SUNRISE REAL ESTATE GROUP INC - Quarter Report: 2009 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 000-32585

SUNRISE REAL ESTATE GROUP, INC.

(Exact name of registrant as specified in its charter)

Texas		75-2713701
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Suite 701, No. 333, Zhaojiabang Road

Shanghai, PRC 200032

(Address of principal executive offices Zip Code)

Registrant’s telephone number: + 86-21-6422-0505

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 x No ¨

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

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: May 10, 2009 - 23,691,925 shares of Common Stock

FORM 10-Q

For the Quarter Ended March 31, 2009

INDEX

		Page
PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Cash Flows	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21

PART II. OTHER INFORMATION		22
Item 1.	Legal Proceedings	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Submission of Matters to a Vote of Security Holders	22
Item 5.	Other Information	22
Item 6.	Exhibits	22

SIGNATURES		22

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Sunrise Real Estate Group, Inc.

Unaudited Condensed Consolidated Balance Sheets

(Expressed in US Dollars)

	March 31,			December 31,
	2009			2008
	(Unaudited)			(Audited)
ASSETS

Current assets
Cash and cash equivalents	$	595,413		$	587,468
Restricted cash (Note7)		25,318			32,411
Accounts receivable		638,889			720,789
Promissory deposits (Note 3)		1,050,522			1,126,620
Other receivables and deposits (Note 4)		409,986			322,095

Total current assets		2,720,128			2,789,383

Property, plant and equipment – net (Note 5)		2,581,160			2,650,023
Investment properties (Note 6)		8,042,120			8,194,880
Goodwill		13,307			13,307

Total assets	$	13,356,715		$	13,647,593

LIABILITIES AND SHAREHOLDERS’ DEFICIT

Current liabilities
Bank loans (Note 7)	$	6,043,743		$	6,044,893
Promissory notes payable (Note 8)		1,087,926			963,006
Accounts payable		702,676			340,353
Amount due to directors (Note 9)		203,991			169,355
Amount due to related party (Note 9)		127,876			127,900
Other payables and accrued expenses (Note 10)		2,160,659			2,359,068
Other tax payable (Note 11)		607,460			593,899
Income tax payable		1,067,596			1,083,477

Total current liabilities		12,001,927			11,681,951

Commitments and contingencies (Note 12)

Long-term bank loans (Note 7)		153,601			204,840
Long-term promissory notes payable (Note 8)		-			11,111
Deposits received from underwriting sales (Note 13)		8,274,151			8,275,725
Minority interest of consolidated subsidiaries		425,542			488,330

Total liabilities	$	20,855,221		$	20,661,957

Shareholders’ deficit
Common stock, par value $0.01 per share; 200,000,000 shares authorized; 23,691,925 shares issued and outstanding as of December 31, 2008 and December 31, 2007		236,919			236,919
Additional paid-in capital		3,620,008			3,620,008
Statutory reserve (Note 14)		731,762			731,762
Accumulated losses		(12,671,529	)		(12,188,648	)
Accumulated other comprehensive income (Note 15)		584,334			585,595

Total shareholders’ deficit		(7,498,506	)		(7,014,364	)

Total liabilities and shareholders’ deficit	$	13,356,715		$	13,647,593

See accompanying notes to consolidated financial statements.

Sunrise Real Estate Group, Inc.

Unaudited Condensed Consolidated Statements of Operations

(Expressed in US Dollars)

	Three Months Ended March 31,
	2009			2008
	(Unaudited)			(Unaudited)

Net Revenues	$	1,495,528		$	1,319,545

Cost of Revenues		(1,230,271	)		(1,428,752	)

Gross Profit		265,257			(109,207	)

Operating Expenses		(191,640	)		(310,626	)

General and Administrative Expenses		(481,555	)		(767,394	)

Operating Loss		(407,938	)		(1,187,227	)

Interest Income		899			5,769

Other Income, Net		14,613			6,532

Interest Expenses		(144,374	)		(143,640	)

Loss Before Income Tax and Minority Interest		(536,800	)		(1,318,566	)

Income Tax		(8,769	)		(5,496	)

Loss Before Minority Interest		(545,569	)		(1,324,062	)

Minority Interest		62,688			10,031

Net Loss	$	(482,881	)	$	(1,314,031	)

Loss Per Share – Basic and Fully Diluted	$	(0.02	)	$	(0.06	)

Weighted average common shares outstanding – Basic and Fully Diluted		23,691,925			23,691,925

Note: In our 2008 year-end financial statement, we reclassified the depreciation expenses of investment properties from General and Administrative Expenses to Cost of Revenues. For the first quarter of 2009, we have done the same reclassification of depreciation expense of investment properties in the amount of $125,828 from General and Administrative Expenses to Cost of Revenues.

See accompanying notes to unaudited condensed consolidated financial statements.

Sunrise Real Estate Group, Inc.

Consolidated Statements of Cash Flows

Increase/(Decrease) in Cash and Cash Equivalents

(Expressed in US Dollars)

	Three Months Ended March 31,
	2009			2008
	(Unaudited)			(Unaudited)

Cash flows from operating activities
Net Loss	$	(482,881	)	$	(1,314,031	)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation of property, plant and equipment		217,343			191,144
Loss/ (Gain) on disposal of property, plant and equipment		4,609			(7,429	)
Minority interest		(62,688	)		(10,031	)
Change in:
Accounts receivable		81,755			561,901
Promissory deposits		75,876			(430,547	)
Other receivables and deposits		(87,943	)		(299,747	)
Amount due from related party		-			(55,442	)
Accounts payable		362,351			(139,264	)
Amounts with venturers		-			67,098
Other payables and accrued expenses		(197,940	)		(759,414	)
Interest payable on promissory notes		938			17,291
Interest payable on amount due to director		(1,600	)		2,897
Amount due to related party		-			48,006
Other tax payable		13,673			(18,748	)
Income tax payable		(15,673	)		5,496
Restricted cash		7,086			1,883,023
Net cash used in operating activities		(85,094	)		(257,797	)

Cash flows from investing activities
Acquisition of property, plant and equipment		(2,413	)		(272,021	)
Proceeds from disposal of property, plant and equipment		-			86,668
Net cash used in investing activities		(2,413	)		(185,353	)

Cash flows from financing activities
Bank loans repayment		(51,195	)		(48,925	)
Repayment of promissory note		(33,333	)		(373,440	)
Proceeds from promissory note		146,272			-
Repayment to director		(43,881	)		(104,380	)
Advance from director		80,130			-
Net cash provided by/ (used in) financing activities		97,993			(526,745	)

Effect of exchange rate changes on cash and cash equivalents		(2,541	)		144,064

Net increase/(decrease) in cash and cash equivalents		7,945			(825,831	)
Cash and cash equivalents at beginning of period		587,468			2,281,516
Cash and cash equivalents at end of period	$	595,413		$	1,455,685

Supplemental disclosure of cash flow information
Cash paid during the period:
Income tax paid		24,650			-
Interest paid		145,036			129,468

See accompanying notes to unaudited condensed consolidated financial statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Sunrise Real Estate Development Group, Inc. (“CY-SRRE”) was established in the Cayman Islands on April 30, 2004 as a limited liability company. CY-SRRE was wholly owned by Ace Develop Properties Limited, a corporation, (“Ace Develop”), of which Lin Chi-Jung, an individual, is the principal and controlling shareholder. Shanghai Xin Ji Yang Real Estate Consultation Company Limited (“SHXJY”) was established in the People’s Republic of China (the “PRC”) on August 14, 2001 as a limited liability company. SHXJY was originally owned by a Taiwanese company, of which the principal and controlling shareholder was Lin Chi-Jung. On June 8, 2004, all the fully paid up capital of SHXJY was transferred to CY-SRRE. On June 25, 2004 SHXJY and two individuals established a subsidiary, namely, Suzhou Xin Ji Yang Real Estate Consultation Company Limited (“SZXJY”) in the PRC, at which point in time, SHXJY held a 90% equity interest in SZXJY. On December 24, 2004, SHXJY acquired 85% of equity interest in Beijing Xin Ji Yang Real Estate Consultation Company Limited (“BJXJY”), a PRC company incorporated on April 16, 2003 with limited liability. On August 9, 2005, SHXJY sold a 10% equity interest in SZXJY to a company owned by a director of SZXJY, and transferred a 5% equity interest in SZXJY to CY-SRRE. Following the disposal and the transfer, CY-SRRE effectively held an 80% equity interest in SZXJY. On November 24, 2006, CY-SRRE, SHXJY, a director of SZXJY and a third party established a subsidiary, namely, Suzhou Shang Yang Real Estate Consultation Company Limited (“SZSY”) in the PRC, with CY-SRRE holding a 12.5% equity interest, SHXJY holding a 26% equity interest and the director of SZXJY holding a 12.5% equity interest in SZSY. At the date of incorporation, SRRE and the director of SZXJY entered into a voting agreement that SRRE is entitled to exercise the voting right in respect of his 12.5% equity interest in SZSY. Following that, SRRE effectively holds 51% equity interest in SZSY. On September 24, 2007, CY-SRRE sold a 5% equity interest in SZXJY to a company owned by a director of SZXJY. Following the disposal, CY-SRRE effectively holds 75% equity interest in SZXJY. On November 1, 2007, SZXJY established a wholly owned subsidiary, Suzhou Xin Ji Yang Real Estate Brokerage Company Limited (“SZXJYB”) in the PRC as a limited liability company. On May 8, 2008, SHXJY established a wholly owned subsidiary, Kunshan Shang Yang Real Estate Brokerage Company Limited (“KSSY”) in the PRC as a limited liability company.

LIN RAY YANG Enterprise Ltd. (“LRY”) was established in the British Virgin Islands on November 13, 2003 as a limited liability company. LRY was owned by Ace Develop, Planet Technology Corporation (“Planet Tech”) and Systems & Technology Corporation (“Systems Tech”). On February 5, 2004, LRY established a wholly owned subsidiary, Shanghai Shang Yang Real Estate Consultation Company Limited (“SHSY”) in the PRC as a limited liability company. On January 10, 2005, LRY and a PRC third party established a subsidiary, Suzhou Gao Feng Hui Property Management Company Limited (“SZGFH”), in the PRC, with LRY holding 80% of the equity interest in SZGFH. On May 8, 2006, LRY acquired 20% of the equity interest in SZGFH from the third party. Following the acquisition, LRY effectively holds 100% of the equity interest in SZGFH. On September 11, 2007 SHSY and other third parties established a subsidiary, namely, Suzhou Bin Fen Nian Dai Administration Consultancy Company Limited (“SZBFND”) in the PRC, with SHSY holding a 19% equity interest in SZBFND. On September 18, 2008, SHSY established a wholly owned subsidiary, San Ya Shang Yang Real Estate Consultation Company Limited (“SYSY”) in the PRC as a limited liability company.

SHXJY, SZXJY, BJXJY, SHSY, SZGFH, SZSY, SZXJYB, KSSY and SYSY commenced operations in November 2001, June 2004, January 2004, February 2004, January 2005, November 2006, November 2007, May 2008 and September 2008 respectively. Each of SHXJY, SZXJY, BJXJY, SHSY, SZGFH, SZSY, SZXJYB and KSSY has been granted a twenty-year operation period and SYSY has been granted a thirty-year operation period from the PRC, which can be extended with approvals from relevant PRC authorities.

On August 31, 2004, Sunrise Real Estate Group, Inc. (“SRRE”), CY-SRRE and Lin Chi-Jung, an individual and agent for the beneficial shareholder of CY-SRRE, i.e., Ace Develop, entered into an exchange agreement under which SRRE issued 5,000,000 shares of common stock to the beneficial shareholder or its designees, in exchange for all outstanding capital stock of CY-SRRE. The transaction closed on October 5, 2004. Lin Chi-Jung is Chairman of the Board of Directors of SRRE, the President of CY-SRRE and the principal and controlling shareholder of Ace Develop.

Also on August 31, 2004, SRRE, LRY and Lin Chi-Jung, an individual and agent for beneficial shareholders of LRY, i.e., Ace Develop, Planet Tech and Systems Tech, entered into an exchange agreement under which SRRE issued 10,000,000 shares of common stock to the beneficial shareholders, or their designees, in exchange for all outstanding capital stock of LRY. The transaction was closed on October 5, 2004. Lin Chi-Jung is Chairman of the Board of Directors of SRRE, the President of LRY and the principal and controlling shareholder of Ace Develop. Regarding the 10,000,000 shares of common stock of SRRE issued in this transaction, SRRE issued 8,500,000 shares to Ace Develop, 750,000 shares to Planet Tech and 750,000 shares to Systems Tech.

As a result of the acquisition, the former owners of CY-SRRE and LRY hold a majority interest in the combined entity. Generally accepted accounting principles require in certain circumstances that a company whose shareholders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. Accordingly, the acquisition has been accounted for as a “reverse acquisition” arrangement whereby CY-SRRE and LRY are deemed to have purchased SRRE. However, SRRE remains the legal entity and the Registrant for Securities and Exchange Commission reporting purposes. All shares and per share data prior to the acquisition have been restated to reflect the stock issuance as a recapitalization of CY-SRRE and LRY.

SRRE was initially incorporated in Texas on October 10, 1996, under the name of Parallax Entertainment, Inc. (“Parallax”). On December 12, 2003, Parallax changed its name to Sunrise Real Estate Development Group, Inc. On April 25, 2006, Sunrise Estate Development Group, Inc. filed Articles of Amendment with the Texas Secretary of State, changing the name of Sunrise Real Estate Development Group, Inc. to Sunrise Real Estate Group, Inc., effective from May 23, 2006.

Figure 1: Company Organization Chart

SRRE and its subsidiaries, namely, CY-SRRE, LRY, SHXJY, SZXJY, SZXJYB, SZSY, KSSY, BJXJY, SHSY, SZGFH and SYSY are sometimes hereinafter collectively referred to as “the Company.”

The principal activities of the Company are property brokerage services, real estate marketing services, property leasing services and property management services in the PRC.

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting and Principles of Consolidation

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America and present the financial statements of SRRE and its subsidiaries, CY-SRRE, LRY, SHXJY, SZXJY, SZXJYB, SZSY, KSSY, BJXJY, SHSY, SZGFH and SYSY. All inter-company transactions and balances have been eliminated.

Foreign Currency Translation and Transactions

The functional currency of SRRE, CY-SRRE and LRY is United States Dollars (“US$”) and the financial records are maintained and the financial statements prepared in US $. The functional currency of SHXJY, SZXJY, SZXJYB, SZSY, KSSY, BJXJY, SHSY, SZGFH and SYSY is Renminbi (“RMB”) and the financial records are maintained and the financial statements prepared in RMB.

Foreign currency transactions during the period are translated into each company’s denominated currency at the exchange rates ruling at the transaction dates. Gain and loss resulting from foreign currency transactions are included in the consolidated statement of operations. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated into each company’s denominated currency at period end exchange rates. All exchange differences are dealt with in the consolidated statements of operations.

The financial statements of the Company’s operations based outside of the United States have been translated into US$ in accordance with SFAS 52. Management has determined that the functional currency for each of the Company’s foreign operations is its applicable local currency. When translating functional currency financial statements into US$, period-end exchange rates are applied to the consolidated balance sheets, while average period rates are applied to consolidated statements of operations. Translation gains and losses are recorded in translation reserve as a component of shareholders’ equity.

The exchange rate between US$ and RMB had little fluctuation during the periods presented. The rates as of March 31, 2009 and December 31, 2008 are US$1: RMB6.8359 and US$1: RMB6.8346, respectively.

Property, Plant, Equipment and Depreciation

Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method to allocate the cost of depreciable assets over the estimated useful lives of the assets as follows:

		Estimated Useful Life (in years)

Furniture and fixtures		5-10
Computer and office equipment		5
Motor vehicles		5
Properties		20

Maintenance, repairs and minor renewals are charged directly to the statement of operations as incurred. Additions and improvements are capitalized. When assets are disposed of, the related cost and accumulated depreciation thereon are removed from the accounts and any resulting gain or loss is included in the statement of operations.

Investment property

Investment properties are stated at cost. Depreciation is computed using the straight-line method to allocate the cost of depreciable assets over the estimated useful lives of 20 years.

Significant additions that extend property lives are capitalized and are depreciated over their respective estimated useful lives. Routine maintenance and repair costs are expensed as incurred. The Company reviews its investment property for impairment whenever events or changes in circumstances indicate that the carrying amount of an investment property may not be recoverable.

Goodwill

SFAS No. 142, “Goodwill and Other Intangible Assets,” requires that goodwill be tested for impairment on an annual basis (December 31 for us) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of a company. Application of the goodwill impairment test requires judgment, including the determination of the fair value of a company. The fair value of a company is estimated using a discounted cash flow methodology. This requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, the useful life over which cash flows will occur, and the determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for a company.

Revenue Recognition

Agency commission revenue from property brokerage is recognized when the property developer and the buyer complete a property sales transaction, and the property developer grants confirmation to us to be able to invoice them accordingly. The time when we receive the commission is normally at the time when the property developer receives from the buyer a portion of the sales proceeds in accordance with the terms of the relevant property sales agreement, or the balance of the bank loan to the buyer has been funded, or recognized under the sales schedule or other specific items of agency sales agreement with developer. At no point does the Company handle any monetary transactions nor act as an escrow intermediary between the developer and the buyer.

Revenue from marketing consultancy services is recognized when services are provided to clients.

Rental revenue from property management and rental business is recognized on a straight-line basis according to the time pattern of the leasing agreements.

The Company accounts for underwriting sales in accordance with SFAS No. 66 “Accounting for Sales of Real Estate” (SFAS 66). The gain on underwriting sales is recognized when the criteria in SFAS No. 66 have been met, generally when title is transferred and the Company no longer has substantial continuing involvement with the real estate asset sold. If the Company provides certain rent guarantees or other forms of support where the maximum exposure to loss exceeds the gain, it defers the related commission income and expenses by applying the deposit method. In future periods, the commission income and related expenses are recognized when the remaining maximum exposure to loss is reduced below the amount of gain deferred.

All revenues represent gross revenues less sales and business tax.

Net Earnings per Common Share

The Company computes net earnings per share in accordance with SFAS No. 128, “Earnings per Share.” Under the provisions of SFAS No. 128, basic net earnings per share is computed by dividing the net earnings available to common shareholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net earnings per share recognizes common stock equivalents, however; potential common stock in the diluted EPS computation is excluded in net loss periods, as their effect is anti-dilutive.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109 “Accounting for Income Taxes.” Under SFAS No. 109, deferred tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

We continue to account for income tax contingencies using a benefit recognition model. Beginning January 1, 2007, if we considered that a tax position is 'more likely than not' of being sustained upon audit, based solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that is greater than 50% likely of being realized upon settlement, presuming that the tax position is examined by the appropriate taxing authority that has full knowledge of all relevant information. These assessments can be complex and we often obtain assistance from external advisors.

Under the benefit recognition model, if our initial assessment fails to result in the recognition of a tax benefit, we regularly monitor our position and subsequently recognize the tax benefit if there are changes in tax law or analogous case law that sufficiently raise the likelihood of prevailing on the technical merits of the position to more likely than not; if the statute of limitations expires; or if there is a completion of an audit resulting in a settlement of that tax year with the appropriate agency.

Uncertain tax positions, represented by liabilities on our balance sheet, are now classified as current only when we expect to pay cash within the next 12 months. Interest and penalties, if any, continue to be recorded in Provision for taxes on income and are classified on the balance sheet with the related tax liability.

Historically, our policy had been to account for income tax contingencies based on whether we determined our tax position to be 'probable' under current tax law of being sustained, as well as an analysis of potential outcomes under a given set of facts and circumstances. In addition, we previously considered all tax liabilities as current once the associated tax year was under audit.

Segment information

The Company believes that it operates in one business segment. Management views the business as consisting of several revenue streams; however it is not possible to attribute assets or indirect costs to the individual streams other than direct expenses.

NOTE 3 - PROMISSORY DEPOSITS

The balance of $1,050,522 represents the deposits placed with several property developers in respect of a number of real estate projects where the Company is appointed as sales agent.

As of March 31, 2009, $731,433 out of the total promissory deposits was pledged to secure a promissory note payable in note 8.

NOTE 4 - OTHER RECEIVABLES AND DEPOSITS

	March 31		December 31
	2009		2008

Advances to staff	$	12,494	$	11,389
Rental deposits		70,086		72,228
Prepaid rental		282,492		205,811
Other receivables		44,914		32,667
	$	409,986	$	322,095

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT – NET

	March 31,			December 31,
	2009			2008

Furniture and fixtures	$	162,075		$	146,873
Computer and office equipment		286,830			325,862
Motor vehicles		653,570			654,349
Properties		2,213,237			2,213,659
		3,315,712			3,340,743
Less: Accumulated depreciation		(734,552	)		(690,720	)
	$	2,581,160		$	2,650,023

All above properties as of March 31, 2009 and as of December 31, 2008 were pledged to secure a loan in note 7.

NOTE 6 – INVESTMENT PROPERTIES

	March 31,			December 31,
	2009			2008

Investment property	$	9,058,183		$	9,059,905
Less: Accumulated depreciation		(1,016,063	)		(865,025	)
	$	8,042,120		$	8,194,880

The investment properties included one floor and four units of a commercial building in Suzhou, the PRC, from which the Company derives its underwriting sales income. The investment properties were acquired by the Company for long-term investment purposes and were pledged to secure a loan in note 7. The carrying amount of $6,004,869 was pledged to a promissory note payable in note 8.

As of May 10, 2009, the four units of the investment properties were leased to SZBFND, a related party of the Company, and 95% of the total area of the one remaining floor was leased out.

NOTE 7 - BANK LOANS

Bank loans at March 31, 2009 included two bank loans, as listed below:

First, the balance includes a bank loan of $5,838,942, bears interest at prime rate as announced by the People’s Bank of China and repayable by an approximately $1,450,346 payment on February 1, 2010 and $4,388,596 payment on August 2, 2010. This bank loan is secured by the properties as mentioned in Note 6 above.

Pursuant to the relevant loan agreement, the using of the bank loan is restricted to pay for deposits and expenditures incurred in performing any real estate marketing projects of the Company, and approval from the lending bank is required for any transactions in excess of RMB1 million from the remaining balance. This balance is recorded as restricted cash on the balance sheet.

Second, the remaining bank loan of $358,402 bears interest at prime rate as announced by the People’s Bank of China, and is repayable before December 15, 2010 in monthly installments. The bank loan is secured by the properties as mentioned in Note 5 above.

NOTE 8 – PROMISSORY NOTES PAYABLE

There are five promissory notes, as listed below:

First, the balance includes a promissory note of $111,110 and accrued interest of $5,002 thereon. This promissory note of $111,110 bears interest at a rate of 5% per annum. The promissory note is unsecured and will be repayable before October 31, 2009.

Second, the balance includes a promissory note of $75,000 and accrued interest of $11,667 thereon. This promissory note of $75,000 bears interest at a rate of 5% per annum. This promissory note is unsecured and the term of repayment is not specifically defined.

Third, the balance includes a promissory note of $300,000. This promissory note of $300,000 bears interest at a rate of 15% per annum. This promissory note is unsecured and the term of repayment is not specifically defined.

Fourth, the balance includes a promissory note of $146,287. This promissory note of $146,287 bears interest at a rate of 15% per annum. This promissory note is unsecured and the term of repayment is not specifically defined.

Fifth, the balance includes a promissory note of $438,860. This promissory note of $438,943 bears interest at a rate of 18% per annum. This promissory note is secured by the promissory deposit of $731,572 as mentioned in Note 3 above and one floor of the investment properties as mentioned in Note 6 above and the term of repayment is not specifically defined.

NOTE 9 – AMOUNTS WITH RELATED PARTIES AND DIRECTORS

A related party is an entity that can control or significantly influence the management or operating policies of another entity to the extent one of the entities may be prevented from pursuing its own interests. A related party may also be any party the entity deals with that can exercise that control.

Amount due to directors

Amount due to Lin Chin-Jung

As of March 31, 2009, the balance includes one loan and advances obtained from Lin Chin-Jung.

The loan includes principal of $142,742 and accrued interest of $13,684 thereon. The principal is unsecured, bears interest at a rate of 9.6% per annum and the term of repayment is not specifically defined.

The advances and reimbursements of $12,609 represented the salary payable and rental reimbursement to Lin Chin-Jung outstanding as of March 31, 2009.

Amount due to Lin Chao-Chin

A balance of $34,956 represented the salary payable and rental reimbursement to Lin Chao-Chin outstanding as of March 31, 2009.

Amount due to related party

The amount includes a rental deposit received from SZBFND. This amount is unsecured, interest free and repayable on demand.

NOTE 10 - OTHER PAYABLES AND ACCRUED EXPENSES

	March 31,		December 31,
	2009		2008

Accrued staff commission & bonus	$	404,125	$	556,293
Rental deposits received		816,417		676,121
Accrual for onerous contracts		486,125		446,456
Other payables		453,992		680,198
	$	2,160,659	$	2,359,068

NOTE 11 – OTHER TAX PAYABLE

Other tax payable mainly represents the outstanding payables of business tax, urban real estate tax and land appreciation tax in the PRC.

NOTE 12- COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

During the three months ended March 31, 2009 and 2008, the Company incurred lease expenses amounting to $86,772 and $99,943, respectively. As of March 31, 2009, the Company had commitments under operating leases, requiring annual minimum rentals as follows:

	March 31,		December 31,
	2009		2008

Within one year	$	78,562	$	144,325
Two to five years		20,700		42,995
Operating lease commitments	$	99,262	$	187,320

During the year of 2005 and 2006, SZGFH entered into leasing agreements with certain buyers of the Sovereign Building underwriting project to lease the properties for them. These leasing agreements on these properties are for 62% of the floor space that was sold to third party buyers. In accordance with the leasing agreements, the owners of the properties can have an annual rental return of 8.5% and 8.8% per annum for a period of 5 years and 8 years, respectively. The leasing period started in the second quarter, 2006, and the Company has the right to sublease the leased properties to cover these lease commitments in the leasing period. As of March 31, 2009, 113 sub-leasing agreements have been signed, the area of these sub-leasing agreements represented 89% of total area with these lease commitments.

As of March 31, 2009, the lease commitments are as follows:

	March 31,		December 31,
	2009		2008

Within one year	$	3,239,015	$	3,225,101
Two to five years		7,794,692		7,850,226
Over five years		330,831		346,550
Operating lease commitments arising from the promotional package	$	11,364,538	$	11,421,877

An accrual for onerous contracts was recognized which is equal to the difference between the present value of the sublease income and the present value of the associated lease expense at the appropriate discount rate. The accrual for onerous contracts was $534,889 as of March 31, 2009 and $446,456 as of December 31, 2008.

According to the leasing agreements, the Company has an option to terminate any agreement by paying a predetermined compensation. As of March 31, 2009, the compensation to terminate all leasing agreements is $2,908,473. According to the sub-leasing agreements that have been signed through March 31, 2009, the rental income from these sub-leasing agreements will be $ 2,026,239 within one year and $ 1,001,129 within two to five years. However, no assurance can be given that we can collect all of the rental income.

NOTE 13 –DEPOSITS RECEIVED FROM UNDERWRTING SALES

The Company accounts for its underwriting sales revenue with underwriting rent guarantees in accordance with SFAS No. 66 “Accounting for Sales of Real Estate” (SFAS 66). Under SFAS 66, the deposit method should be used for the revenue from the sales of floor space with underwriting rent guarantees until the rental revenues generated by sub-leasing properties exceed the guaranteed rental amount due to the purchasers.

NOTE 14 – STATUTORY RESERVE

According to the relevant corporation laws in the PRC, a PRC company is required to transfer at least 10% of its profit after taxes, as determined under accounting principles generally accepted in the PRC, to the statutory reserve until the balance reaches 50% of its registered capital. The statutory reserve can be used to make good on losses or to increase the capital of the relevant company.

NOTE 15 – ACCUMULATED OTHER COMPREHENSIVE INCOME

As of March 31, 2009, the only component of accumulated other comprehensive income was translation reserve.

NOTE 16 – CONCENTRATION OF CUSTOMERS

During the three months ended March 31, 2009 and 2008, the following customer accounted for more than 10% of total net revenue:

Percentage of Net Sales

Three Months Ended

March 31,

Percentage of

Accounts Receivable

as at March 31,

2009

2008

2009

2008

Customer A

Customer B

Customer C

Customer D

Customer E

Customer F

* less than 10%

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANICAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Sunrise Real Estate Group, Inc. (“SRRE”). The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes. The information contained in this quarterly report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission, or SEC, including but not limited to our annual report on Form 10-K for the year ended December 31, 2008, which discusses our business in greater detail.

In this report we make, and from time to time we otherwise make, written and oral statements regarding our business and prospects, such as projections of future performance, statements of management’s plans and objectives, forecasts of market trends, and other matters that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements containing the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimates,” “projects,” “seeks”, “believes,” “expects,” “anticipates,” “intends,” “target,” “goal,” “plans,” “objective,” “should” or similar expressions identify forward-looking statements, which may appear in documents, reports, filings with the Securities and Exchange Commission, news releases, written or oral presentations made by officers or other representatives made by us to analysts, stockholders, current or potential investors, news organizations and others, and discussions with management and other of our representatives, customer and suppliers. For such statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Our future results, including results related to forward-looking statements, involve a number of risks and uncertainties. No assurance can be given that the results reflected in any forward-looking statements will be achieved. Any forward-looking statement speaks only as of the date on which such statement is made. Our forward-looking statements are based upon assumptions that are sometimes based upon estimates, data, communications and other information from suppliers, government agencies and other sources that may be subject to revision. Except as required by law, we do not undertake any obligation to update or keep current either (i) any forward-looking statement to reflect events or circumstances arising after the date of such statement, or (ii) the important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or which are reflected from time to time in any forward-looking statement.

In addition to other matters identified or described by us from time to time in filings with the SEC, there are several important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or results that are reflected from time to time in any forward-looking statement. Some of these important factors, but not necessarily all important factors, include those relating to our ability to raise money and grow our business, and potential difficulties in integrating new acquisitions with our current operations, especially as they pertain to foreign markets and market conditions. Please also refer to the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008.

OVERVIEW

In October 2004, the former shareholders of Sunrise Real Estate Development Group, Inc. (Cayman Islands) (“CY-SRRE”) and LIN RAY YANG Enterprise Ltd. (“LRY”) acquired a majority of our voting interests in a share exchange. Before the completion of the share exchange, SRRE had no continuing operations, and its historical results would not be meaningful if combined with the historical results of CY-SRRE, LRY and their subsidiaries.

As a result of the acquisition, the former owners of CY-SRRE and LRY hold a majority interest in the combined entity. Generally accepted accounting principles require in certain circumstances that a company whose shareholders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. Accordingly, the acquisition has been accounted for as a “reverse acquisition” arrangement whereby CY-SRRE and LRY are deemed to have purchased SRRE. However, SRRE remains the legal entity and the Registrant for Securities and Exchange Commission reporting purposes. The historical financial statements prior to October 5, 2004 are those of CY-SRRE and LRY and their subsidiaries. All equity information and per share data prior to the acquisition have been restated to reflect the stock issuance as a recapitalization of CY-SRRE and LRY.

SRRE and its subsidiaries, namely, CY-SRRE, LRY, Shanghai Xin Ji Yang Real Estate Consultation Company Limited (“SHXJY”), Suzhou Xin Ji Yang Real Estate Consultation Company Limited (“SZXJY”), Beijing Xin Ji Yang Real Estate Consultation Company Limited (“BJXJY”), Shanghai Shangyang Real Estate Consultation Company Limited (“SHSY”), Suzhou Gao Feng Hui Property Management Company Limited (“SZGFH”), Suzhou Shang Yang Real Estate Consultation Company Limited (“SZSY”), Suzhou Xin Ji Yang Real Estate Brokerage Company Limited(“SZXJYB”), Kunshan Shang Yang Real Estate Brokerage Company Limited (“KSSY”) and San Ya Shang Yang Real Estate Consultation Company Limited (“SYSY”) are sometimes hereinafter collectively referred to as “the Company,” “our,” or “us”.

The principal activities of the Company are real estate agency sales, real estate marketing services, real estate investments, property leasing services and property management services in the PRC.

RECENT DEVELOPMENTS

Our major business was agency sales, whereby our Chinese subsidiaries contracted with property developers to market and sell their newly developed property units. For these services we earned a commission fee calculated as a percentage of the sales prices. We have focused our sales on the whole China market, especially in secondary cities. To expand our agency business, we have established subsidiaries in Shanghai, Suzhou, Beijing, Kunshan and Hainan, and branches in NanChang, YangZhou, NanJing and ChongQing.

During the years of 2005 and 2006, SZGFH entered into leasing agreements with certain buyers of the Sovereign Building underwriting project to lease the properties for them. These leasing agreements on these properties are for 62% of the floor space that was sold to third party buyers. In accordance with the leasing agreements, the owners of the properties can have an annual rental return of 8.5% and 8.8% per annum for a period of 5 years and 8 years, respectively. The leasing period started in the second quarter, 2006, and the Company has the right to sublease the leased properties to cover these lease commitments in the leasing period. As of May 10, 2009, 115 sub-leasing agreements have been signed, the area of these sub-leasing agreements represented 91% of total area with these lease commitments.

RECENTLY ISSUED ACCOUNTING STANDARDS

In October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active.” This FSP clarifies the application of SFAS No. 157 in a market for that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. This FSP was effective for the Company upon issuance, including prior periods for which financial statements have not been issued; and, therefore was effective for the Company’s financial statements as of and for the three and nine month periods ended September 30, 2008. There was no impact of adoption of FAS 157 as the Company has no financial assets or liabilities which were not classified as level I.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (“GAAP”) for nongovernmental entities. SFAS No. 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. Management does not anticipate that the provisions of SFAS No. 162 will have an impact on the Company’s consolidated results of operations or consolidated financial position.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations,” (“SFAS 141R”) to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. This Statement applies to all transactions or other events in which an entity obtains control of one or more businesses, and combinations achieved without the transfer of consideration. SFAS No. 141 (revised 2007) is effective for business combinations for which the acquisition date is in on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The impact of adopting SFAS 141R will depend on the nature and size of the future business combinations the Company consummates after the effective date.

FASB statement No. 160 “Noncontrolling Interests in Consolidated Financial Statements- an amendment of ARB No. 51” was issued December of 2007. This Statement establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The Company believes that this new pronouncement will have an immaterial impact on the Company’s financial statements in future periods.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Critical accounting policies for us include revenue recognition, net earnings per common share, income taxes and segment information.

Revenue Recognition

Revenue from marketing consultancy services is recognized when services are provided to clients.

Rental revenue from property management and rental business is recognized on a straight-line basis according to the time pattern of the leasing agreements.

All revenues represent gross revenues less sales and business tax.

Net Earnings per Common Share

Income Taxes

Segment Information

RESULTS OF OPERATIONS

We provide the following discussion and analyses of our changes in financial condition and results of operations for the first quarter, 2009, with comparisons to the first quarter, 2008.

Revenue

The following table shows the net revenue detail by line of business:

	Three months ended March 31,
	2009		% to total			2008		% to total			% change
Agency sales	$	727,714		49	%	$	746,777		57	%		(3	)%
Property management	$	767,814		51	%	$	572,768		43	%		34	%
Net revenue	$	1,495,528		100	%	$	1,319,545		100	%		13	%

The net revenue in the first quarter, 2009 was $1,495,528, which was an increase of 13% from $1,319,545 in the first quarter, 2008. In the first quarter, 2009, agency sales represented 49% of net revenue and property management represented 51%. In the first quarter, 2008, agency sales represented 57% of net revenue and property management represented 43%. The increase in net revenue in the first quarter, 2009 was mainly due to the increase in our property management.

Agency sales

Agency sales represented 49% of our net revenue in the first quarter, 2009 and net revenue of agency sales in the first quarter, 2009 decreased 3% compared with same period in 2008. The primary reason was that:

1)	In first quarter, 2009, there were 9 agency sales projects contributing net revenue to the Company, compared to 18 projects in the same period in 2008.

2)	There were several projects in the initial stage, which didn’t contribute net revenue to the Company in the first quarter, 2009.

Because of our diverse market locations, the current macro economic policies had little impact on our agency sales business, and we are seeking stable growth in our agency sales business in 2009. However, there can be no assurance that we will be able to do so.

Property Management

During the years of 2005 and 2006, SZGFH entered into leasing agreements with certain buyers of the Sovereign Building underwriting project to lease the properties for them. These leasing agreements on the Sovereign Building are for 62% of the floor space that was sold to third party buyers. The leasing period started in the second quarter of 2006, and in the leasing period SZGFH has the right to sublease the leased properties to earn rental income. As of March 31, 2009, 113 sub-leasing agreements were signed. The area of these sub-leasing agreements represents 89% of total area under these lease commitments. We expect that the income from the sub-leasing business will be on a stable growth trend in 2009 and that it can cover the lease commitments in the leasing period as a whole. However there can be no assurance that we will achieve these objectives.

Cost of Revenue

The following table shows the cost of revenue detail by line of business:

	Three months ended March 31,
	2009		% to total			2008		% to total			% change
Agency sales	$	245,310		20	%	$	534,322		37	%		(54	)%
Property management	$	984,961		80	%	$	894,430		63	%		10	%
Cost of revenue	$	1,230,271		100	%	$	1,428,752		100	%		(14	)%

The cost of revenue in the first quarter, 2009 was $1,230,271, a decrease of 14% from $1,428,752 in the same period in 2008. In the first quarter, 2009, agency sales represented 20% of cost of revenue and property management represented 80%. In the first quarter, 2008, agency sales represented 37% of cost of revenue and property management represented 63%. The decrease in cost of revenue in first quarter, 2009 was mainly due to the decrease in our agency sales.

Agency sales

The cost of revenue for agency sales in the first quarter, 2009 was $245,310, a decrease of 54% from $534,322 in the same period in 2008. This decrease was mainly due to the decrease in our staff costs, commissions and consulting fees in the first quarter, 2009, compared to the same period in 2008, the decrease of such expenses was $76,951, $36,354 and $155,579 respectively.

Property management

During the years of 2005 and 2006, SZGFH entered into leasing agreements with certain buyers of the Sovereign Building underwriting project to lease the properties for them. In accordance with the leasing agreements, the owners of the properties can enjoy an annual rental return at 8.5% and 8.8% per annum for a period of 5 years and 8 years, respectively.

The leasing period started in the second quarter, 2006, and we recognized the rental coverage that we pay under these leasing agreements as our cost. As certain properties under this promotion package were not leased out in the first quarter of 2009, the Company recorded a negative gross profit margin for this period. We expect that these properties will be leased out in 2009, the gross margin will be improved. However, no assurance can be given that this will be the case.

An accrual for onerous contracts was recognized which is equal to the difference between the present value of the sublease income and the present value of the associated lease expense at appropriate discount rate. The accrual for onerous contacts was$534,889 as of March 31, 2009 and $446,456 as of December 31, 2008.

Operating Expenses

The following table shows operating expenses detail by line of business:

	Three months ended March 31,
	2009		% to total			2008		% to total			% change
Agency sales	$	146,720		77	%	$	278,451		90	%		(47	)%
Property management	$	44,920		23	%	$	32,175		10	%		40	%
Operating expenses	$	191,640		100	%	$	310,626		100	%		(38	)%

The operating expenses in the first quarter, 2009 were $191,640, a decrease of 38% from $310,626 in the same period in 2008. In the first quarter, 2009, agency sales represented 77% of operating expenses and property management represented 23%. In the first quarter, 2008, agency sales represented 90% of operating expenses and property management represented 10%. The decrease in operating expenses in the first quarter of 2009 was mainly due to the decrease in our agency sales.

Agency sales

The operating expenses for agency sales in the first quarter, 2009 were $146,720 which decreased 47% from $278,451 in the same period in 2008. This decrease was mainly due to the decrease in staff costs and office expenses in the first quarter, 2009, compared to the same period in 2008, the decrease of such expenses was $88,987 and $24,308 respectively.

Property management

The operating expenses for property management in the first quarter, 2009 were $44,920, an increase of 40% from $32,175 in the same period in 2008. This increase was mainly due to the increase in staff costs and commissions in the first quarter, 2009, compared to the same period in 2008, the increase of such expenses was $5,981 and $6,825 respectively.

General and Administrative Expenses

The general and administrative expenses in the first quarter, 2009 were $481,555, a decrease of 37% from $767,394 in the same period in 2008. This decrease was mainly due to the decrease in staff costs and business travel expenses in the first quarter, 2009, compared to the same period in 2008, the decrease of such expenses was $151,325 and $55,094 respectively.

Interest Expenses

Interest expenses in the first quarter, 2009 were $144,374, increasing 1% from $143,640 in the same period in 2008. The interest expenses were mainly incurred for bank loans and promissory notes payable.

LIQUIDITY AND CAPITAL RESOURCES

In the first quarter of 2009, our principal sources of cash were revenues from our agency sales and property management business. Most of our cash resources were used to fund our revenue related expenses, such as salaries and commissions paid to the sales force, daily administrative expenses and the maintenance of regional offices, and the repayments of our bank loans and promissory notes.

We ended the period with a cash position of $620,731 (including cash and cash equivalents of $595,413 and restricted cash of $25,318).

The Company’s operating activities used cash in the amount of $85,094, which was primarily attributable to the Company’s net loss in the amount of $482,881. The net loss in the first quarter of 2009 represented a reduction in net losses of $831,150, compared to the Company’s net loss for the first quarter of 2008 of $1,314,031.,

The Company’s investing activities provided cash resources of $2,413, which was primarily attributable to the use of restricted cash.

The Company’s financing activities provided cash resources of $97,993, which was primarily attributable to the advance from director and proceeds from promissory notes.

The potential cash needs for 2009 will be the repayments of our bank loans and promissory notes, the rental guarantee payments and promissory deposits for various property projects.

We anticipate that our current available funds, cash inflows from providing property agency services and management services, the proceeds from investment properties and the impending sale of shares of Common Stock to Whole World will be sufficient to meet our anticipated needs for working capital expenditures, business expansion and the potential cash needs during 2009.

If our business otherwise grows more rapidly than we currently predict, we plan to raise funds through the issuance of additional shares of our equity securities in one or more public or private offerings. We will also consider raising funds through credit facilities obtained with lending institutions. There can be no guarantee that we will be able to obtain such funds through the issuance of debt or equity that are with terms satisfactory to management and our board of directors.

The Company incurred losses of $482,881 for the first quarter of 2009 and had a net working capital deficiency of $9,281,799 as of March 31, 2009. The Company’s net working capital deficiency, recurring losses and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern.

On March 10, 2009, we entered into a Share Purchase Agreement with Whole World Holding Corporation (“Whole World”) to issue 57 million shares to Whole World for US $20 million. This agreement, subject to standard closing terms and conditions, was scheduled to close on or before May 17, 2009. On May 17, 2009, the Company and Whole World agreed to extend the closing date until on or before August 17, 2009 and the terms and conditions of the Share Purchase Agreement otherwise remained unchanged. Management believes that the successful completion of the Share Purchase Agreement will enable the Company to have sufficient cash flow to meet its obligations on a timely basis and ultimately to attain successful operations in respect of the agency sales and building management operations.

OFF BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A smaller reporting company is not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2009. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective at March 31, 2009, to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. There were no changes in our internal controls over financial reporting during the quarter ended March 31, 2009, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not a party to any legal proceedings of a material nature.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 10, 2009, we entered into a Share Purchase Agreement with Whole World Holding Corporation (“Whole World”) to issue 57 million shares to Whole World for US $20 million. This agreement, subject to standard closing terms and conditions, is scheduled to close on or before August 17, 2009. In connection with the issue of its shares to Whole World or their designees, Sunrise will rely on Regulation S as its exemption from the registration requirements of the Securities Act of 1933. All of such persons are non-US persons and agree that the shares may not be transferred or sold except in accordance with the provisions of Regulation S and/or compliance with the registration requirements of the Securities Act of 1933 or in reliance upon an applicable exemption therefrom. The certificates representing the Sunrise shares shall bear a legend reflecting such transfer restrictions and stop transfer orders will be placed with the transfer agent against these shares.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit	Description
Number

31.1	Section 302 Certification by the Corporation's Chief Executive Officer.

31.2	Section 302 Certification by the Corporation's Chief Financial Officer.

32.1	Section 1350 Certification by the Corporation's Chief Executive Officer and Corporation's Chief Financial Officer.

SIGNATURES

In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SUNRISE REAL ESTATE GROUP, INC.

Date: May 19, 2009	By: /s/ Lin, Chi-Jung
	Lin, Chi-Jung, Chief Executive Officer

Date: May 19, 2009	By: /s/ Wang Wen-Yan
	Wang Wen-Yan, Chief Financial Officer