UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549








FORM
      10-QSB








(Mark
      One)





¢
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934For
                the quarterly period endedSeptember
                30, 2007o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor
                the transition period from ___ to _______Commission
                file number000-50760







Sancon
      Resources Recovery, Inc.


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








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








1507
      Greenland Commercial Centre


1258
      Yuyuan Road, Shanghai, China 200050


(Address
      of principal executive offices)





(+61)
      3
      97922555


(Issuer's
      telephone number)








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





APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS


DURING
      THE PRECEDING FIVE YEARS





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





APPLICABLE
      ONLY TO CORPORATE ISSUERS





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





Common
      Stock: par value of $0.001; 20,414,996 shares issued and outstanding on
      September 30, 2007.





Transitional
      Small Business Disclosure Format (Check one): Yes  ̈ No x










Sancon
      Resources Recovery, Inc.


FORM
      10-QSB




INDEX





PAGEImportant
                NoticePART
                I.
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                Statements (Unaudited)
            2Item
                2.
            Management's
                Discussion and Analysis or Plan of Operation
            11Item
                3.
            Controls
                and Procedures
            17PART
                II.
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            17Item
                2.
            Changes
                in Securities and Use of Proceeds
            17Item
                3.
            Default
                Upon Senior Securities
            17Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            17Item
                5.
            Other
                Information
            17Item
                6.
            Exhibits
            18Signatures
            19





-
          1
          -


PART
      I.
      FINANCIAL INFORMATION





ITEM
      1.
      FINANCIAL STATEMENTS (UNAUDITED)





**SANCON
                RESOURCES RECOVERY, INC.****CONSOLIDATED
                BALANCE SHEET****(Unaudited)**Assets
            
            *September
                30, 2007*Current
              assetsCash
                and cash equivalents
            
            
            
            
            $
            454,428Trade
                receivables
            
            
            
            
            
            293,481Advance
                to suppliers
            
            
            
            
            
            734Inventory
            
            
            
            
            
            23,908Prepaid
                expenses
            
            
            
            
            
            73,458Due
                from related parties
            
            
            
            
            
            73,275*Total
                current assets*
            
            
            
            
            
            919,284Property,
                plant & equipment, net
            
            
            
            
            
            429,164Security
                deposit
            
            
            
            
            
            9,772*Total
                Assets*
            
            
            
            
            $
            1,358,220Liabilities
                & Stockholders' DeficitCurrent
                liabilitiesTrade
                payables
            
            
            
            
            $
            392,368Capital
                lease - current
            
            
            
            
            
            8,364Accrued
                expenses
            
            
            
            
            
            26,502Advances
            
            
            
            
            
            16,650Tax
                payable
            
            
            
            
            
            120,725Other
                payables
            
            
            
            
            
            159,201Shares
                to be issued
            
            
            
            
            
            240,000*Total
                current liability*
            
            
            
            
            
            963,810Long
                term liabilityDue
                to related party
            
            
            
            
            
            327,702Capital
                lease
            
            
            
            
            
            53,491*Total
                liability*
            
            
            
            
            
            1,345,003Minority
                Interest
            
            
            
            
            
            131,136*Stockholders'
                Deficit*Share
                CapitalAuthorized:
                500,000,000 common shares, par value $0.001 per shareIssued
                and
                Outstanding: 20,414,996 shares
            
            
            
            
            
            20,415Additional
                paid-in capital
            
            
            
            
            
            124,999Other
                comprehensive loss
            
            
            
            
            
            (4,363
            )Accumulated
                deficit
            
            
            
            
            
            (258,970
            )*Total
                stockholders' deficit*
            
            
            
            
            
            (117,919
            )*Total
                liabilities & stockholders' deficit*
            
            
            
            
            $
            1,358,220The
                accompanying notes form an integral part of these unaudited financial
                statements.





-
          2
          -




**SANCON
                RESOURCES RECOVERY, INC.****CONSOLIDATED
                STATEMENTS OF OPERATIONS****(Unaudited)***Three
                month periods ended September 30,*
            
            *Nine
                month periods ended*
              *September
                30,**2007*
            
            *2006*
            
            *2007*
            
            *2006*Net
                Sales
            
            $
            1,270,261
            
            $
            1,589,117
            
            $
            4,168,090
            
            $
            1,875,230Cost
                of sales
            
            
            855,714
            
            
            1,377,465
            
            
            3,387,962
            
            
            1,538,112Gross
                profit
            
            
            414,547
            
            
            211,652
            
            
            780,128
            
            
            337,118Operating
                ExpensesDepreciation
            
            
            10,616
            
            
            11,993
            
            
            46,275
            
            
            32,088Selling,
                General and Administrative
            
            
            290,589
            
            
            141,318
            
            
            844,316
            
            
            290,750Total
                operating expenses
            
            
            301,205
            
            
            153,311
            
            
            890,591
            
            
            322,838Operating
                income (loss)
            
            
            113,342
            
            
            58,341
            
            
            (110,463
            )
            
            14,280Other
                Income (Expense)Other
                income
            
            
            35,915
            
            
            3,808
            
            
            45,365
            
            
            4,453Interest
                income
            
            
            1,175
            
            
            -
            
            
            3,085
            
            
            1,406Total
                other income
            
            
            37,090
            
            
            3,808
            
            
            48,450
            
            
            5,859Income
                (loss) from continued operations before income taxes and discontinued
                operations
            
            
            150,432
            
            
            62,149
            
            
            (62,013
            )
            
            20,139Discontinued
                OperationGain
                on Disposal of Subsidiary
            
            
            -
            
            
            -
            
            
            -
            
            
            18,041Minority
                Interest
            
            
            (29,049
            )
            
            -
            
            
            (29,049
            )
            
            -Income
                (loss) before income taxes
            
            
            121,383
            
            
            62,149
            
            
            (91,062
            )
            
            38,180Income
                taxes
            
            
            45,217
            
            
            9,051
            
            
            51,193
            
            
            9,051Net
                income (loss)
            
            
            76,166
            
            
            53,098
            
            
            (142,255
            )
            
            29,129Other
                comprehensive income (loss)
            
            
            1,348
            
            
            -
            
            
            (3,115
            )
            
            -Net
                comprehensive income (loss)
            
            $
            77,514
            
            $
            53,098
            
            $
            (145,370
            )
            $
            29,129Earnings
                (loss) per share:Basic
                & diluted earnings (loss) per share
            
            $
            0.00
            
            $
            0.00
            
            $
            (0.01
            )
            $
            0.00Basic
                & diluted weighted average shares outstanding
            
            
            20,414,996
            
            
            19,914,348
            
            
            20,394,775
            
            
            17,139,304The
                accompanying notes form an integral part of these unaudited financial
                statements.




-
          3
          -




**SANCON
                RESOURCES RECOVERY, INC.****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****(Unaudited)***For
                the nine months periods ended**September
                30,**2007*
            
            *2006**Cash
                Flows from Operating Activities*Net
                income (loss)
            
            $
            (142,255
            )
            $
            29,129Adjustments
                to reconcile net income (loss) to net cash flowsprovided
                by (used in) operating activities:Depreciation
                and amortization
            
            
            58,459
            
            
            32,088Gain
                on disposal of investment/subsidiary
            
            
            -
            
            
            (18,041
            )Shares
                issued in lieu of compensation
            
            
            98,000
            
            
            -Minority
                interest
            
            
            29,049
            
            
            -Goodwill
            
            
            (38,203
            )
            
            -Changes
                in current assets and liabilities:Decrease
                (increase) in trade receivables
            
            
            235,108
            
            
            8,739Decrease
                (increase) in inventory
            
            
            (23,908
            )
            
            4,816Decrease
                (increase) in advance to suppliers
            
            
            18,201
            
            
            (205,424
            )Decrease
                (increase) in other current assets
            
            
            24,698
            
            
            (10,905
            )Increase
                (decrease) in tax payable
            
            
            50,483
            
            
            -Increase
                (decrease) in trade payable
            
            
            70,516
            
            
            15,617Increase
                (decrease) in other current liabilities
            
            
            12,015
            
            
            22,634Net
                cash flows provided by (used in) operating activities
            
            
            392,163
            
            
            (121,347
            )*Cash
                Flows from Investing Activities*Purchase
                of property and equipment
            
            
            (124,980
            )
            
            (179,178
            )Cash
                acquired due to acquisitions
            
            
            -
            
            
            71,564Cash
                decreased due to investment in convertible notes
            
            
            (200,000
            )
            
            -Cash
                decreased due to disposal of subsidiary
            
            
            -
            
            
            (67,807
            )Net
                cash flows used in investing activities
            
            
            (324,980
            )
            
            (175,421
            )*Cash
                Flows from Financing Activities*Cash
                acquired due to subscription
            
            
            240,000
            
            
            -Loan
                from related parties
            
            
            (224,262
            )
            
            374,532Paid-in
                capital from shareholder
            
            
            -
            
            
            -Proceeds
                from (payment of) mortgage loan
            
            
            56,181
            
            
            (2,475
            )Net
                cash flows provided by financing activities
            
            
            71,919
            
            
            372,057*Effect
                of exchange rate changes on cash*
            
            
            (3,115
            )
            
            (5,904
            )*Net
                Increase in Cash & Cash Equivalents*
            
            
            135,987
            
            
            69,385Cash
                & Cash Equivalents at start of period
            
            
            318,441
            
            
            67,583Cash
                & Cash Equivalents at end of period
            
            $
            454,428
            
            $
            136,968Supplemental
              disclosure:Interest
              paid
            
            $
            2,915
            
            $
            757Income
              tax paid
            
            $
            -
            
            $
            -Supplemental
                disclosure - Non cash investing & financing
                activity:During
                the nine month period ended September 30, 2007, the Company converted
                $200,000 notes receivable to equity interest in Sancon
                Shanghai.The
                accompanying notes form an integral part of these unaudited financial
                statements.





-
          4
          -


Sancon
      Resources Recovery, Inc.


CONDENSED
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      period ended September 30, 2007


(Unaudited)








Note
      1.
      Nature of Operations





Sancon
      Resources Recovery, Inc. ("Sancon", or "the Company", or "we", or "us") is
      registered in good standing under Chapter 78 of the Nevada Statutes, and its
      common stock is traded on the OTCBB under the symbol SRRY.OB. Sancon is an
      industrial recycling company with operations based in Melbourne Australia,
      Hong
      Kong (SAR) and Shanghai China. 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.





As
      of
      September 30, 2007, the Sancon group comprises of the following
      companies:





Registered
                Name
              (business
                is conducted under the registered names)
            Domicile
            Owner
            %
                held
            StatusDigital
                Financial Service Limited ("DFSL" hereinafter)
            Hong
                Kong
            Sancon
            100
            ActiveSancon
                Recycling Pty Ltd.
            Australia
            Sancon
            100
            ActiveGuang
                Cheng Int'l Trading Ltd. ("Guang Cheng" hereinafter)
            Hong
                Kong
            Sancon
            100
            ActiveSancon
                Resources Recovery (Shanghai) Co., Ltd. ("Sancon SH"
                hereinafter)
            Shanghai
            Sancon
            70
            Active





Note
      2.
      Basis of Presentation





(a)
            Interim
                Consolidated Financial Statements





The
      accompanying unaudited consolidated financial statements have been prepared
      in
      conformity with generally accepted accounting principles in the United States
      of
      America. However, certain information and footnote disclosures normally included
      in financial statements prepared in accordance with generally accepted
      accounting principles have been omitted or condensed, pursuant to the rules
      and
      regulations of the Securities and Exchange Commission ("SEC"). In the opinion
      of
      Sancon management, all adjustments of a normal recurring nature necessary for
      a
      fair presentation have been included. The results for periods are not
      necessarily indicative of results for the entire year. These financial
      statements and accompanying notes should be read in conjunction with our annual
      financial statements and the notes thereto for the year ended December 31,
      2006,
      included in our Annual Report on Form 10KSB, filed with the Securities and
      Exchange Commission.




(b)
            Principles
                of Consolidation




The
      accompanying unaudited consolidated financial statements include all of the
      accounts of the Company and all of the subsidiaries under its control, which
      include DFSL, Sancon Recycling Pty Ltd., Guang Cheng and Sancon SH (70%) as
      of
      and for the period ended September 30, 2007. While the historical results for
      the nine months period ended September 30, 2006 only include the Company, DFSL,
      Sancon Recycling Pty Ltd. and Guang Cheng. All material inter-company balances
      and transactions have been eliminated in consolidation.




(c)
            Going
                Concern




As
      shown
      in the accompanying consolidated financial statements, the Company incurred
      accumulated losses of $258,970 as of September 30, 2007 and net loss of $142,255
      for the nine months period ended September 30, 2007. These matters raise
      substantial doubt about the Company's ability to continue as a going
      concern.





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





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





● Look for
      growth opportunities through acquisitions & merger with profitable
      companies


● Raise
      capital through public offering


● Take
      measures to control cost and operating expenses





-
          5
          -


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.





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.





-
          6
          -


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
      September 30, 2007 and 2006, 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 157 "Fair Value Measurements". This Statement
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), and expands disclosures about
      fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. However, for some entities, the application of
      this
      Statement will change current practice. This Statement is effective for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and interim periods within those fiscal years. Management is currently
      evaluating the effect of this pronouncement on financial
      statements.





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





a.
            A
                brief description of the provisions of this Statement


b.
            The
                date that adoption is required


c.
            The
                date the employer plans to adopt the recognition provisions of this
                Statement, if earlier.





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





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





-
          7
          -


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





Note
      4.
      Concentrations and commitments





(a).
      Concentrations





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





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





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





(b).
      Commitments





Office
      space:


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





2007
            
            $
            26,0152008
            
            
            104,060Total
            
            $
            130,075





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 $345
      each
      and the final installment of $5,872. The balance as of September 30, 2007
      amounted to $14,636 with $2,273 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 $477 each and the
      final installment of $8,734. The balance as of September 30, 2007 amounted
      to
      $25,982 with $3,061 as current liability.





In
      September 2007, the company purchased a vehicle by mortgage loan from CBFC
      Limited ABN. The annual interest rate is 8.6% with payment term of sixty (48)
      months. The payment is to be made in 47 equal monthly installments of $418
      each
      and the final installment of $6,867. The balance as of September 30, 2007
      amounted to $21,510 with $3,030 as current liability.








The
      Company pays approximately $1,240 per month under these leases, the last of
      which expires in September 2011.





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





CapitalLeases2008
            
            $
            14,8802009
            
            
            14,8802010
            
            
            19,0272011
            
            
            23,238$
            72,025Less:
                Amount representing interest
            
            
            (10,170
            )Present
                value of minimum lease payments
            
            
            61,855Less:
                Current portion
            
            
            (8,364
            )$
            53,491





-
          8
          -


Note
      5.
      Business Combination and Corporate Restructure





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





On
      August
      15, 2007, the Company exercised its conversion right to convert its convertible
      note with face value of $200,000 into 70% equity interest of Sancon Resource
      Recovery (Shanghai) Co., Ltd., pursuant to the terms of Convertible Note issued
      on June 1, 2007.





Sancon
      Resource Recovery (Shanghai) Co., Ltd was established in March 2007, in
      Shanghai, China, focuses on the recycling of wasted wine bottle in China. Sancon
      SH started operations on April 1, 2007.  Sancon
      SH
      is 100% owned by Jack Chen who is also a director of Sancon Recycling Pty Ltd,
      Australia, a 100% owned subsidiary of the Company. The acquisition resulted
      in
      recapitalization of the Company's capital structure similar to the pooling
      on
      interest method.





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





Sancon
      Resource Recovery (Shanghai) Co., Ltd.


Summary
      Statement of Financial Position


At
      August
      15, 2007




AmountCash
              
              $
              244,143Other
                  Current assets
              
              
              106,731Property
                  & equipment
              
              
              88,587Current
                  liabilities
              
              
              113,457Net
                  Assets Acquired
              
              $
              326,004





UNAUDITED
      PRO FORMA CONSOLIDATED FINANCIAL INFORMATION DISCLOSURE


FOR
      THE
      NINE MONTH PERIOD ENDED SEPTEMBER 30, 2007




The
      following un-audited pro forma consolidated financial information for the nine
      month period ended September 30, 2007 as presented below, reflects the results
      of operations of the Company assuming the acquisition occurred on April 1,
      2007.
      These pro forma results have been prepared for information purposes only and
      do
      not purport to be indicative of what operating results would have been had
      the
      acquisitions actually taken place on April 1, 2007 and may not be indicative
      of
      future operating results.








Nine
                  month period ended September 30, 2007(Unaudited)Revenue
              
              
              
              
              $
              4,609,908Operating
                  income
              
              
              
              
              $
              114,381Net
                  loss
              
              
              
              
              $
              (61,762
              )Basic
                  and fully diluted gain/(loss) per share
              $
              (0.00
              )











-
          9
          -


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.





Plant
                and Machinery
            
            Vehicles
            
            Office
                Equipment
            
            TotalAt
                September 30, 2007Cost
            
            $
            368,087
            
            $
            155,005
            
            $
            33,694
            
            $
            556,786Accumulated
                Depreciation
            
            
            103,441
            
            
            14,399
            
            
            9,782
            
            
            127,622Net
                Carrying Value
            
            $
            264,646
            
            $
            140,606
            
            $
            23,912
            
            $
            429,164





Included
      in property and equipment is approximately $71,816 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 $14,860.





Depreciation
      and amortization expense for the nine months period ended September 30, 2007
      and
      2006 was $46,275 and $32,088, respectively.





Note
      7.
      Due to related parties





Current


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





Included
      in the amount due to related parties, there were loans due to Mr. David Chen
      and
      Mr. Jimmy Yiu amounting of $41,100, and $8,030 and loans due from Mr. Chen
      Guangliang amounting of $81,338 respectively.





Long-term


Due
      to
      related party includes loan from Mr. Jack Chen of $327,702 without interest,
      unsecured and not be payable until such time as the Board of Directors
      determine.





Guang
      Cheng International Trading Ltd sold $589,118 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 September 30,
      2007.








Note
      8.
      Stockholders equity





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





On
      April
      15, 2007, the Company 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$0.24 per share for gross proceeds of US$240,000. The shares are subject
      to
      144 restriction and proceeds will be used for working capital needs. These
      shares are recorded as shares to be issued as at September 30, 2007.





Note
      9.
      Segmental information





Following
      is a summary of segment information by geographic unit for the nine months
      period ended September 30, 2007:





Australia
            
            Hong
                Kong
            
            Shanghai
            
            Un-allocated
            
            TotalSales,
                net
            
            
            997,016
            
            
            2,900,045
            
            
            271,029
            
            
            -
            
            
            4,168,090Net
                income (loss)
            
            
            (11,745
            )
            
            (6,256
            )
            
            96,829
            
            
            (221,083
            )
            
            (142,255
            )Total
                assets
            
            
            612,980
            
            
            97,806
            
            
            578,798
            
            
            68,636
            
            
            1,358,220Capital
                expenditure
            
            
            62,179
            
            
            -
            
            
            62,801
            
            
            -
            
            
            124,980Depreciation
            
            
            44,928
            
            
            -
            
            
            1,347
            
            
            -
            
            
            46,275





During
      the nine months period ended September 30, 2006, the Company operated under
      one
      segment.





-
          10
          -





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





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





Introduction





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


·
            Caution
                concerning forward-looking statements and risk factors. This section
                discusses how certain forward-looking statements made by us throughout
                the
                MD&A and in the financial statements are based on our present
                expectations about future events and are inherently susceptible to
                uncertainty and changes in
                circumstances.


·
            Overview.
                This section provides a general description of our business, as well
                as
                recent developments that we believe are important in understanding
                the
                results of operations and to anticipate future trends in those
                operations.


·
            Results
                of operations. This section provides an analysis of our results of
                operations for the three months and nine months ended September 30,
                2007
                compared to the same period in 2006. A brief description is provided
                of
                transactions and events, including any related party transactions
                that
                affect the comparability of the results being
                analyzed.


·
            Liquidity
                and capital resources. This section provides an analysis of our financial
                condition and cash flows for the nine months ended September 30,
                2007 and
                2006.


·
            Critical
                accounting policies. This section provides an analysis of the significant
                estimates and judgments that affect the reported amounts of assets,
                liabilities, revenues and expenses, and related disclosure of contingent
                assets and liabilities.





Caution
      Concerning Forward-looking Statements and Risk Factors





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





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





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





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





Potential
      Fluctuations In Periodic Operating Results





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





-
          11
          -


Dependence
      Upon Management





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





Limitation
      of Liability and Indemnification of Officers and Directors





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





Management
      of Potential Growth





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





Limited
      Market Due To Penny Stock





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





-
          12
          -


Overview
      of the Company and its Operations





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





*The
      Trend in Chinese Market*





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





*Sancon's
      Visions and Goals*





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





*Services
      Offered To Our Clients*





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





*Competition*





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





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


1)
            Sancon
                offers large selection of plastic raw materials to our
                customers.


2)
            With
                our operations in Melbourne Australia and new processing facility
                opened
                up in Sydney, Sancon will cut out the middle man by selling direct
                to our
                partners and customs in China to protect our company's profit
                margin.


3)
            Hong
                Kong trading operation will source recycled materials globally for
                to meet
                the increasing demand from our customers in
                China.


4)
            Working
                closely with more processing partners in China will add value to
                our
                products.


5)
            Industry
                know-how and management team's ability to ensure all major milestones
                are
                achieved.





*Employees*





At
      September 30, 2007, the Company had 70 employees in total (excluding
      consultants), in sales and marketing, finance, logistic, and administration.
      None of the Company's employees is covered by a collective bargaining agreement
      and the Company believes its employee relations are satisfactory.





-
          13
          -


*Factors
      That May Affect Future Results*





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





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





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





As
      a
      public company, Sancon is subject to certain regulatory requirements including,
      but not limited to, compliance with Section 404 of the Sarbanes-Oxley Act of
      2002 ("SOX404"). Such compliance results in significant additional costs to
      the
      Company by increased audit and consulting fees, and the time required by
      management to address the regulations. The SEC has recently delayed the
      implementation date of SOX404 for non-accelerated filers until the fiscal year
      ended December 31, 2007. However, should the Company successfully fulfill its
      plans to procure financing and expand its operations; the Company may come
      under
      the accelerated filer definition, and be required to comply with SOX404 before
      December 31, 2007. In any case, such costs will likely affect adversely the
      Company's business, financial condition and results of operations.





Results
      of Operations - Comparison between the three and nine months ended September
      30,
      2007 and same periods of 2006.





Sales





Sales
      are
      generated by the sale of recyclable materials. The sales in Q3 2007 were
      $1,270,261, representing a 20% decrease compared to the sales of $1,589,117
      in
      same period of 2006. The sharp decreases were mainly due to the significant
      sales drop contributed from DFSL in Q3 2007. And sales for nine months ended
      on
      September 30 for the year 2007 and 2006 were $4,168,090 and $1,875,230
      respectively.





Cost
      of
      Sales





The
      cost
      of sales is the direct cost for sale of the recycling materials. In Q3 2007,
      the
      cost of the recyclable materials was $855,714. It is 38% decrease as compared
      to
      the cost of sales of $1,377,465 in Q3 2006. The significant decrease of cost
      of
      sales is in line with the decrease of sales during the quarter ended September
      30, 2007. And cost of sales for nine months ended on September 30 for the year
      2007 and 2006 were $3,387,962 and $1,538,112 respectively.





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





SG&A
      expenses increased by $149,271 or 106% to $290,589 in Q3 2007 compared to the
      same period of 2006. The increase is mainly due to the acquicision of Sancon
      SH
      during the three month ended September 31, 2007. SG&A expenses increased by
      $553,566 to $844,316 during nine months period ended on September 30, 2007
      compared with the same period of year 2006.





Depreciation
      Expense





Depreciation
      expense decreased to $10,616 in Q3 2007 from $11,993 in same period of 2006.
      The
      decrease is mainly due to Sancon Recycling Pty Ltd. using Declining-balance
      Method to provide depreciation expenses. The expenses increased from $32,088
      to
      $46,275 during nine months period ended on September 30, 2007 compared with
      same
      period in year 2006. The increases were due to the purchase of plant and
      machinery.





Liquidity
      and Capital Resources





As
      shown
      in the accompanying financial statements, the Company has accumulated deficit
      of
      $258,970 as of September 30, 2007. In addition, we have negative working capital
      $44,526.





Our
      ability to continue as a going concern depends on the success of our plan to
      seek funding sources and the success of our future operations.





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          14
          -


Operating
      Activities





The
      net
      cash provided by operating activities from the nine months period ended on
      September 30, 2007 amounted to $392,163 compared to $121,347 used in the same
      period of year 2006. The net cash outflow from operating activities in the
      nine
      months period ended on September 30, 2007 was mainly due to the increase of
      trade receivables of $235,108.





Investing
      Activities





Net
      cash
      used in investing activities amounted to $324,980 during the nine months period
      ended on September 30, 2007 compared to $175,421 during the same period of
      year
      2006. The net cash outflows primarily resulted from the purchase of property
      and
      equipment, and the investment in convertible notes.





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





On
      August
      15, 2007, the Registrant exercised its conversion right to convert its
      convertible note with face value of $200,000 into 70% equity interest of Sancon
      Resource Recovery (Shanghai) Co., Ltd., pursuant to the terms of Convertible
      Notes issued on June 1, 2007. Documents for the ownership of the 70% equity
      interest were completed on September 10, 2007.




Financing
      Activities





Net
      cash
      provided by financing activities amounted to $71,919 during the nine months
      period ended on September 30, 2007 compared to net cash obtained from financing
      activities of $372,057 during the same period in year 2006. The net cash inflow
      in the nine months period ended on September 30, 2007 was mainly due to stock
      subscription of $240,000.





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





Inflation





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





Trends
      and uncertainties





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





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





Critical
      Accounting Policies and Estimates





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





-
          15
          -


*Allowance
      for doubtful accounts*




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




*Income
      taxes*




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




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





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





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





*Stock-Based
      Compensation*




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





-
          16
          -


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








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





*Asset
      Impairment*




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








Item
      2(b). Off-Balance Sheet Arrangements





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





ITEM
      3.
      CONTROLS AND PROCEDURES





Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and the principal financial officer, we conducted
      an
      evaluation of the effectiveness of the design and operation of its disclosure
      controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
      the
      Securities Exchange Act of 1934, as of the end of the period covered by this
      report (the "Evaluation Date"). Based on this evaluation, our principal
      executive officer and principal financial officer concluded as of the Evaluation
      Date, that our disclosure controls and procedures were effective such that
      the
      material information required to be included in our Securities and Exchange
      Commission ("SEC") reports is recorded, processed, summarized and reported
      within the time periods specified in SEC rules and forms relating to us,
      including our consolidating subsidiaries, and was made known to them by others
      within those entities, particularly during the period when this report was
      being
      prepared.





During
      the nine months ended September 30, 2007, there were no changes in our internal
      accounting controls or in other factors that materially affected our internal
      controls over financial reporting.








PART
      II.
      OTHER INFORMATION





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





None





Item
      2
      Changes in Securities and Use of Proceeds





None





Item
      3.
      Defaults Upon Senior Securities.





None.





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





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





Item
      5.
      Other Information.





None.





-
          17
          -


Item
      6.
      Exhibits





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





Exhibit
                Number
            Note
            Description
                of Document3.1
            (1)
            Articles
                of Incorporation of Financial Telecom Limited (USA),
                Inc.3.2
            (1)
            Amended
                and Restated Bylaws of Financial Telecom Limited (USA),
                Inc.10.1
            (1)
            Agreement
                between Hong Kong Futures Exchange Limited and Financial Telecom
                Limited.10.2
            (1)
            Market
                Service Datafeed Agreement between Stock Exchange Information Services
                Limited and Financial Telecom Limited.10.3
            (2)
            Option
                agreement dated December 14, 2004 between Fintel Group Limited and
                shareholders of Shanghai Long terms Technology Limited.10.4
            (2)
            Option
                agreement dated January 5, 2005 between Fintel Group Limited and
                shareholders of Beijing JCL Technology Commerce
                Limited.10.5
            (2)
            Option
                agreement dated January 20, 2005 between Fintel Group Limited and
                shareholders of Shanghai Qianhou Computer Technology
                Limited.10.6
            (2)
            Independent
                contractor agreement between Fintel Group Limited and Mr. Sam Chong
                Keen.10.7
            (2)
            Independent
                contractor agreement between Fintel Group Limited and Info Media
                Company.10.8
            (2)
            Independent
                contractor agreement between Fintel Group Limited and China Digital
                Distribution Limited.10.9
            (3)
            Sales
                and purchase agreement dated March 25, 2005 between Fintel Group
                Limited
                and shareholders of Enjoy Media Holdings Limited.10.10
            (4)
            Sales
                and purchase agreement dated April 25, 2005 between Fintel Group
                Limited
                and shareholders of Beijing Genial Technology Co. Ltd.10.11
            (4)
            Option
                agreement dated March 7, 2005 between Fintel Group Limited and
                shareholders of Beijing Sinoskyline technology Trading Co.
                Ltd.14.1
            (9)
            Code
                of Ethics.16.1
            (7)
            Change
                in Certifying Accountants.16.2
            (10)
            Incorporated
                herein by reference to registrant's Current Report on Form 8K/A (File
                No.
                000-50760) filed July 7, 2006.17.1
            (6)
            Correspondence
                on departure of Directors.20.1
            (8)
            Proxy
                Statement dated December 6, 2005.21.1
            (5)
            Subsidiaries
                of the registrant.24.1
            (5)
            Power
                of
                Attorney.31.1
            (5)
            Certification
                of Chief Executive
                Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002.31.2
            (5)
            Certification
                of Chief Financial
                Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002.32.1
            (5)
            Certification
                of Officers, pursuant
                to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                the
                Sarbanes-Oxley Act of 2002.


______________________





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


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


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


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


(5)
            Filed
                herewith.


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


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


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


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


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





-
          18
          -


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:November
                16, 2007By:
                /s/ Jack Chen--------------------------------Jack
                ChenChief
                Executive Officer











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





Sancon
                Resources Recovery, Inc.Date:November
                16, 2007By:
                /s/ David Chen--------------------------------David
                ChenChairman





Date:November
                16, 2007By:
                /s/ Jimmy Yiu--------------------------Jimmy
                YiuDirectorDate:November
                16, 2007By:
                /s/ Cong Yuanli--------------------------Cong
                YuanliIndependent
                DirectorDate:November
                16, 2007By:
                /s/ Jack Chen--------------------------Jack.
                ChenDirector





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          19
          -