of Sancon
SH was $687,556 for the six months period ended June 30, 2008, this number
increased to $906,754 for the six months period ended June 30, 2009. It
increased $219,198 or 32%. The increase was mainly contained $105,254 of
consulting fee and $43,688 of travelling fee which is for developing new market
and customer. The SG&A expenses of Sancon AU decreased $231,455 or 32% from
$729,905 for the six months period ended June 30, 2008 to $498,450 for the six
months period ended June 30, 2009. The SG&A expenses also included investor
relationship expenses which increased $37,100 or 53% from $69,700 for the six
months period ended June 30, 2008 to $106,800 for the six months period ended
June 30, 2009.

The SG&A expenses was 28% of the sales for the six months period ended June 30,
2009 while it was 30% for the six months period ended June 30, 2008.

Depreciation Expense

Depreciation expense increased to $46,011 for the three months period ended June
30, 2009 from $40,585 for the three months period ended June 30, 2008. It
increased $5,426 or 13%. The increases were mainly due to the purchase of plant
and machinery. The depreciation expense of Sancon SH increased $2,635 or 15%
from $18,043 for the three months period ended June 30, 2008 to $20,678 for the
three months period ended June 30, 2009. The depreciation expense of Sancon AU
increased from $22,542 to $25,333 for the three months period ended June 30,
2008 and 2009. It increased $2,791 or 12%.

For the three months period ended June 30, 2008 and 2009, depreciation expense
was 2% of the sales.

Depreciation expense increased to $90,310 for the six months period ended June
30, 2009 from $78,206 for the six months period ended June 30, 2008. It
increased $12,104 or 15%. The depreciation expense of Sancon SH increased $8,818
or 26% from $33,639 for the six months period ended June 30, 2008 to $42,457 for
the six months period ended June 30, 2009. The depreciation expense of Sancon AU
increased from $44,567 to $47,853 for the six months period ended June 30, 2008
and 2009. It increased $3,286 or 7%.

For the six months period ended June 30, 2008 and 2009, depreciation expense was
2% of the sales.

Other Income (Expense)

For the three months period ended June 30, 2009, the Company booked other income
of $11,105 compared to other expense of $127,165 for the three months period
ended June 30, 2008. The increase in other income was $138,270 or 109%.

For the three months period ended June 30, 2009, other income was 0.4% of the
sales whie other expense was 5% for the three months period ended June 30, 2008.

For the six months period ended June 30, 2009, the Company booked other income
of $39,064 compared to $25,661 for the six months period ended June 30, 2008.
The increase in other income is $13,403 or 52%.

For the six months period ended June 30, 2009, other income was 0.7% of the
sales whie it was 0.5% for the six months period ended June 30, 2008.

Noncontrolling interest

On August 15, 2007, the Company completed the acquisition of 70% of the equity
interest in Sancon Resources Recovery (Shanghai) Co., Ltd by exercising its
option to convert $200,000 of convertible promissory note. Noncontrolling
interest was $68,739 for the three months period ended June 30, 2008 while it
was $7,945 for the three months period ended June 30, 2009. For the three months
period ended June 30, 2008 and 2009, noncontrolling interest was 3% and 0.3% of
the sales respectively.

Noncontrolling interest was $151,990 for the six months period ended June 30,
2008 while it was $14,849 for the six months period ended June 30, 2009. For the
six months period ended June 30, 2008 and 2009, noncontrolling interest was 3%
and 0.3% of the sales respectively.


                                       20
<PAGE>

Discontinued Operation

On March 31, 2009, the company sold 100% equity interest of Guang Cheng Int'l
Trading Ltd. ("Guang Cheng") for $1,290 plus the assumption of certain
liabilities.

There was no discontinued operation for the three months period ended June 30,
2009. During the same period in 2008, Loss on discontinued operation was $193.

Loss on discontinued operation was $1,884 for the six months period ended June
30, 2009 while it was $36,401 for the six months period ended June 30, 2009.

Income Tax

The income tax decreased to $19,247 for the three months period ended June 30,
2009 from $75,508 for the three months period ended June 30, 2008, a decrease of
$56,261 or 75%. That is because the profit of Sancon SH decreased dramaticly.
For the three months period ended June, 2008 and 2009, income tax was 1% and 3%
of the sales respectively.

The income tax decreased to $36,012 for the six months period ended June 30,
2009 from $168,532 for the six months period ended June 30, 2008, a decrease of
$132,520 or 79%. For the six months period ended June, 2008 and 2009, income tax
was 3% and 0.7% of the sales respectively.

Net loss/income

Net income for the three months period ended June 30, 2009 was $534,725,
compared to $218,459 for the three months period ended June 30, 2008, an
increase of $316,266 or 145%. The increase is mainly due to the significant
increase of net income in CR of $378,652 or 240% and head office of $190,001 or
81% although net income of Sancon AU decreased $73,715 or 75% and Sancon SH
decreased $178,866. Net profit margin for the three months period ended June 30,
2009 was 19% while it was 9% for the same period in 2008.

Net income for the six months period ended June 30, 2009 was $1,107,442,
compared to $991,014 for the six months period ended June 30, 2008, an increase
of $116,428 or 12%. The increase is mainly due to the significant increase of
net income in CR of $547,880 or 93% although net income of Sancon AU decreased
$102,332 or 69% and Sancon SH decreased $357,009 or 91%. Net profit margin for
the six months period ended June 30, 2009 was 21% while it was 20% for the same
period in 2008.

Liquidity and Capital Resources

As shown in the accompanying financial statements, the Company has accumulated
profit of $2,475,397 as of June 30, 2009 compared to $1,367,955 as of December
31, 2008. In addition, we have positive working capital $2,304,173 as of June
30, 2009 and it was $1,160,747 as of December 31, 2008. It increased $1,143,426.
That is mainly due to the increase of trade receivables. It increased to
$880,858 from $289,240.

Operating Activities

The net cash provided by operating activities for the six months period ended
June 30, 2009 amounted to $852,143 compared to $1,178,710 for the six months
period ended June 30, 2008, and decrease of $326,567 or 28%. The decrease mainly
included trade receivables of $931,923 and noncontrolling interest of $137,141.
These decreases were offset by other current liabilities of $239,123 and trade
payable of $311,793. The payment terms of our accounts receivable is about one
month and will not be more than two months.

Investing Activities

Net cash used in investing activities amounted to $249,571 for the six months
period ended June 30, 2009 compared to $140,835 for the six months period ended
June 30, 2008, an increase of $108,736 or 77%. It's mainly due to the increase
on purchase of property and equipment and long term investment. For the six
months period ended June 30, 2008, the cash used in purchase of property and
equipment was $140,873, however, this number increased to $207,475 for the same
period in 2009. During the six months period ended June 30, 2009, the Company
invested $43,950 to acquire 20% equity of Sheng Rong.

Financing Activities

Net cash used in financing activities amounted to $87,337 for the six months
period ended June 30, 2009. For the six months period ended June 30, 2008, net
cash provided by financing activities was $129,443, a decrease of $216,780 or
167%. The decrease mainly included shareholder's loan of $217,624.


                                       21
<PAGE>

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.

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

                                       22
<PAGE>

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.

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, 2009 and 2008, 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
anticipaded cash flows discounted at a rate commensurate with the risk involved.
Significant estimates are utilized to calculate expected future cash flows
utilized in impairment analyses. We also utilize judgment to determine other
factors within fair value analyses, including the applicable discount rate.

Item 2(b).  Off-Balance Sheet Arrangements

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

ITEM 3.  CONTROLS AND PROCEDURES

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


                                       23
<PAGE>


Management is responsible for establishing and maintaining adequate internal
control over financial reporting of the Company. Internal control over financial
reporting is a process designed by, or under the supervision of, our chief
executive and chief financial officers and effected by our board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles.

Management, with the participation of our principal executive officer and
principal financial officer, has evaluated the effectiveness of our internal
control over the six months period ended June 30, 2009, based on criteria
established under the COSO framework, an integrated framework for evaluation of
internal controls issued to identify the risks and control objectives related to
the evaluation of the control environment by the Committee of Sponsoring
Organizations of the Treadway Commission.

Based on our evaluation described above, management has concluded that our
internal control over financial reporting was not effective as of June 30, 2009.
We have limited resources and we rely heavily on direct management oversight of
transactions, along with the use of legal and accounting professionals. As we
grow we will hire skilled professionals that will enable us to implement
adequate segregation of duties within the internal control framework.

In September 2008, the Company appointed an Accounting Manager experienced in US
GAAP to prepare financial statement and control our accounting and financial
reporting process. Furthermore, our management implemented additional review
procedures designed to ensure that the disclosure provided by the Company meets
the current requirements of the applicable filing made under the Exchange Act
and methodology to review the statements.

During the six months ended June 30, 2009, 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.

None

Item 2.  Changes in Securities and Use of Proceeds

None

Item 3.  Defaults Upon Senior Securities.

None.

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

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

Item 5.  Other Information.

None.

                                       24
<PAGE>

Item 6.  Exhibits

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

<TABLE>
<CAPTION>
<S>     <C>

  Exhibit                                                      Description of Document
  Number     Note

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.


                                       25
<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, 2009
                                                          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, 2009
                                                         By: /s/ David Chen
                                                             --------------
                                                                 David Chen
                                                                   Chairman

Date:  August 14, 2009
                                                         By:  /s/ Jimmy Yiu
                                                              -------------
                                                                  Jimmy Yiu
                                                       Independent Director

Date:  August 14, 2009
                                                       By:  /s/ Cong Yuanli
                                                            --------------
                                                                Cong Yuanli
                                                       Independent Director

Date:   August 14, 2009
                                                       By:  /s/ Jack Chen
                                                            -------------
                                                               Jack  Chen
                                                                 Director



                                       26