<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, 2008
                                         -------------

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
      For the transition period from ___ to _______

              Commission file number      000-50760
                                          ---------


                         Sancon Resources Recovery, Inc.
        (Exact name of small business issuer as specified in its charter)


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


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

                                (+61) 3 97922555
                           (Issuer's telephone number)


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

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

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

Common Stock: par value of $0.001; 21,714,996 shares issued and outstanding on
June 30, 2008.

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


<page>


                        Sancon Resources Recovery, Inc.

                                    FORM 10-Q

                                      INDEX

                                                                            PAGE

           Important Notice...................................................2
2
PART I.    FINANCIAL INFORMATION..............................................3

Item 1.    Financial Statements  (Unaudited)..................................3

Item 2.    Management's Discussion and Analysis or Plan of Operation..........10

Item 3.    Controls and Procedures............................................16

PART II.   OTHER INFORMATION..................................................17

Item 1.    Legal Proceedings..................................................17

Item 2.    Changes in Securities and Use of  Proceeds.........................17

Item 3.    Default Upon Senior Securities.....................................17

Item 4.    Submission of Matters to a Vote of Security Holders................17

Item 5.    Other Information..................................................17

Item 6.    Exhibits...........................................................18

           Signatures.........................................................19


<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.




<page>

PART I.   FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

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

                                           SANCON RESOURCES RECOVERY, INC.
                                             CONSOLIDATED BALANCE SHEETS

                                                                                       June 30, 2008   December 31, 2007
                                                                                        (UNAUDITED)       (AUDITED)
                                                                                        -----------      -----------
                                                        ASSETS
Current assets
     Cash and cash equivalents                                                          $ 1,448,387      $   250,470
     Trade receivables                                                                      287,029          628,616
     Advance to suppliers                                                                     2,693               --
     Inventory                                                                               35,584            3,763
     Prepaid expenses                                                                       317,334           81,467
     Due from related parties                                                               127,096           73,285
                                                                                        -----------      -----------
        TOTAL CURRENT ASSETS                                                              2,218,123        1,037,601

     Property, plant & equipment, net                                                       603,358          540,691
     Security deposit                                                                        10,566            9,644
                                                                                        -----------      -----------
        TOTAL ASSETS                                                                    $ 2,832,047      $ 1,587,936
                                                                                        ===========      ===========

                                    LIABILITIES & STOCKHOLDERS' EQUITY/ (DEFICIT)
LIABILITIES
     Current liabilities
        Trade payables                                                                  $   228,704      $   402,961
        Capital lease -current                                                               11,631           10,206
        Accrued expenses                                                                    116,464          144,309
        Shares to be issued                                                                  52,500          350,000
        Due to related parties                                                              382,906          327,122
        Tax payables                                                                        295,014          187,019
        Other payables                                                                       83,038          105,573
                                                                                        -----------      -----------
          TOTAL CURRENT LIABILITY                                                         1,170,257        1,527,190
     Long term liability
         Capital lease                                                                       47,129           48,119
                                                                                        -----------      -----------
              TOTAL LIABILITY                                                             1,217,386        1,575,309
                                                                                        -----------      -----------

     Minority Interest                                                                      305,210          153,220

STOCKHOLDERS' EQUITY/(DEFICIT)

     Share Capital Authorized: 500,000,000 common shares, par
     value $0.001 per share Issued and Outstanding: 21,714,996
     shares and 20,414,996 respectively                                                      21,715           20,415
     Additional paid-in capital                                                             509,199          115,499
     Deferred  compensation                                                                 (22,500)              --
     Other comprehensive income                                                              56,468            8,051
     Accumulated profit/(deficit)                                                           744,569         (284,558)
                                                                                        -----------      -----------
        TOTAL STOCKHOLDERS' EQUITY/ (DEFICIT)                                             1,309,451         (140,593)
                                                                                        -----------      -----------
        TOTAL LIABILITIES & STOCKHOLDERS' EQUITY/ (DEFICIT)                             $ 2,832,047      $ 1,587,936
                                                                                        ===========      ===========

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



                                                          3

<page>



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

                                                               THREE MONTHS ENDED JUNE 30,        SIX MONTHS ENDED JUNE 30,
                                                                   2008            2007             2008            2007
                                                             ------------      ------------      ------------      ------------

Net Sales                                                    $  2,570,531      $    838,658      $  5,519,527      $  1,531,706
     Cost of sales                                              1,181,097           687,689         2,616,983         1,220,064
                                                             ------------      ------------      ------------      ------------
Gross profit                                                    1,389,434           150,969         2,902,544           311,642

Operating Expenses
     Depreciation                                                  40,585            21,343            78,206            35,659
     Selling, General and Administrative                          809,671           201,550         1,490,983           516,181
                                                             ------------      ------------      ------------      ------------
     Total operating expenses                                     850,256           222,893         1,569,189           551,840

                                                             ------------      ------------      ------------      ------------
     Operating Income (Loss)                                      539,178           (71,924)        1,333,355          (240,198)

Other Income (Expense)
     Other Income (Expenses)                                     (151,247)              318              (913)           11,069
     Interest Income                                               12,925             1,018            15,379             1,910
                                                             ------------      ------------      ------------      ------------
     Total Other Income (expense)                                (138,322)            1,336            14,466            12,979
                                                             ------------      ------------      ------------      ------------
Income/(loss) from Continued Operations before Minority
Interest and Income Taxes                                         400,856           (70,588)        1,347,821          (227,219)

Minority Interest                                                 (68,739)               --          (151,990)              --
                                                             ------------      ------------      ------------      ------------
Income/(loss) from Continued Operations before Income
Taxes                                                             332,117           (70,588)        1,195,831          (227,219)

     Income Taxes                                                  75,545             2,022           168,569             3,173
                                                             ------------      ------------      ------------      ------------
Net Income (Loss) from Continued Operations                  $    256,572      $    (72,610)     $  1,027,262      $   (230,392)

Discontinued Operation
     Gain/ (loss) from Discontinued Operations                         --            11,456            (1,955)           11,970
     Gain on Disposal of Discontinued Operations                       --                --             3,820                --
                                                             ------------      ------------      ------------      ------------
       Total Gain on Disposal of Discontinued Operations               --            11,456             1,865            11,970
                                                             ------------      ------------      ------------      ------------
Net income (loss)                                                 256,572           (61,154)        1,029,127          (218,422)

Other comprehensive income/(loss)                                  20,111            (3,670)           42,434            (4,462)
                                                             ------------      ------------      ------------      ------------
Net Comprehensive income/(loss)                              $    276,683      $    (64,824)     $  1,071,561      $   (222,884)
                                                             ============      ============      ============      ============

Earnings per share
     Basic & diluted earnings/(loss) per share               $       0.01      $      (0.00)     $       0.05      $      (0.01)
     Basic & diluted weighted average shares outstanding       21,714,996        20,414,996        21,219,146        20,383,403
                                                             ============      ============      ============      ============

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



<page>


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


                                                               FOR THE SIX MONTHS PERIODS ENDED
                                                                            JUNE 30,
                                                                     2008              2007
                                                                  -----------      -----------
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income (loss)                                                $ 1,029,127      $  (218,422)
 Adjustments to reconcile net income (loss) to net cash flows
 Provided by (used in) operating activities:
   Depreciation and amortization                                       78,206           35,659
   Shares issued in lieu of compensation                               22,500           88,500
   Minority interest                                                  151,990               --
   Changes in current assets and liabilities:
      Decrease (increase) in trade receivables                        341,595          323,230
      Decrease (increase) in inventory                                (31,821)        (137,492)
      Decrease (increase) in advance to suppliers                      (2,693)        (247,678)
      Decrease (increase) in other current assets                    (236,789)          49,407
      Increase (decrease) in shares to be issued                       52,500               --
      Increase (decrease) in tax payable                              107,995            1,046
      Increase (decrease) in trade payable                           (174,257)         141,921
      Increase (decrease) in other current liabilities               (150,162)         (65,769)
                                                                  -----------      -----------
   Net cash provided by (used in) continued operations              1,188,191          (29,598)
   Net cash provided by (used in) discontinued operations              (1,865)             --
                                                                  -----------      -----------
   Net cash flows provided by (used in) operating activities        1,186,326          (29,598)

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                                (140,873)         (25,674)
   Cash decreased due to investment in convertible notes                   --         (200,000)
                                                                  -----------      -----------
      Net cash flows used in investing activities                    (140,873)        (225,674)

CASH FLOWS FROM FINANCING ACTIVITIES
 Cash acquired due to subscription                                         --          240,000
 Loan from related parties                                            109,595          (59,282)
 Proceeds from (payment of) mortgage loan                                 435           34,675
                                                                  -----------      -----------
   Net cash flows (provided by) used in financing activities          110,030          215,393
                                                                  -----------      -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                42,434           (4,462)
                                                                  -----------      -----------

NET INCREASE (DECREASE )IN CASH & CASH EQUIVALENTS                  1,197,917          (44,341)

 Cash & Cash Equivalents at start of period                           250,470           63,600
                                                                  -----------      -----------
 Cash & Cash Equivalents at end of period                         $ 1,448,387      $    19,259
                                                                  ===========      ===========
Interest paid                                                     $    12,366      $     1,865
Income taxes paid                                                 $        --      $        --

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

</TABLE>


<page>


                         Sancon Resources Recovery, Inc.
            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       For the period ended June 30, 2008
                                   (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 ISO 14001 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. Crossover did not have any
operations or assets/liability prior to 2008. Therefore, no proforma information
has been presented.

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,
due to its continuing losses, resulting in gain of $1,865 on disposal of the
entity.

As of June 30, 2008, 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
Guang Cheng Int'l Trading Ltd. ("Guang Cheng" hereinafter)                            Hong Kong         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>

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

All references to common stock, share and per share amounts have been
retroactively restated to reflect the exchange of 100 shares of SRPL common
stock for 14,897,215 shares of the Sancon's common stock outstanding immediately
prior to the merger as if the exchange had taken place as of the beginning of
the earliest period presented. Effective August 4, 2006, the listed company, MKA
Capital Inc., changed its name to Sancon Resources Recovery, Inc.



                                       4

<page>

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, 2007,
included in our Annual Report on Form 10KSB, filed with the Securities and
Exchange Commission.

(b) Principles of Consolidation

The accompanying unaudited consolidated financial statements include all of the
accounts of the Company and all of the subsidiaries under its control, which
include Sancon Recycling Pty Ltd., Guang Cheng, Sancon SH (70%) and CS as of and
for the period ended June 30, 2008. While the historical results for the six
months period ended June 30, 2007 only include the Company, Sancon Recycling Pty
Ltd., DFSL and Guang Cheng. All material inter-company balances and transactions
have been eliminated in consolidation.

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.

INCOME TAXES

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

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

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

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


                                       5

<page>

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.

RECLASSIFICATIONS

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

STOCK BASED PAYMENTS

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

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

As of June 30, 2008 and 2007, the Company did not issue or make provision
through the issuance of stock options to employees and directors.

RECENT PRONOUNCEMENTS

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

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

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

In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to
specific requirements outlined in the new statement. Therefore, calendar-year

                                       6

<page>

companies may be able to adopt FAS 159 for their first quarter 2007 financial
statements. The new statement allows entities to choose, at specified election
dates, to measure eligible financial assets and liabilities at fair value that
are not otherwise required to be measured at fair value. If a company elects the
fair value option for an eligible item, changes in that item's fair value in
subsequent reporting periods must be recognized in current earnings. FAS 159
also establishes presentation and disclosure requirements designed to draw
comparison between entities that elect different measurement attributes for
similar assets and liabilities. Management is currently evaluating the effect of
this pronouncement on the financial statements.

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's fiscal year
beginning October 1, 2009. Management is currently evaluating the effect of this
pronouncement on financial statements.

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) will apply prospectively to business combinations for which the
acquisition date is on or after Company's fiscal year beginning October 1, 2009.
While the Company has not yet evaluated this statement for the impact, if any,
that SFAS No. 141(R) will have on its consolidated financial statements, the
Company will be required to expense costs related to any acquisitions after
September 30, 2009.

In March 19, 2008, FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. Currently the Company does not carry any derivative instruments and
the adoption of this statement may not have any effect on the financial
statements.

In May of 2008, FSAB issued SFASB No.162, The Hierarchy of Generally Accepted
Accounting Principles. The pronouncement mandates the GAAP hierarchy reside in
the accounting literature as opposed to the audit literature. This has the
practical impact of elevating FASB Statements of Financial Accounting Concepts
in the GAAP hierarchy. This pronouncement will become effective 60 days
following SEC approval. The company does not believe this pronouncement will
impact its financial statements.

In May of 2008, FASB issued SFASB No. 163, Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60. The scope of the
statement is limited to financial guarantee insurance (and reinsurance)
contracts. The pronouncement is effective for fiscal years beginning after
December 31, 2008. The company does not believe this pronouncement will impact
its 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.




                                       7

<page>

(b). Commitments

Office space:
The Company leases office space in Australia, Hong Kong and Shanghai. The lease
for Australia expires in October 2011 while leases for Shanghai expire on
various dates from January 2008 to September 2010. Based upon existing leases,
without renewals, the minimum lease payments up to expiry are as follows:


          2008                                         $     124,500
          2009                                               201,000
          2010                                               225,000
          2011                                                86,000
                                                       -------------
          Total                                        $     636,500

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 $374
each and the final installment of $6,349. The balance as of June 30, 2008
amounted to $13,681 with $3,520 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 $516 each and the
final installment of $9,444. The balance as of June 30, 2008 amounted to $24,781
with $4,287 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 (60)
months. The payment is to be made in 59 equal monthly installments of $452 each
and the final installment of $7,425. The balance as of June 30, 2008 amounted to
$20,298 with $3,824 as current liability.

The Company pays approximately $1,341 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

          2009                                                18,996
          2010                                                23,104
          2011                                                24,672
                                                       -------------
                                                       $      66,772
          Less: Amount representing interest                  (8,012)
          Present value of minimum lease payments              58,760
          Less: Current portion                              (11,631)
                                                       -------------
                                                       $      47,129
                                                       =============


Note 5. Business Combination and Corporate Restructure

On November 17, 2006, the company completed the acquisition of 100% equity
interest in Crossover Solutions Inc. from Fintel Group for one dollar.

No proforma financial information has been presented as the amounts involved
were immaterial.

Note 6. Property, plant & equipment

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

<TABLE>
<CAPTION>
<S>     <C>
                             Plant and Machinery  Vehicles   Office Equipment   Total
      At June 30, 2008

     Cost                         $ 414,565      $ 377,624      $  38,694      $ 830,883
     Accumulated Depreciation      (157,649)       (56,564)       (13,312)      (227,525)
     Net Carrying Value           $ 256,916      $ 321,060      $  25,382      $ 603,358

</TABLE>

Included in property and equipment is approximately $77,645 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 $27,296.


                                       8

<page>

Depreciation and amortization expense for the six months period ended June 30,
2008 and 2007 was $78,206 and $35,659, respectively.

Note 7.  Due from/to related parties

Current

Included in the amount due from related parties, there were loans due from
Mr.Cheng Guangliang, an officer of a subsidiary of the Company, amounting of
$113,377 and due from Mr.Jack Chen, current CEO, amounting of $13,719.

Included in the amount due to related parties, there were loans due to Mr.David
Chen, former CEO and major shareholder, amounting of $10,158 and loans due to
Mr.Jimmy Yiu, director of the Company, amounting of $5,021 and loans due to Mr.
Jack Chen of $367,727 without interest, unsecured and due on demand.

Guang Cheng International Trading Ltd sold $146,010 worth of goods to Shenzhen
Sanjiang Plastic Factory, owned by the father of the sole director of Guang
Cheng International Trading Ltd during the period ended June 30, 2008.

Note 8.  Stockholders equity

On April 15, 2007, the Registrant entered into a Share Purchase Agreement to
issue and sell 1,000,000 shares of its common stock in an offshore transaction
under Regulation S to Fengteng Investment Consulting Management (Shanghai) Co.,
Limited at US$0.35 per share for gross proceeds of US$350,000. The shares are
subject to 144 restriction and proceeds will be used for working capital needs.

On March 10, 2008, the Company issued 300,000 shares to Lyons Capital LLC of
Restricted, RULE 144 Stock, for services rendered or to be rendered in the
future, recorded at the fair market value of $45,000 to be amortized over a
period of twelve months. The Company recorded $22,500 in consulting expense for
the six month ended June 30, 2008.

Note 9. 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, 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 for the
six months periods ended June 30, 2008 and 2007.

For the six month period ended June 30, 2008

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

                            Material Recycling    Material Trade    Waste Service       Un-allocated           Total

     Sales, net                  1,341,943            527,141          3,650,443                 --          5,519,527
     Income (loss) from oprs.      136,041             11,079          1,251,157            (64,922)         1,333,355
     Net income (loss)             146,833               (153)         1,094,702           (212,255)         1,029,127
     Total assets                  772,772             20,032          1,901,864            137,379          2,832,047
     Capital expenditure           (39,990)                --           (100,883)                --           (140,873)
     Depreciation                   44,567                 --             33,639                 --             78,206
</TABLE>



During the six months periods ended June 30, 2007, the Company operated under
two segments ofmaterial recycling, and material trade.

For the six month period ended June 30, 2007

<TABLE>
<CAPTION>
<S>     <C>
                            Material Recycling    Material Trade     Un-allocated           Total

     Sales, net                    576,572            955,134                --          1,531,706
     Income (loss) from oprs.      (56,590)            15,930          (183,146)          (223,806)
     Net income (loss)             (43,996)            13,142          (187,568)          (218,422)
     Total assets                  452,104            451,662           170,442          1,074,208
     Capital expenditure            25,674                 --                --             25,674
     Depreciation                   35,659                 --                --             35,659
</TABLE>



                                       9

<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 nine months
                  ended June 30, 2008 compared to the same period in 2007. A
                  brief description is provided of transactions and events,
                  including any related party transactions that affect the
                  comparability of the results being analyzed.

         o        Liquidity and capital resources. This section provides an
                  analysis of our financial condition and cash flows for the six
                  months ended June 30, 2008 and 2007.

         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

                                       10

<page>

stage of development, such accounting treatment can have a material impact on
the results for any period. Due to the foregoing factors, among others, it is
likely that our operating results will fall below our expectations or those of
investors in some future period.

Dependence Upon Management

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

Limitation of Liability and Indemnification of Officers and Directors

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

Management of Potential Growth

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

Limited Market Due To Penny Stock

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

                                       11

<page>

investors in the Company`s common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be "penny
stock". Rule 15g-9 of the Commission requires broker-dealers in penny stocks to
approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for the Company's stockholders to
resell their shares to third parties or to otherwise dispose of them.

Overview of the Company and its Operations

Sancon Resources Recovery, Inc. is an environmental service and waste management
company that operates recycling facilities in China and Australia. Sancon
specializes in the collection and recovery of industrial and commercial solid
wastes such as plastic, paper, cardboard, and glass. The recycled materials are
re-used by Sancon's manufacturing customers in China to make a wide variety of
new products including outdoor furniture, construction materials, building
materials, road surface, and various new products. Sancon's China operation is
licensed by the Chinese government for waste management services, and is
certified with ISO 9001 and ISO14001 standards. Sancon currently ships more than
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 sourced from suppliers such as
Hella, Toyota, Full Views, Wastech Holdings, Supagas, and Priority etc, 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 oil price soars, 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, Fujian and Hong Kong.

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.
In addition, policies will be drafted and mechanism will be proposed to promote
the development of the recycling economy. Policies will give priority to the
recycling and reuse of scrap home appliance, electronic products, waste tires,
waste paper and waste packaging, as well as the re-production of machinery and
electric products, recycled aluminum, and transformation of wastes into
resources.

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.



                                       12

<page>

SANCON'S VISIONS AND GOALS

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

SERVICES OFFERED TO OUR CLIENTS

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

COMPETITION

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

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

1)       Sancon offers large selection of recycled plastic 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)       Hong Kong trading operation will source recycled materials globally to
         meet the increasing demand from our customers in China.

4)       Expand continuously of our operations in China to offer our services to
         more industrial and commercial clients.

5)       Industry know-how and management team's ability to ensure all operating
         and environmental standards are achieved.

EMPLOYEES

As of June 30, 2008, the Company employed 15 people in both Australia and Hong
Kong subsidiaries. Our joint venture in China employed 22 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 15, 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 15, 2009. In any case, such cocts will likely affect adversely the
Company's business, financial condition and results of operations.

Results of Operations - Comparison between the three and six months ended June
30, 2008 and same periods of 2007.


                                       13

<page>

Sales

Sales are generated by service charges and the sale of recyclable materials. The
sales in Q2 2008 were $2,570,531, representing a 207% increase compared to the
sales of $838,658 in same period of 2007. The sharp increases were mainly due to
the significant sales amount contributed from Sancon SH and CS, which started
their operation in Q3 2007 and Q1 2008. 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 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. Crossover did not have any
operations or assets/liability prior to 2008. The both companies are engaged in
recycling material trading business. And sales for six months ended on June 30
for the year 2008 and 2007 were $5,519,527 and $1,531,706 respectively.

Cost of Sales

The cost of sales is the direct cost for sale of the recycling materials. In Q2
2008, the cost of the recyclable materials was $1,181,097. It is 72% increase as
compared to the cost of sales of $687,689 in Q2 2007. And cost of sales for six
months ended on June 30 for the year 2008 and 2007 were $2,616,983 and
$1,220,064 respectively.

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

SG&A expenses increased by $608,121 or 302% to $809,671 in Q2 2008 compared to
the same period of 2007. The increase is mainly due to the expanded operation
during the three months ended June 30, 2008. SG&A expenses increased by $974,802
to $1,490,983 during six months period ended on June 30, 2008 compared with the
same period of year 2007.

Depreciation Expense

Depreciation expense increased to $40,585 in Q2 2008 from $21,343 in same period
of 2007. Depreciation expenses increased from $35,659 to $78,206 during six
months period ended on June 30, 2008 compared with same period in year 2007. The
increases were due to the purchase of plant and machinery in 2008 to expand its
processing capacity.

Liquidity and Capital Resources

As shown in the accompanying financial statements, the Company has accumulated
profit of $744,569 as of June 30, 2008. In addition, we have positive working
capital $1,047,866.

Operating Activities

The net cash provided by operating activities from the six months period ended
on June 30, 2008 amounted to $1,186,326 compared to $29,598 used in the same
period of year 2007.

Investing Activities

Net cash used in investing activities amounted to $140,873 during the six months
period ended on June 30, 2008 compared to $225,674 during the same period of
year 2007. The net cash outflows primarily resulted from the purchase of
property and equipment.

Financing Activities

Net cash provided by financing activities amounted to $110,030 during the three
months period ended on June 30, 2008 compared to net cash provided by financing
activities of $215,393 during the same period in year 2007.

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.


                                       14

<page>

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

Critical Accounting Policies and Estimates

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

ALLOWANCE FOR DOUBTFUL ACCOUNTS

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

INCOME TAXES

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

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

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

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

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

                                       15

<page>

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, 2008 and 2007, 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 effective such that the
material information required to be included in our Securities and Exchange
Commission ("SEC") reports is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms relating to us,
including our consolidating subsidiaries, and was made known to them by others
within those entities, particularly during the period when this report was being
prepared.

During the three months ended June 30, 2008, there were no changes in our
internal accounting controls or in other factors that materially affected our
internal controls over financial reporting.


                                       16

<page>

PART II.  OTHER INFORMATION

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

None

Item 2   Changes in Securities and Use of Proceeds

None

Item 3.  Defaults Upon Senior Securities.

None.

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

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

Item 5.  Other Information.

None.


                                       17

<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.


                                       18

<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, 2008
                                                             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, 2008
                                                            By: /s/ David Chen
                                                                --------------
                                                                    David Chen
                                                                      Chairman

Date: August 14, 2008
                                                            By:  /s/ Jimmy Yiu
                                                                --------------
                                                                     Jimmy Yiu
                                                                      Director

Date: August 14, 2008
                                                          By:  /s/ Cong Yuanli
                                                               ---------------
                                                                   Cong Yuanli
                                                          Independent Director

Date: August 14, 2008
                                                            By:  /s/ Jack Chen
                                                                 -------------
                                                                    Jack. Chen
                                                                      Director


                                       19



<page>

EXHIBIT 24.1



                                POWER OF ATTORNEY



KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jack Chen and Klaus Shen, jointly and severally,
as his attorneys-in-fact, each with the power of substitution, for him in any
and all capacities, to sign any amendments to this Report on Form 10-Q and to
file the same, with exhibits thereto and other documents in connection therewith
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or substitutes may do or
cause to be done by virtue hereof.


Pursuant to the requirements of the Securities Act of 1934, this Form 10-Q has
been signed by the following persons in the capacities and on the dates
indicated:


      Signature                            Title                         Date

    /s/ Jack Chen       Chief Executive Officer and Director     August 14, 2008
-----------------
      Jack Chen

   /s/ Klaus Shen              Chief Financial Officer           August 14, 2008
-----------------
     Klaus Shen