UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934:

 

For the Quarterly Period ended March 31, 2017

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT

 

For the transition period from __________________ to __________________

 

Commission File Number: 000-50760

 

Sancon Resources Recovery, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada	58-2670972
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

 

G5, Tiara Mutiara

(No 139, Jalan Puchong)

58200 Kuala Lumpur, Malaysia

(Address of Principal Executive Offices)

 

+ 603-77726616

(Registrant’s Telephone Number, Including Area Code)

 

602 Nan Fung Tower, Suite 6/F, 88 Connaught Road Central, Central District, Hong Kong
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

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 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 ☒     No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

 

	Large accelerated filer  o	Accelerated filer  o
	Non-accelerated filer  o	Smaller reporting company  x
	Emerging growth company  o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒     No ☐

 

Number of shares outstanding of each of the issuer’s classes of common equity, as of May 8, 2017: 107,014,454 shares of Common Stock, par value US $0.001

 

 

 

 

 

Forward Looking Statements

 

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

 

The information contained in this 10-Q includes some statements that are not purely historical and that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as such, may involve risks and uncertainties. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, perceived opportunities in the market and statements regarding our mission and vision. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. You can generally identify forward-looking statements as statements containing the words “anticipates”, “believes”, “continue”, “could”, “estimates”, “expects”, “intends”, “may”, “might”, “plans”, “possible”, “potential”, “predicts”, “projects”, “seeks”, “should”, “will”, “would” and similar expressions, or the negatives of such terms, but the absence of these words does not mean that a statement is not forward-looking.

 

Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The forward-looking statements contained herein are based on various assumptions, many of which are based, in turn, upon further assumptions. Our expectations, beliefs and forward-looking statements are expressed in good faith on the basis of management’s views and assumptions as of the time the statements are made, but there can be no assurance that management’s expectations, beliefs or projections will result or be achieved or accomplished. We disclaim any obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)			4
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION			10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			13
ITEM 4. CONTROLS AND PROCEDURES			13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			14
ITEM 1A. RISK FACTORS			14
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES			14
ITEM 4. MINE SAFETY DISCLOSURES			14
ITEM 5. OTHER INFORMATION			14
ITEM 6. EXHIBITS			14
SIGNATURES			15
INDEX TO EXHIBITS			16

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

 

SANCON RESOURCES RECOVERY, INC.

CONDENSED BALANCE SHEETS

 

		As at
		March 31, 2017 (Unaudited)				December 31, 2016 (Audited)
Asset
Total current asset and total asset		$	–			$	–
Liability
Due to related parties			107,580				100,137
Accrued expenses and other payables			3,308				1,973
Total current liability and total liability			110,888				102,110
Stockholders' deficits
Share capital
Authorized: 500,000,000 common shares, par value $0.001 per share
Issued and outstanding: 105,091,254 shares as of March 31, 2017 (December 31, 2016: 105,091,254 shares)			105,091				105,091
Additional paid-in capital			923,070				923,070
Share option reserves			89,015				89,015
Accumulated losses			(1,228,064	)			(1,219,286	)
Total stockholders’ deficits			(110,888	)			(102,110	)
Total liability& stockholders' deficits		$	–			$	–

 

The accompanying notes are an integral part of these unaudited financial statements

 

 

 

 

SANCON RESOURCES RECOVERY, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

		For the three months periods ended March 31,
		2017				2016
Net Revenue		$	–			$	–
Operating Expenses
General and Administrative expenses			8,778				18,987
Total operating expenses			8,778				18,987
Operating loss			(8,778	)			(18,987	)
Other income			–				1,230
Loss before tax			(8,778	)			(17,757	)
Income taxes			–				–
Net loss		$	(8,778	)		$	(17,757	)
Loss per share
Basic loss per share		$	–			$	–
Basic weighted average shares outstanding			105,091,254				45,286,663
Diluted loss per share		$	–			$	–
Diluted weighted average shares outstanding			108,163,326				45,286,663

 

The accompanying notes are an integral part of these unaudited financial statements

 

 

 

 

SANCON RESOURCES RECOVERY, INC.

CONDENSED STATEMENTS OF CASH FLOW

(UNAUDITED)

 

		For the three months periods ended March 31,
		2017				2016
Cash Flows from Operating Activities
Net loss		$	(8,778	)		$	(17,757	)
Change in current assets and liabilities
Increase / (Decrease) in accrued expenses and other payables			1,335				(2,557	)
Net cash flows used in operating activities			(7,443	)			(20,314	)
Cash Flows from Financing Activities
Issuance of shares			–				42,000
Loans from related parties			11,300				–
Settlement of loans from related parties			(3,857	)			(21,686	)
Net cash flows provided by financing activities			7,443				20,314
Effect of exchange rate changes on cash			–				–
Net Increase in Cash & Cash Equivalent			–				–
Cash & Cash Equivalent at start of period		$	–			$	–
Cash & Cash Equivalent at end of period		$	–			$	–

 

The accompanying notes are an integral part of these unaudited financial statements

 

 

 

 

SANCON RESOURCES RECOVERY, INC.

NOTES TO THE FINANCIAL STATEMENTS

For the three months periods ended March 31, 2017

(Unaudited)

 

Note 1.  Nature of Operations

 

Sancon Resources Recovery, Inc. ("Sancon", or "the Company", or "we", or "us") is registered in the State of Nevada. Sancon Resources Recovery, Inc. was dormant during the period.

 

Note 2.  Basis of Presentation

 

Unaudited Interim Financial Statements

 

The accompanying unaudited 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’s 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, 2016, included in our Annual Report on Form 10K, filed with the Securities and Exchange Commission.

 

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.

 

Income Taxes

 

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax assets and liabilities 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. 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.

 

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.

 

Recent pronouncements

 

The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.

 

 

 

 

 

Note 4.  Going Concern

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, after the disposal of its operating subsidiaries in the 4^th quarter of 2011 and became dormant afterwards, the Company has the stockholders’ deficits of $110,888 and $102,110 as of March 31, 2017 and December 31, 2016 respectively. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans, additional sales of its common stock or through a possible business combination. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

Note 5. Related Party Transactions

 

As of March 31, 2017, the Company owed $28,700 and $78,880 to director and shareholder respectively.

 

As of December 31, 2016, the Company owed $17,400 and $82,737 to director and shareholder respectively.

 

On May 4, 2016, (i) 42,582,858 shares of our common stock, valued at $138,000 were issued in lieu of cash compensation for director and secretarial services from March 13, 2014 through June 30, 2016; and (ii) 9,288,400 shares of our common stock, valued at $23,221 were issued in lieu of cash compensation for accounting services from December 22, 2013 through June 30, 2016.

 

During the period, KOK Seng Yeap, Eddy advanced $11,300 for the operation of the Company.

 

Note 6.  Stockholders’ equity

 

Stock options

 

On December 5, 2012, the Company entered into a settlement agreement with Dragon Wings for the settlement of the claim by Dragon Wings. In consideration of Sancon's agreement to make the payments in the form of common shares and share options listed in the settlement agreement. The Company would give the option to Dragon Wings to purchase 6,000,000 common shares; the option may be exercised by Dragon Wings in whole or in part, at any time within 5 years from the date of this settlement agreement with the exercise price at US$0.01 per share, with dilution protection and subject to share split adjustment.

 

		As at
		March 31, 2017				December 31, 2016
Loan settled by share option		$	149,015			$	149,015
Par value of the common shares			60,000				60,000
Fair value of share option		$	89,015			$	89,015

  

Note 7. Income Taxes

 

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.

 

Note 8. Subsequent events

 

On or about April 5, 2017, the Company received a written consent in lieu of a meeting of Stockholders from a stockholder, who owns 53,596,540 voting shares representing approximately 51% of the 105,091,254 shares of the total issued and outstanding shares of voting stock of the Company (the “Majority Stockholder”) authorizing the Company’s Board of Directors, to effect a name change of the Company to IGS Capital Group Limited and a reverse split of the Company’s Common Stock on a 100-for-one (100:1) basis, pursuant to which the number of authorized shares of Common Stock will remain 500,000,000 shares and the par value for the common stock will remain $0.001, following such reverse stock split (the “Reverse Stock Split”); any fractional shares post-split will be rounded up to the next whole share.

 

 

 

 

 

On April 5, 2017, the Board of Directors of the Company approved the above-mentioned actions. The Majority Stockholder approved the action by written consent in lieu of a meeting on April 5, 2017, in accordance with the Nevada Corporate law.

 

Pre-Reverse Stock Split	Common
Authorized Common Shares	Issued Shares	Authorized but Unissued
500,000,000	105,091,254	394,908,746
Authorized Common	Post-Reverse Common Stock
Shares	Split Issued Shares	Authorized but Unissued
500,000,000	1,050,913	498,949,087

 

The reverse split will not change the proportionate equity interests of our stockholders, nor will the respective voting rights and other rights of stockholders be altered, except for possible immaterial changes, due to rounding-up any fractional shares. The Common Stock issued pursuant to the reverse split will remain fully paid and non-assessable. The reverse split is not intended as, and will not have the effect of, a "going private transaction" covered by Rule 13e-3 under the Securities Exchange Act of 1934. We will continue to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934.

 

On May 8, 2017, the Board of Directors of the Company approved the subscription of the company’s shares with details as follows were tabled.

 

Name of applicant	Number of shares	Price	Date of application
MARCUS BIN APAU	20,000	400.00	April 04, 2017
MICHAEL DHAS ANBALAGAN	45,000	900.00	April 04, 2017
NORAINI BINTI ABU KASSIM	30,000	600.00	April 12, 2017
ANDREW BIN SANDAH	20,000	400.00	April 12, 2017
SALIM BIN AHMAD	15,000	300.00	April 12, 2017
LIPAH BIN UMPOK	20,000	400.00	April 12, 2017
HAI ZATON BINTI AHMAD	45,000	900.00	April 12, 2017
HASLIZA BINTI AHMAD	15,000	300.00	April 12, 2017
NOOR SHAM BINTI ABU KASSIM	15,000	300.00	April 12, 2017
NORAINI BINTI MAJID	20,000	400.00	April 12, 2017
NAJMUIN BIN MOHAMAD	135,000	2,700.00	April 12, 2017
NORAZIZAM BIN DAHLAN	30,000	600.00	April 12, 2017
MOHD MAIZATUL KEFTIAH BIN AHMAD	15,000	300.00	April 12, 2017
RUSTINA SING	40,000	800.00	April 12, 2017
TAN TOH NGUANG	135,000	2,700.00	April 12, 2017
MOHD SABRI BIN ANANG	30,000	600.00	April 12, 2017
SITI MUHIDAH BINTI KAMARUDDIN	60,000	1,200.00	April 12, 2017
MOHAMAD ABDUL WAHAB BIN ABDUL HALIM	15,000	300.00	April 12, 2017
JOLAILI BIN MATMIN	30,000	900.00	April 12, 2017
RAMLEE BIN RASMAT	10,000	300.00	April 12, 2017
MOHAMAD NAZRI BIN HASHIM	125,000	2,500.00	April 12, 2017
FARIZ IZADI BIN MAHIZAN	10,000	300.00	April 12, 2017
ROZALINDA BINTI MUSTAFFA	20,000	400.00	April 12, 2017
MOHAMED YUSOFF BIN ABDUL GHANI	50,000	1,500.00	April 12, 2017
MOHD FAZLY BIN MOHD NOOR SHAM	70,000	1,400.00	April 12, 2017
ANISAH BINTI AMBILAH	65,000	1,300.00	April 12, 2017
NAREIN BALAGEE	30,000	600.00	April 12, 2017
ADTAR KHAFIZ BIN RAMLAN	15,000	300.00	April 12, 2017
AZMAN BIN SAHAROM	628,200	12,564.00	April 12, 2017
SUHANA BINTI ASMAT	15,000	300.00	April 12, 2017
MIOR ZAMRI BIN MIOR AHMAD	150,000	3,000.00	April 12, 2017

 

According to the issuance of total 1,923,200 shares of common stock, the total number of share outstanding increased from 105,091,254 shares to 107,014,454 shares.

 

 

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 periods ended March 31, 2017 compared to the same period in 2016. 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 three months periods ended March 31, 2017 and 2016.

·

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.

 

Forward-looking Statements

 

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.

 

 

 

 

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.

  

Overview of the Company and its Operations

 

The Company sold all its business in the 4^th quarter of 2011. It has no business operation as of the date of this report.

 

Sancon's Visions and Goals

 

After the disposal of all its business in 2011, the directors are now looking for viable business that it can acquire in Asia.

 

Employees

 

As of March 31, 2017, the Company had no employees.

 

Factors That May Affect Future Results

 

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 would limit the Company's ability to: (i) acquire new business and (ii) fund its working capital needs. 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.

 

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.

 

Results of Operations - Comparison between the three months period ended March 31, 2017 and the same period in 2016.

 

Revenue

 

The Company had no revenues for the three months period ended March 31, 2017 and the same period in 2016.

 

General and administrative expenses

 

General and administrative expenses decreased to $8,778 for the three months ended March 31, 2017, from $18,987 for the three months ended March 31, 2016, a decrease of $10,209. Of these amounts, $nil and $15,000 related to the value of cash compensation to our directors and secretary for the three months ended March 31, 2017 and March 31, 2016 respectively. In addition, a substantial portion of our expenses for the three months ended March 31, 2017 related to accounting and staff service fees, audit fees, legal and professional service fees, and for the three months ended March 31, 2016 related to accounting service fees, audit fees, professional service fees and transfer agent fees.

 

Other Income

 

The other income for the three months period ended March 31, 2017 was $nil, compared to the other income of $1,230 for the three months period ended March 31, 2016, a decrease of $1,230.

 

Income Tax

 

There were no income taxes for the three months period ended March 31, 2017 and the same period in 2016.

 

Net loss

 

The net loss for the three months period ended March 31, 2017 was $8,778, compared to the net loss of $17,757 for the three months period ended March 31, 2016, a decrease of $8,979.

 

Liquidity and Capital Resources

 

Working Capital

		As of				As of
		March 31,				December 31,
		2017				2016
Current Assets		$	–			$	–
Current Liabilities		$	110,888			$	102,110
Working Capital		$	(110,888	)		$	(102,110	)

 

As shown in the accompanying financial statements, the Company has accumulated loss of $1,228,064 as of March 31, 2017 compared to $1,219,286 as of December 31, 2016. There was a working capital deficit of $110,888 on March 31, 2017 and it was $102,110 as of December 31, 2016. It has increased by $8,778. The change is mainly due to increase in the loans from related parties.

 

Operating Activities

 

The net cash flows used in operating activities for the three months period ended March 31, 2017 was $7,443 compared to $20,314 for the three months period ended March 31, 2016. The decrease is attributed to decrease in net loss and increase in accrued expenses and other payables.

 

Financing Activities

 

The net cash flows provided by financing activities for the three months period ended March 31, 2017 was $7,443 compared to $20,314 for the three months period ended March 31, 2016. The Company financed its growth by utilizing cash reserves, loans from directors and issuance of common shares. Loans from directors were unsecured, and deferred payment term and without interest bearing. The Company’s primary use of funds was for operation expense and working capital.

 

 

 

 

Critical Accounting Policies and Estimates

 

The preparation of our 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 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.

  

Stock-Based Compensation

 

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 (ASC 718), 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(ASC 718) 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(ASC 718); 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(ASC 718). Results for prior periods have not been restated, as provided for under the modified-prospective method.

 

On December 5, 2012, the Company entered into a settlement agreement with Dragon Wings for the settlement of the claim by Dragon Wings. In consideration of Sancon's agreement to make the payments in the form of common shares and share options listed in the settlement agreement. The Company would give the option to Dragon Wings to purchase 6,000,000 common shares; the option may be exercised by Dragon Wings in whole or in part, at any time within 5 years from the date of this settlement agreement with the exercise price at US$0.01 per share, with dilution protection and subject to share split adjustment.

 

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.

 

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. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The information is not required of smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

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

 

During the three months ended March 31, 2017, 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. LEGAL PROCEEDINGS

 

None.

 

Item 1A. RISK FACTORS

 

The information is not required for smaller reporting companies.

 

Item 2. UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS

 

None.

 

Item 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

Item 4. MINE SAFETY DISCLOSURES

 

None.

 

Item 5. OTHER INFORMATION

 

On March 27, 2017, the Board of Directors of Sancon Resources Recovery, Inc. appointed the director, KOK Seng Yeap as the Chief Financial Officer and Secretary with immediate effect.

 

On or about April 5, 2017, the Company passed the resolution to effect a name change of the Company to IGS Capital Group Limited and a reverse split of the Company’s Common Stock on a 100-for-one (100:1) basis. For details, please refer to Note 8 stated in Item 1 of Part I.

 

On May 8, 2017, the Board of Directors of the Company approved the subscription of the company’s shares. Total 1,923,200 shares of common stock issued. The total number of share outstanding increased to 107,014,454 shares. For details, please refer to Note 8 stated in Item 1 of Part I.

 

Item 6. EXHIBITS

 

(1)	Exhibits: Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits following the signature page of this Form 10-Q, which is incorporated herein by reference.

 

 

 

 

  

SIGNATURES

 

In accordance with the requirements 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.
Dated: May 12, 2017	By:	/s/ Kok Seng Yeap
		Kok Seng Yeap
		Director
		(Chief Executive Officer, Chief Financial Officer and Secretary)
Dated: May 12, 2017	By:	/s/ He Qianying
		He Qianying
		Director

 

 

 

 

 

INDEX TO EXHIBITS

 

Exhibit No.		Description
31.1		Certification of Director and Chief Executive Officer
31.2		Certification of Director
32.1		Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.2		Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, formatted in XBRL (eXtensible Business Reporting Language); (i) Balance Sheets at March 31, 2017 and December 31, 2016, (ii) Statement of Operations for the three months period ended March 31, 2017 and 2016, (iii) Statement of Cash Flows for the three months period ended March 31, 2017 and 2016, and (iv) Notes to Financial Statements.