- Annual Report (10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2008

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-32585

SUNRISE REAL ESTATE GROUP, INC.

(Name of Small Business Issuer in its Charter)

Texas	6351	75-2713701
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

Suite 701, No. 333, Zhaojiabang Road

Shanghai, PRC 200032

(Address of Principal Executive Offices) (Zip Code)

Issuer's telephone number: + 86-21-6422-0505

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨ No þ

Check whether the issuer(1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ¨ No þ

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

	Large accelerated filer ¨		Accelerated filer ¨
	Non-accelerated filer ¨ (Do not check if a smaller reporting company)		Smaller reporting company þ

The issuer's net revenues for its most recent fiscal year ended December 31, 2008 were US$8,075,193.

As of March 31, 2009 the aggregate market value of the Common Stock held by non-affiliates, 14,334,375 shares of Common Stock, was $4,371,984 based on an average of the bid and ask prices of $0.305 per share of Common Stock on such date.

The number of shares outstanding of the issuer's Common Stock, $0.01 par value, as of March 31, 2009 was 23,691,925 shares.

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

SUNRISE REAL ESTATE GROUP, INC.

FORM 10-K

TABLE OF CONTENTS

		Page
PART I
Item 1.	Description of Business	2
Item 2.	Description of Property	7
Item 3.	Legal Proceedings	7
Item 4.	Submission of Matters to a Vote of Security Holders	7
PART II
Item 5.	Market for Common Equity and Related Stockholder Matters	8
Item 6.	Selected Financial Data	8
Item 7.	Management's Discussion and Analysis or Plan of Operation	8
Item 8.	Financial Statements	22
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	37
Item 9A.	Controls and Procedures	37
Item 9B.	Other Information	38
PART III
Item 10.	Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance With Section 16(A) of the Exchange Act	39
Item 11.	Executive Compensation	42
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	43
Item 13.	Certain Relationships and Related Transactions and Director Independence	43
Item 14.	Principal Accountant Fees and Services	44
Item 15.	Exhibits	45

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Corporate History

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.

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 .

General Business Description

SRRE was incorporated on October 10, 1996 as a Texas corporation and was formerly known as Parallax Entertainment, Inc. SRRE has gone through a series of transactions leading to the completion of a reverse merger on October 5, 2004. Prior to the closing of the exchange agreements described in “Corporate History” above, SRRE was an inactive "shell" company. Following the closing, SRRE, through its two wholly owned subsidiaries, CY-SRRE and LRY, has engaged in the property brokerage services, real estate marketing services, property leasing services and property management services in the PRC .

The Company recognizes that in order to differentiate itself from the market, it should avoid direct competition with large-scale property developers who have their own marketing departments. Our objective is to develop a niche position with marketing alliances with medium size and smaller developers, and become their outsourcing marketing and sales agents.

SRRE operates through a tier of wholly owned subsidiaries of Sunrise Real Estate Development Group, Inc., a Cayman Islands corporation ("CY-SRRE") and LIN RAY YANG Enterprise, Ltd., a British Virgin Islands company ("LRY"). Neither CY-SRRE nor LRY have operations but conduct operations in Mainland China through their respective subsidiaries that are based in the PRC. CY-SRRE operates through its wholly owned subsidiary, SHXJY. LRY operates through its two wholly owned subsidiaries, SHSY and SZGFH. SHXJY and SHSY are property agency business earning commission revenue from marketing and sales services to developers. The main business of SZGFH is to render property rental service, buildings management and maintenance service for office buildings. Our company organization chart is as follows:

Figure 1: Company Organization Chart

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 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, 116 sub-leasing agreements have been signed, the area of these sub-leasing agreements represented 90% of total area with these lease commitments.

With a relatively short history and smaller capital base, we recognize that in order to differentiate ourselves from the market, we need to avoid direct competition with large-scale property developers, who have their own marketing departments. We plan to utilize our professional experience to carve a niche and position by developing marketing alliances with medium size and smaller developers. This strategic plan is designed to expand our activities beyond our existing revenue base, enabling us to assume higher investment risk and giving us flexibility in collaborating with partnering developers. The plan is aimed at improving our capital structure, diversifying our revenue base, creating higher values and equity returns.

In the past seven years, we have established a reputation as a sales and marketing agency for new projects. With our accumulated expertise and experience, we intend to take a more aggressive role by participating in property investments. We plan to select property developers with outstanding qualifications as our strategic partners, and continue to build strength in design, planning, positioning and marketing services.

Business Activities

Our main operating subsidiaries, SHXJY and SHSY, have engaged in sales and marketing agency work for newly built property units. We also have developed a good network of landowners and earned the trust of developers, allowing us to explore opportunities in property investments.

In order to build a cushion against the cyclical nature of the real estate industry and have a more diversified revenue base, we established another operating subsidiary, SZGFH, to deal with property management and rental operations.

Commission Based Services

Commission based services refer to marketing and sales agency operations, which provide the following services:

a. Integrated Marketing Planning

b. Advertising Planning & Execution

c. Sales Planning and Execution

In this type of business, we sign a marketing and sales agency agreement with property developers to undertake the marketing and sales activities of a specific project. The scope of service varies according to clients' needs; it could be a full package of all the above services, a combination of any two of the above services or any single service.

A major part of our existing revenue comes from commission-based services. We secure these projects via bidding or direct appointments. As a result of our relationships with existing clients and our sales track record, we have secured a number of cases from prior clients on subsequent phases of projects.

Normally, before a developer retains us, we will evaluate and determine the Average Sales Value of a project. This value will be proposed to the developer, and the parties will determine and agree on an Average Sales Value as the basis of our agency agreement. The actual sales price of the project is generally priced higher than the Average Sales Value depending on market conditions. On average, we have been to sell the property at a small premium over Average Sales Value.

Our normal commission structure is a combination of the following:

a) Base Commission of 1.0% - 1.5% based on the Average sales value.

b) Surplus Commission of 10% - 30% based on the difference between Average Sales Value and actual sales price.

Our wholly owned subsidiaries, SHXJY and SHSY, engage in this sales and marketing phase of our business.

Mainland China's Property Sector

The industry's macro environment is opening up, and the property sector is gradually developing to be a more regulated market. Stable economic growth provides a solid and secure base for investment returns in the property sector.

GDP Growth of PRC for the period of 2004 through 2008

	GDP GROWTH
2004		10.1	%
2005		10.4	%
2006		10.7	%
2007		11.4	%
2008		9.0	%

Government regulation

On January 3, 2008 the State Council issued the Circular of the State Council on Promoting Efficient and Intensive Land Use. The Circular calls for strict reviews of planning and standards for land use. It also puts forward specific rules aiming to reduce the amount of idle lands and better implement economic mechanisms for a more efficient use of land.

The Measures for Land Registration went into effect in China on February 1, 2008, signifying a step by the Ministry of Land and Resources to implement the relevant provisions in the Property Law, which went into effect on October 1, 2007. The Measures delineate the categories of land-related rights that should be registered, streamline the registration process, and add new types of registration to better protect the holders of various rights.

In order to regulate transactions involving state-owned land-use rights and to add transparency to the transaction process, the Shanghai Municipal People’s Government (the Shanghai Government) opened the Shanghai Land Exchange on March 1, 2008. In conjunction with the administration of the Exchange, the Shanghai Government issued the Administrative Measures for the Shanghai Land Exchange on February 28, 2008 and the Measures took effect on March 1, 2008.

On December 20, 2008, the General Office of the State Council issued the Several Opinions on Promoting the Sound Development of the Real Estate Market, which took effect on the same day. In the Opinions, the General Office urges provincial governments and the State Council’s committees to make their best efforts in ensuring an adequate supply of social security housing. The central government sets a three-year time frame to help lower-income households enhance their living conditions by building more low-rent and low-price residences, and renovating residences in poor condition. It also outlines favorable policies for people purchasing their second residences to boost real estate sales. In order to promote the resale of residences, the General Office provides tax exemptions under certain conditions.

In addition, the Opinions abolish the urban real estate tax. Both domestic and foreign enterprises and individuals are entitled to the same tax rate provided under the Interim Regulations on Real Estate Taxation of the People’s Republic of China. It represents the Chinese government’s third adjustment to real estate tax policies in 2008

Environmental matters

None

Employees

As of December 31, 2008, we had the following number of employees:

	Employees
SRRE
Administration Dept.	6
Accounting Dept.	2
Investor Relations Dept.	2
Research & Development Dept.	5

SHXJY
Administration Dept.	9
Accounting Dept.	3
Research & Development Dept.	9
Advertising & Communication Planning Dept.	3
Marketing Dept.	38

Nanchang Branch of SHXJY
Marketing Dept.	10

Yangzhou Branch of SHXJY
Accounting Dept.	2
Marketing Dept.	17

Chongqing Branch of SHXJY
Accounting Dept.	2
Marketing Dept.	11

SZXJY and Nanjing Branch
Administration Dept.	10
Accounting Dept.	3
Research & Development Dept.	8
Advertising & Communication Planning Dept.	6
Marketing Dept.	52

SZSY
Marketing Dept.	24

SZXJYB
Marketing Dept.	7

BJXJY
Administration Dept.	1

SHSY
Administration Dept.	5
Research & Development Dept.	5
Accounting Dept.	2
Marketing Dept.	6

SYSY
Marketing Dept.	12

SZGFH
Administration Dept.	1
Accounting Dept.	3
Marketing Dept.	4

Total	268

ITEM 1A. RISK FACTORS

Not Applicable

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. DESCRIPTION OF PROPERTY

We currently rent our facilities at 7 th Floor, No.333, Zhaojiabang Road, Shanghai, PRC. We also have regional field support offices in various cities in Mainland China, namely Suzhou, Beijing, Nanchang, Yangzhou, Chongqing, Nanjing and Hainan. We lease the facilities that house our regional field support offices.

During the past four years, the Company has also acquired two floors and four units of the Sovereign Building in Suzhou, PRC. The properties under development were completed on March 31, 2006, and we have paid the full purchase price to the property developer. In 2007, the title for these properties were transferred to the Company. The Company decided that one floor will be held for the Company’s own use, and the remaining properties will be held for long-term investment purposes. Accordingly, the costs of the properties for the Company’s own use was $2,213,659 and the investment properties was $9,059,905.

As of December 31, 2008, the bank loan secured by the investment properties was $5,840,053 and bears interest at prime rate as announced by the People’s Bank of China . The bank loan secured by the properties for the Company’s own use was $ 409,680, which is repayable before December 15, 2010 in monthly installments and bears interest at prime rate as announced by the People’s Bank of China .

ITEM 3. LEGAL PROCEEDINGS

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

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

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the Over-the-Counter Bulletin Board system under the symbol “SRRE.” The following table sets forth the high and low quotations of our common stock reported by the OTCBB system for the periods indicated.

Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commissions, and may not necessarily represent actual transactions.

(Expressed in US Dollars)

	2008				2007
	High		Low		High		Low
First quarter	$	0.38	$	0.15	$	1.98	$	1.65
Second quarter	$	0.52	$	0.12	$	2.15	$	1.02
Third quarter	$	0.70	$	0.12	$	1.95	$	0.25
Fourth quarter	$	0.40	$	0.05	$	0.80	$	0.15

As of March 31, 2009, we had approximately 1,271 record holders of our common stock. On March 31, 2009, the closing price of our common stock was $0.62.

No cash dividends were declared on our common stock in 2008 and 2007. The major reason for not declaring any cash dividends is that we are still a growing company and require sufficient liquidity to fund our business activities. In the future, in the event we have funds available for distribution, we may consider paying cash dividends on our common stock.

The Company did not repurchase any of its outstanding equity securities during the year ended December 31, 2008.

No securities of the Company were issued pursuant to any equity compensation plan during the year ended December 31, 2008.

ITEM 6. SELECTED FINANCIAL DATA

Not Applicable

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Sunrise Real Estate Group, Inc. (“SRRE”). MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes.

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

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-K

In addition to historical information, this Form 10-K contains forward-looking statements. Forward-looking statements are based on our current beliefs and expectations, information currently available to us, estimates, projections about our industry, and certain assumptions made by our management. These statements are not historical facts. We use words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", and similar expressions to identify our forward-looking statements, which include, among other things, our anticipated revenue and cost of our agency and investment business.

Because we are unable to control or predict many of the factors that will determine our future performance and financial results, including future economic, competitive, and market conditions, our forward-looking statements are not guarantees of future performance. They are subject to risks, uncertainties, and errors in assumptions that could cause our actual results to differ materially from those reflected in our forward-looking statements. We believe that the assumptions underlying our forward-looking statements are reasonable. However, the investor should not place undue reliance on these forward-looking statements. They only reflect our view and expectations as of the date of this Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statement in light of new information, future events, or other occurrences.

There are several risks and uncertainties, including 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. These risks and uncertainties can materially affect the results predicted. The Company’s future operating results over both the short and long term will be subject to annual and quarterly fluctuations due to several factors, some of which are outside our control. These factors include but are not limited to fluctuating market demand for our services, and general economic conditions.

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

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 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.

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.

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.

RESULTS OF OPERATIONS

We provide the following discussion and analyses of our changes in financial condition and results of operations for the year ended December 31, 2008, with comparisons to the historical year ended December 31, 2007.

Revenue

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

	Years ended December 31,
	2008		% to total		2007		% to total		% change
Agency sales		5,087,634		63		6,655,582		82		(24	)
Underwriting sales		-		-		275,465		3		(100	)
Property management		2,987,559		37		1,170,277		15		155
Net revenue		8,075,193		100		8,101,324		100		(1	)

The net revenues for 2008 were $8,075,193, which decreased 1% from $8,101,324 of 2007. In 2008, agency sales represented 63% of the total net revenues and property management represented 37%. The decrease in 2008 was mainly due to the decrease in our agency sales revenue.

Agency sales

In 2008 63% of our net revenue was due to agency sales, which were from the business activities of SHXJY, SHSY and their subsidiaries and branches. As compared with 2007, net revenue of agency sales in 2008 decreased 24%. Primary reasons for this change was that in 2007 there were three projects that contributed net revenue in the aggregate amount of $2.49million to SHXJY, and the net revenue from these projects in 2008 decreased by $1.54million.

Because of our diverse market locations, the current macro economic policies had little impact on our business operations in agency sales in 2008, 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 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 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 December 31, 2008, 125 sub-leasing agreements were signed. The area of these sub-leasing agreements represents 94% 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 Revenues

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

	Years ended December 31,
	2008		% to total		2007		% to total		% change
Agency sales		3,008,265		45		3,212,473		47		(6	)
Underwriting sales		-		-		214,559		3		(100	)
Property management		3,654,595		55		3,378,931		50		8
Cost of revenue		6,662,860		100		6,805,963		100		(2	)

The cost of revenues for 2008 was $6,662,860; this was a decrease of 2% from $6,805,963 in 2007. In 2008, agency sales represented 45% of total cost of revenues and property management represented 55%. The decrease in cost of revenues in 2008 was mainly due to the decrease in our agency sales.

Agency sales

As compared with 2007, cost of revenue of agency sales in 2008 decreased 6%. The primary reason for the change was the decrease in our commissions paid to marketing staff. In 2008, our commissions paid to marketing staff decreased $414,924 compared to 2007.

Property management

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. 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 2008, the Company recorded a negative gross profit margin for 2008. 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 lease contracts, 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, was recognised. The accrual for onerous lease contacts was $535,811 as of December 31, 2007 and $446,456 as of December 31, 2008.

Operating Expenses

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

	Years ended December 31,
	2008		% to total		2007		% to total		% change
Agency sales		1,180,917		92		853,309		75		38
Underwriting sales		-		-		99,385		9		(100	)
Property management		105,784		8		177,318		16		(40	)
Operating expenses		1,286,701		100		1,130,012		100		14

The operating expenses of 2008 were $1,286,701; these increased 14% from $1,130,012 in 2007. In 2008, agency sales represented 92% of the total operating expenses and property management represented 8%. The increase in operating expenses in 2008 was mainly due to the increase in our agency sales expenses.

Agency sales

When compared to 2007, the operating expenses for agency sales in 2008 increased 38%. The primary reason for the increase in 2008 was the increase in staff cost, business travel expenses and lease expenses of $230,810, $42,647 and $39,080 respectively, compared to 2007. These increased costs are incurred to strengthen our marketing workforce.

Property management

When compared to 2007, the operating expenses for property management in 2008 decreased 40%. The main reason for the decrease was the agency commissions of SZGFH. In 2008, the agency commissions decreased $63,278, compared to 2007.

General and Administrative Expenses

The general and administrative expenses in 2008 were $4,380,662, decreasing 6% from $4,654,995 in 2007. Primary reasons for the change were the following:

i)	The decrease in our staff cost. In 2008, our staff cost decreased $111,110, compared to 2007.


ii)	The decrease in legal fees. In 2008, legal fees decreased $120,942, compared to 2007.


iii)	The decrease in business travel expenses. In 2008, business travel expenses decreased $145,807, compared to 2007.


iv)	The decrease in consulting fees. In 2008, consulting fees decreased $113,217, compared to 2007.


v)	In 2007, the bad debt expenses and fit-out expenses were $114,543 and $80,579, and there was no such expenses in 2008.


vi)	In 2008, an impairment loss on equity investment of $83,399 and an impairment loss on amount due from related party of $314,317 were made


vii)	In 2008, an impairment loss on advances to minority interest of consolidated project venturers of $989,822 was made.

Interest Expenses

When compared to 2007, the interest expenses in 2008 decreased 34%. The interest expenses relate to bank loans and promissory notes payable.

Major Related Party Transaction

None.

LIQUIDITY AND CAPITAL RESOURCES

In 2008, 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 $619,879 (including cash and cash equivalents of $587,468 and restricted cash of $32,411). The Company’s operating activities used cash in the amount of $3,746,656, which was primarily attributable to the Company’s net loss in the amount of $6,028,907.

The Company’s investing activities consumed cash resources of $630,032 in 2008.

The Company’s financing activities used cash resources of $45,547 in 2008, which was primarily attributable to the repayment to director and 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, and the proceeds from investment properties 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 has incurred losses of $6,028,907 for the year ended December 31, 2008 and had a net working capital deficiency of $7,014,364 as of December 31, 2008. 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.

The Company is negotiating a Share Purchase Agreement with Whole World Holding Corporation (“Whole World”) to issue 57,000,000 underlying shares to Whole World for a consideration of $20,000,000, which is scheduled to close on or before May 17, 2009. Management believes that the successful completion of the aforesaid 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.

RISK FACTORS

SRRE has identified a number of risk factors faced by the Company. These factors, among others, may cause actual results, events or performance to differ materially from those expressed in this 10-K or in press releases or other public disclosures. You should be aware of the existence of these factors.

RISKS RELATING TO THE GROUP

SRRE is a holding company and depends on its subsidiaries’ cash flows to meet its obligations.

SRRE is a holding company, and it conducts all of its operations through its subsidiaries. As a result, its ability to meet any obligations depends upon its subsidiaries’ cash flows and payment of funds as dividends, loans, advances or other payments. In addition, the payment of dividends or the making of loans, advances or other payments to SRRE may be subject to regulatory or contractual restrictions.

Our invoicing for commissions may be delayed.

Generally, we recognize our commission revenues after the contracts signed with developers are completed and confirmations are received from the developers. However, sometimes we do not recognize income even when we have rendered our services for any of the following reasons:

a.	The developers have not received payments from potential purchasers who have promised to pay the outstanding sum by cash;


b.	The purchasers, who need to obtain mortgage financing to pay the outstanding balance due, are unable to obtain the necessary financing from their banks;


c.	Banks are sometimes unwilling to grant the necessary bridge loan to the developers in time due to the developers’ relatively low credit rating;


d.	The developers tend to be in arrears with sales commissions; therefore, do not grant confirmation to us to be able to invoice them accordingly.

Development of new business may stretch our cash flow and strain our operation efficiency.

Business expansion and the need to integrate operations arising from the expansion may place a significant strain on our managerial, operational and financial resources, and will further contribute to a needed increase in our financial needs.

Risks associated with a Guaranteed Rental Return Promotion.

During 2005 and 2006, we launched a promotional package that allows property buyers and investors to enjoy a 5 or 8 year guaranteed rental return at 8.5% or 8.8% of the property purchase costs per annum for a leasing period of 5 or 8 years, respectively. We are continuing to promote this package. The return is guaranteed by SZGFH, whereby SZGFH’s principal activities are real estate leasing and property management services. However, we may not successfully sublease the targeted properties at prices higher than what we committed in the promotional package. Our failure to do so could adversely affect our financial condition.

Our acquisition of new property may involve risks.

These acquisitions involve several risks including, but not limited to, the following:

a.	The acquired properties may not perform as well as we expected or ever become profitable.


b.	Improvements to the properties may ultimately cost significantly more than we had originally estimated.

Additional acquisitions might harm our business.

As part of our business strategy, we may seek to acquire or invest in additional businesses, products, services or technologies that we think could complement or expand our business. If we identify an appropriate acquisition opportunity, we might be unable to negotiate the terms of that acquisition successfully, finance it, or integrate it into our existing business and operations. We may also be unable to select, manage or absorb any future acquisitions successfully. Furthermore, the negotiation of potential acquisitions, as well as the integration of an acquired business, would divert management time and other resources. We may have to use a substantial portion of our available cash to consummate an acquisition. If we complete acquisitions through exchange of our securities, our shareholders could suffer significant dilution. In addition, we cannot assure you that any particular acquisition, even if successfully completed, will ultimately benefit our business.

Our real estate investments are subject to numerous risks.

We are subject to risks that generally relate to investments in real estate. The investment returns available from equity investments in real estate depend in large part on the amount of income earned and capital appreciation generated by the related properties, as well as the expenses incurred. In addition, a variety of other factors affect income from properties and real estate values, including governmental regulations, insurance, zoning, tax and eminent domain laws, interest rate levels and the availability of financing. For example, new or existing real estate zoning or tax laws can make it more expensive and/or time-consuming to develop real property or expand, modify or renovate properties. When interest rates increase, the cost of acquiring, developing, expanding or renovating real property increases and real property values may decrease as the number of potential buyers decrease. Similarly, as financing becomes less available, it becomes more difficult both to acquire and to sell real property. Finally, governments can, under eminent domain laws, take real property. Sometimes this taking is for less compensation than the owner believes the property is worth. Any of these factors could have a material adverse impact on results of our operations or financial condition. In addition, equity real estate investments, such as the investments we hold and any additional properties that we may acquire, are relatively difficult to sell quickly. If our properties do not generate sufficient revenue to meet operating expenses, including debt servicing and capital expenditures, our income will be reduced.

Competition, economic conditions and similar factors affecting us, and the real estate industry in general, could affect our performance.

Our properties and business are subject to all operating risks common to the real estate industry. These risks include:

a.	Adverse effects of general and local economic conditions;


b.	Increases in operating costs attributable to inflation and other factors; and


c.	Overbuilding in certain property sectors.

These factors could adversely affect our revenues, profitability and results of operations.

Our business is susceptible to fluctuations in the real estate market of China, especially in certain areas of eastern China where a significant portion of our operations are concentrated, which may adversely affect our revenues and results of operations.

We conduct our real estate services business primarily in China. Our business depends substantially on the conditions of the PRC real estate market. Demand for private residential real estate in China has grown rapidly in the recent decade but such growth is often coupled with volatility in market conditions and fluctuation in real estate prices. Following a period of rising real estate prices and transaction volume in most major cities, the industry experienced a severe downturn in 2008, with transaction volume in many major cities declining by more than 40% compared to 2007. Average selling prices also declined in many cities during 2008. Fluctuations of supply and demand in China’s real estate market are caused by economic, social, political and other factors. To the extent fluctuations in the real estate market adversely affect real estate transaction volumes or prices, our financial condition and results of operations may be materially and adversely affected.

As a significant portion of our operations is concentrated in Shanghai, Jiangsu Province, any decrease in demand or real estate prices or any other adverse developments in these regions may materially and adversely affect our total real estate transaction volumes and average selling prices, which may in turn adversely affect our revenues and results of operations.

Our business may be materially and adversely affected by government measures aimed at China’s real estate industry.

The real estate industry in China is subject to government regulations. Until 2008, the real estate markets in a number of major cities in China had experienced rapid and significant growth. Before the global economic crisis hit all the major economies worldwide in 2008, the PRC government had adopted a series of measures to restrain what it perceived as unsustainable growth in the real estate market. From 2003 to 2007, the PRC government introduced a series of specific administrative and credit-control measures including, but not limited to, setting minimum down payment requirements for residential and commercial real estate transactions, limiting availability of mortgage loans, and tightening governmental approval process for certain real estate transactions.

Since 2008, the PRC government has relaxed such restrictions and introduced measures aimed at stimulating residential property purchases by individuals and stabilizing the real estate market. On October 22, 2008, the Ministry of Finance, the State Administration of Taxation and the People’s Bank of China lowered transaction taxes, minimum down payment requirements, and the mortgage interest rate for certain residential real estate transactions. In December 2008, the General Office of the State Council promulgated rules that exempted certain residential real estate transactions from business tax and urban real estate tax.

However, despite the recent government measures aimed at maintaining the long-term stability of the real estate market, we cannot assure you that the PRC government will not adopt new measures in the future that may result in short-term downward adjustments and uncertainty in the real estate market. Our business may be materially and adversely affected as a result of decreased transaction volumes or real estate prices that may follow these adjustments or market uncertainty.

We operate in a highly competitive environment.

Our competitors may be able to adapt more quickly to changes in customer needs or to devote greater resources than we can to developing and expanding our services. Such competitors could also attempt to increase their presence in our markets by forming strategic alliances with other competitors, by offering new or improved services or by increasing their efforts to gain and retain market share through competitive pricing. As the market for our services matures, price competition and penetration into the market will intensify. Such competition may adversely affect our gross profits, margins and results of operations. There can be no assurance that we will be able to compete successfully with existing or new competitors.

We may be unable to effectively manage our growth.

We will need to manage our growth effectively, which may entail devising and effectively implementing business and integration plans, training and managing our growing workforce, managing our costs, and implementing adequate control and reporting systems in a timely manner. We may not be able to successfully manage our growth or to integrate and assimilate any acquired business operations. Our failure to do so could affect our success in executing our business plan and adversely affect our revenues, profitability and results of operations.

If we fail to successfully manage our planned expansion of operations, our growth prospects will be diminished and our operating expenses could exceed budgeted amounts.

Our ability to offer our services in an evolving market requires an effective planning and management process. We have expanded our operations rapidly since inception, and we intend to continue to expand them in the foreseeable future. This rapid growth places significant demand on our managerial and operational resources and our internal training capabilities. In addition, we have hired a significant number of employees and plan to further increase our total work force. This growth will continue to substantially burden our management team. To manage growth effectively, we must:

a.	Implement and improve our operational, financial and other systems, procedures and controls on a timely basis.


b.	Expand, train and manage our workforce, particularly our sales and marketing and support organizations.

We cannot be certain that our systems, procedures and controls will be adequate to support our current or future operations or that our management will be able to handle such expansion and still achieve the execution necessary to meet our growth expectations. Failure to manage our growth effectively could diminish our growth prospects and could result in lost opportunities as well as operating expenses exceeding the amount budgeted.

We may be unable to maintain internal funds or obtain financing or renew credit facilities in the future.

Adequate financing is one of the major factors, which can affect our ability to execute our business plan in this regard. We finance our business mainly through internal funds, bank loans or raising equity funds. There is no guarantee that we will always have internal funds available for future developments or we will not experience difficulties in obtaining financing and renewing credit facilities granted by financial institutions in the future. In addition, there may be a delay in equity fundraising activities. Our access to obtain debt or equity financing depends on the banks' willingness to lend and on conditions in the capital markets, and we may not be able to secure additional sources of financing on commercially acceptable terms, if at all.

Our recent transaction with Whole World Holding Corp may not be consummated.

On March 10, 2009, the Company entered into a Share Purchase Agreement with 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 May 17, 2009. Our business will be adversely affected if we do not obtain the $20 million to be paid by Whole World.

We may need to raise additional capital that may not be available on terms favorable to us, if at all.

We may need to raise additional capital in the future, and we cannot be certain that we will be able to obtain additional financing on favorable terms, if at all. If we cannot raise additional capital on acceptable terms, we may not be able to develop or enhance our services, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements. To fully realize our business objectives and potential, we may require additional financing. We cannot be sure that we will be able to secure the financing we will require, or that it will be available on favorable terms. If we are unable to obtain any necessary additional financing, we will be required to substantially curtail our approach to implementing our business objectives. Additional financing may be debt, equity or a combination of debt and equity. If equity is used, it could result in significant dilution to our shareholders.

Our operations and growth prospects may be significantly impeded if we are unable to retain our key personnel or attract additional key personnel, particularly since experienced personnel and new skilled personnel are in short supply.

Competition for key personnel is intense. As a small company, our success depends on the service of our executive officers, and other skilled managerial and technical personnel, and our ability to attract, hire, train and retain personnel. There is always the possibility that certain of our key personnel may terminate their employment with us to work for one of our competitors at any time for any reason. There can be no assurance that we will be successful in attracting and retaining key personnel. The loss of services of one or more key personnel could have a material adverse effect on us and would materially impede the operation and growth of our business.

If our partnering developers experience financial or other difficulties, our business and revenues could be adversely affected.

As a service-based company, we greatly depend on the working relationships and agency contracts with its partnering developers. We are exposed to the risks that our partnering developers may experience financial or other difficulties, which may affect their ability or will to carry out any existing development projects or resell contracts, thus delaying or canceling the fulfillment of their agency contracts with us. Any of these factors could adversely affect our revenues, profitability and results of operations.

If we fail to establish and maintain strategic relationships, the market acceptance of our services, and our profitability, may suffer.

To offer services to a larger customer base, our direct sales force depends on strategic partnerships, marketing alliances, and partnering developers to obtain customer leads and referrals. If we are unable to maintain our existing strategic relationships or fail to enter into additional strategic relationships, we will have to devote substantially more resources to the marketing of our services. We would also lose anticipated customer introductions and co-marketing benefits. Our success depends in part on the success of our strategic partners and their ability to market our services successfully. In addition, our strategic partners may not regard us as significant for their own businesses. Therefore, they could reduce their commitment to us or terminate their respective relationships with us, pursue other partnerships or relationships, or attempt to develop or acquire services that compete with our services. Even if we succeed in establishing these relationships, they may not result in additional customers or revenues.

We are subject to the risks associated with projects operated through joint ventures.

Some of our projects are operated through joint ventures in which we have controlling interests. We may enter into similar joint ventures in the future. Any joint venture investment involves risks such as the possibility that the joint venture partner may seek relief under federal or state insolvency laws, or have economic or business interests or goals that are inconsistent with our business interests or goals. While the bankruptcy or insolvency of our joint venture partner generally should not disrupt the operations of the joint venture, we could be forced to purchase the partner’s interest in the joint venture, or the interest could be sold to a third party. Additionally, we may enter into joint ventures in the future in which we have non-controlling interests. If we do not have control over a joint venture, the value of our investment may be affected adversely by a third party that may have different goals and capabilities than ours. It may also be difficult for us to exit a joint venture that we do not control after an impasse. In addition, a joint venture partner may be unable to meet its economic or other obligations, and we may be required to fulfill those obligations.

We are subject to risks relating to acts of God, terrorist activity and war.

Our operating income may be reduced by acts of God, such as natural disasters or acts of terror, in locations where we own and/or operate significant properties and areas from which we draw customers and partnering developers. Some types of losses, such as from earthquake, hurricane, terrorism and environmental hazards, may be either uninsurable or too expensive to justify insuring against. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in any particular property, as well as any anticipated future revenue from such property. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. Similarly, wars (including the potential for war), terrorist activity (including threats of terrorist activity), political unrest and other forms of civil strife as well as geopolitical uncertainty have caused in the past, and may cause in the future, our results to differ materially from anticipated results.

We have limited business insurance coverage in China.

The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products. As a result, we do not have any business liability or disruption insurance coverage for our operations in China. Any business disruption, litigation or natural disaster might result in substantial costs and diversion of resources.

We are incurring net losses and accumulated deficit and facing going concern problem.

Net loss in 2008 and 2007 were $6,028,907 and $ 4,753,249 respectively. Accumulated deficit as at December 31, 2008 and 2007 were $12,188,648 and $ 6,157,723 respectively. As we have incurred substantial losses and accumulated deficit, our net working capital deficiency, recurring losses and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern.

RISKS RELATING TO OUR SECURITIES

Our controlling shareholders could take actions that are not in the public shareholders’ best interests.

As of March 31, 2009, Ace Develop directly controls 38.08% of our outstanding common stock and Lin Chi-Jung, our Chairman, is the principal and controlling shareholder of Ace Develop. Accordingly, pursuant to our Articles of Incorporation and bylaws, Ace Develop and Lin Chi-Jung, by virtue of their controlling ownership of share interests, will be able to exercise substantial influence over our business by directly or indirectly voting at either shareholders meetings or the board of directors meetings in matters of significance to us and our public shareholders, including matters relating to:

a.	Election of directors and officers;


b.	The amount and timing of dividends and other distributions;


c.	Acquisition of or merger with another company; and


d.	Any proposed amendments to our Articles of Incorporation.

Whole World has agreed to purchase 57 million shares of common stock for $20 million, which transaction will result in Whole World owning approximately 70% of our issued and outstanding shares of common stock, which will give Whole World effective control, including the matters stated above.

Future sales of our common stock could adversely affect our stock price.

If our shareholders sell substantial amounts of our common stock in the public market, the market price of our common stock could be adversely affected. In addition, the sale of these shares could impair our ability to raise capital through the sale of additional equity securities.

We are listed on the OTC Bulletin Board, which can be a volatile market.

Our common stock is quoted on the OTC Bulletin Board, a FINRA sponsored and operated quotation system for equity securities. It is a more limited trading market than the Nasdaq Capital Market, and timely and accurate quotations of the price of our common stock may not always be available. Investors may expect trading volume to be low in such a market. Consequently, the activity of only a few shares may affect the market and may result in wide swings in price and in volume.

We may be subject to exchange rate fluctuations.

A majority of our revenues are received, and a majority of our operating costs are incurred, in Renminbi. Because our financial statements are presented in U.S. Dollars, any significant fluctuation in the currency exchange rates between the Renminbi and the U.S. Dollar will affect our reported results of operations. We do not currently engage in currency-hedging transactions.

Trading of our common stock is limited, which may make it difficult for investors to sell their shares at times and prices that investors feel are appropriate.

Trading of our common stock has been extremely limited. This adversely effects the liquidity of our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of us. This may result in lower prices for our common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock.

There is a limited market for our common stock and an active trading market for our common stock may never develop.

Trading in our common stock has been limited and has been characterized by wide fluctuations in trading prices, due to many factors that may have little to do with a company’s operations or business prospects.

Because it may be a “penny stock,” it will be more difficult for shareholders to sell shares of our common stock.

In addition, our common stock may be considered a “penny stock” under SEC rules because it has been trading on the OTC Bulletin Board at prices lower than $1.00. Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny-stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement for the purchaser. Broker-dealers also must provide customers that hold penny stocks in their accounts with such broker-dealers a monthly statement containing price and market information relating to the penny stock. If a penny stock is sold to investors in violation of the penny stock rules, investors may be able to cancel the purchase and get the money back. The penny stock rules may make it difficult for investors to sell their shares of our stock, and because of these rules, there is less trading in penny stocks. Moreover, many brokers simply choose not to participate in penny-stock transactions. Accordingly, investors may not always be able to resell shares of our common stock publicly at times and at prices that investors feel are appropriate.

Our stock price is, and we expect it to remain, volatile, which could limit investors’ ability to sell stock at a profit.

Since the completion of the SRRE – CY-SRRE/LRY share exchange transactions the market price of our common stock has ranged from a high of $2.15 per share to a low of $0.05 per share in the 2008 and 2007. The volatile price of our stock makes it difficult for investors to predict the value of our investment, to sell shares at a profit at any given time, or to plan purchases and sales in advance. A variety of factors may affect the market price of our common stock. These include, but are not limited to:

a.	Announcements of new technological innovations or new commercial services by our competitors or us;


b.	Developments concerning proprietary rights;


c.	Regulatory developments in Mainland China and foreign countries;


d.	Period-to-period fluctuations in our revenues and other results of operations;


e.	Economic or other crises and other external factors;


f.	Changes in financial estimates by securities analysts; and


g.	Sales of our common stock.

We will not be able to control many of these factors, and we believe that period-to-period comparisons of our financial results will not necessarily be indicative of our future performance.

The stock market in general has experienced extreme price and volume fluctuations that may have been unrelated and disproportionate to the operating performance of individual companies. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

Because we have not paid and do not plan to pay cash dividends, investors will not realize any income from an investment in our common stock unless and until investors sell their shares at profit.

We did not pay cash dividends on our common stock in 2008, and we do not anticipate paying any cash dividends in the near future. Investors should not rely on an investment in our stock if they require dividend income. Further, investors will only realize income on an investment in our stock in the event they sell or otherwise dispose of their shares at a price higher than the price they paid for their shares. Such a gain would result only from an increase in the market price of our common stock, which is uncertain and unpredictable.

We intend to retain all of our earnings for use in our business and do not anticipate paying any cash dividends in the near future.

The payment of any future dividends will be at the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, the success of our business activities, general financial condition, future prospects, general business conditions and such other factors as our Board of Directors may deem relevant.

RISKS RELATING TO THE REAL ESTATE INDUSTRY IN YANGTZE DELTA AND OTHER AREAS OF THE PRC

The real estate market in Yangtze Delta and other areas of the PRC is at an early stage of development.

We are subject to real estate market conditions in the PRC generally and Yangtze Delta in particular. Private ownership of property in the PRC is still at an early stage of development. Although there is a perception that economic growth in the PRC and the higher standard of living resulting from such growth will lead to a greater demand for private properties in the PRC, it is not possible to predict with certainty that such a correlation exists as many social, political, economic, legal and other factors may affect the development of the property market.

The PRC property market, including the Yangtze Delta property market, is volatile and may experience oversupply and property price fluctuations. The central and local governments frequently adjust monetary and other economic policies to prevent and curtail the overheating of the PRC and local economies, and such economic adjustments may affect the real estate market in Yangtze Delta and other parts of China. Furthermore, the central and local governments from time to time make policy adjustments and adopt new regulatory measures in a direct effort to control the over development of the real estate market in China, including Yangtze Delta. Such policies may lead to changes in market conditions, including price instability and an imbalance of supply and demand of residential properties, which may materially adversely affect our business and financial conditions. Also, there is no assurance that there will not be over development in the property sector in Yangtze Delta and other parts of China in the future. Any future over development in the property sector in Yangtze Delta and other parts of China may result in an oversupply of properties and a fall of property prices in Yangtze Delta or any of our other markets, which could adversely affect our business and financial condition.

We face increasing competition, which may adversely affect our revenues, profitability and results of operations.

In recent years, a large number of property companies have begun undertaking property sales and investment projects in Yangtze Delta and elsewhere in the PRC. Some of these property companies may have better track records and greater financial and other resources than we do. The intensity of the competition may adversely affect our business and financial position. In addition, the real estate market in Yangtze Delta and elsewhere in the PRC is rapidly changing. If we cannot respond to the changes in the market conditions more swiftly or effectively than our competitors do, our business and financial position will be adversely affected.

If the availability or attractiveness of mortgage financing were significantly limited, many of our prospective customers would not be able to purchase the properties, thus adversely affecting our business and financial position.

Mortgages are becoming increasingly popular as a means of financing property purchases in the PRC. An increase in interest rates may significantly increase the cost of mortgage financing, thus reducing the affordability of mortgages as a source of financing for residential property purchases. The PRC government has increased the down payment requirements and imposed certain other conditions that make mortgage financing unavailable or unattractive for some potential property purchasers. There is no assurance that the down payment requirements and other conditions will not be further revised. If the availability or attractiveness of mortgage financing is further significantly limited, many of our prospective customers would not be able to purchase the properties and, as a result, our business and future prospects would be adversely affected.

Our future prospects are heavily dependent on the performance of property sectors in specific geographical areas.

The properties we resell and intend to invest in are mainly based in Yangtze Delta. Our future prospects are, therefore, heavily dependent on the continued growth of the property sector around Yangtze Delta, and our business may be affected by any adverse developments in the supply and demand or housing prices in the property sector around Yangtze Delta.

The current level of property development and investment activity in Yangtze Delta and other markets is substantial. However, there is no assurance that such property resale and investment activity in Yangtze Delta or any of our other markets will continue at this level in the future or that we will be able to benefit from the future growth of these property markets.

Our revenues and operating income could be reduced by adverse conditions specific to our property locations.

The properties we resell and intend to invest in are concentrated geographically and are located predominately in Yangtze Delta. As a result, our business and our financial operating results may be materially affected by adverse economic, weather or business conditions in this area. Adverse conditions that affect these areas such as economic recession, changes in extreme weather conditions and natural disasters, may have an adverse impact on our operations.

RISKS RELATING TO THE PEOPLES REPUBLIC OF CHINA

All of our current prospects and deals are generated in Mainland China; thus all of our revenues are derived from our operations in the PRC. Accordingly, our business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and legal developments in the PRC.

PRC economic, political policies and social conditions could adversely affect our business.

The economy of PRC differs from the economies of most developed countries in a number of respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources.

The PRC Government has been reforming the PRC economic system from planned economy to market oriented economy for more than 20 years, and has also begun reforming the government structure in recent years. These reforms have resulted in significant economic growth and social progress. Although we believe these reforms will have a positive effect on our overall and long-term development, we cannot predict whether any future changes in PRC’s political, economic and social conditions, laws, regulations and policies will have any adverse effect on our current or future business, results of operations or financial condition.

Changes in foreign exchange regulations may adversely affect our ability to pay dividends and could adversely affect our results of operations and financial condition.

Substantially all of our revenues and operating expenses are denominated in Renminbi. Conversion of Renminbi is under strict government regulation in the PRC. The Renminbi is currently freely convertible under the "current account", including trade and service related foreign exchange transactions and payment of dividends, but not under the "capital account", which includes foreign direct investment and loans. Under the existing foreign exchange regulations in the PRC, we will be able to pay dividends in foreign currencies without prior approval from the State Administration for Foreign Exchange by complying with certain procedural requirements. However, there is no assurance that the above foreign policies regarding payment of dividends in foreign currencies will continue in the future.

Fluctuation of the Renminbi could materially affect the value of, and dividends payable on, the common stock.

The value of the Renminbi is subject to changes in the PRC Government’s policies and depends to a large extent on China’s domestic and international economic and political developments, as well as supply and demand in the local market. Since 1994, the official exchange rate for the conversion of Renminbi to U.S. Dollars has generally been stable, and in 2005 the official exchange rate between U.S. Dollars and Renminbi had a little fluctuation . However, we cannot give any assurance that the value of the Renminbi will continue to remain stable against the U.S. Dollar or any other foreign currency. Since our income and profit are denominated in Renminbi, any devaluation of the Renminbi would adversely affect the value of, and dividends, if any, payable on, our shares in foreign currency terms.

Our operations could be adversely affected by changes in the political and economic conditions in the PRC. The PRC is our main market and accounted for all of our revenue. Therefore, we face risks related to conducting business in the PRC. Changes in the social, economic and political conditions of the PRC may adversely affect our business. Unfavorable changes in government policies, political unrest and economic developments may also have a negative impact on our operations.

Since the adoption of the “open door policy” in 1978 and the “socialist market economy” in 1993, the PRC government has been reforming and is expected to continue to reform its economic and political systems. Any changes in the political and economic policies of the PRC government may lead to changes in the laws and regulations or the interpretation of the same, as well as changes in the foreign exchange regulations, taxation and import and export restrictions, which may, in turn, adversely affect our financial performance. While the current policy of the PRC government seems to be one of imposing economic reform policies to encourage foreign investments and greater economic decentralization, we cannot assure that such a policy will continue to prevail in the future.

The PRC Legal System Embodies Uncertainties

The PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little value as precedents. In 1979, the PRC Government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past 28 years has significantly enhanced the protections afforded to various forms of foreign investment in Mainland China. Our PRC operating subsidiaries, wholly foreign-owned enterprises (“WFOEs”), are subject to laws and regulations applicable to foreign investment in the PRC in general and laws and regulations applicable to WFOEs in particular. However, these laws, regulations and legal requirements are constantly changing, and their interpretation and enforcement involve uncertainties. These uncertainties could limit the legal protections available to us and other foreign investors. In addition, we cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws.

Our shareholders may not be able to enforce U.S. civil liabilities claims.

Our assets are located outside the United States and are held through subsidiaries incorporated under the laws of the Cayman Islands, British Virgin Islands and the PRC. Our current operations are conducted in the PRC. In addition, our directors and officers are residents of the PRC. As a result, it may be difficult for shareholders to implement service of process on these individuals. In addition, there is uncertainty as to whether the courts of China would recognize or enforce judgments of United States courts obtained against the Company or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in these countries against us or such persons predicated upon the securities laws of the United States or any state thereof.

ITEM 8. FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		23

Consolidated Balance Sheets -
December 31, 2008 and 2007		24

Consolidated Statements of Operations -
December 31, 2008 and 2007		25

Consolidated Statements of Stockholders' Deficit -
December 31, 2008 and 2007		26

Consolidated Statements of Cash Flows -
December 31, 2008 and 2007		27

Notes to Consolidated Financial Statements		28

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Sunrise Real Estate Group, Inc.

We have audited the accompanying consolidated balance sheets of Sunrise Real Estate Group, Inc. as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders' deficit and cash flows for the years ended December 31, 2008 and 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sunrise Real Estate Group, Inc. as of December 31, 2008 and 2007 and the results of its consolidated operations and its cash flows for the years ended December 31, 2008 and 2007, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

BDO Limited

Hong Kong, May 14, 2009

Sunrise Real Estate Group, Inc.

Consolidated Balance Sheets

(Expressed in US Dollars)

	December 31,			December 31,
	2008			2007
	(Audited)			(Audited)
ASSETS

Current assets
Cash and cash equivalents	$	587,468		$	2,281,516
Restricted cash (Note 10)		32,411			2,441,579
Accounts receivable		720,789			842,868
Promissory deposits (Note 3)		1,126,620			273,800
Amounts due from venturers (Note 12)		-			1,069,484
Amount due from related party (Note 12)		-			312,132
Other receivables and deposits (Note 4)		322,095			602,373

Total current assets		2,789,383			7,823,752

Property, plant and equipment – net (Note 5)		2,650,023			2,519,585
Equity investment (Note 6)		-			78,033
Investment properties (Note 7)		8,194,880			7,800,228
Deferred tax asset (Note 8)		-			1,021,059
Goodwill (Note 9)		13,307			13,307

Total assets	$	13,647,593		$	19,255,964

LIABILITIES AND SHAREHOLDERS’ DEFICIT

Current liabilities
Bank loans (Note 10)	$	6,044,893		$	191,660
Promissory notes payable (Note 11)		963,006			976,435
Accounts payable		340,353			230,654
Amount due to directors (Note 12)		169,355			171,458
Amount due to related party (Note 12)		127,900			159,561
Other payables and accrued expenses (Note 13)		2,359,068			2,452,833
Other tax payable (Note 14)		593,899			546,873
Income tax payable (Note 15)		1,083,477			1,238,912

Total current liabilities		11,681,951			5,968,386

Commitments and contingencies (Note 16)

Long-term bank loans (Note 10)		204,840			5,847,606
Long-term promissory notes payable (Note 11)		11,111			111,112
Deposits received from underwriting sales (Note 17)		8,275,725			7,743,240
Minority interest of consolidated subsidiaries		488,330			431,674

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 18)		731,762			729,744
Accumulated losses		(12,188,648	)		(6,157,723	)
Accumulated other comprehensive income (Note 19)		585,595			724,998

Total shareholders’ deficit		(7,014,364	)		(846,054	)

Total liabilities and shareholders’ deficit	$	13,647,593		$	19,255,964

See accompanying notes to consolidated financial statements.

Sunrise Real Estate Group, Inc.

Consolidated Statements of Operations

(Expressed in US Dollars)

	Years Ended December 31,
	2008			2007
	(Audited)			(Audited)
Net Revenues	$	8,075,193		$	8,101,324

Cost of Revenues		(6,662,860	)		(6,805,963	)

Gross Profit		1,412,333			1,295,361

Operating Expenses		(1,286,701	)		(1,130,012	)

General and Administrative Expenses		(4,380,662	)		(4,654,995	)

Operating Loss		(4,255,030	)		(4,489,646	)

Profit on Disposal of Investment Properties		-			1,115,025

Other Income, Net		27,665			14,008

Interest Income		13,199			29,072

Interest Expenses		(623,928	)		(944,824	)

Loss Before Income Tax and Minority Interest		(4,838,094	)		(4,276,365	)

Income Tax (Note 15)		(1,164,307	)		(426,054	)

Loss Before Minority Interest		(6,002,401	)		(4,702,419	)

Minority Interest of Consolidated Subsidiaries		(26,506	)		(50,830	)

Net Loss	$	(6,028,907	)	$	(4,753,249	)

Loss Per Share – Basic and Fully Diluted	$	(0.25	)	$	(0.20	)

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

See accompanying notes to consolidated financial statements.

Sunrise Real Estate Group, Inc.

Consolidated Statements of Stockholders’ Deficit

(Expressed in US Dollars)

	Common Stock								Accumulated						Total
	Number of shares issued		Amount		Additional paid-in capital		Statutory reserve		other comprehensive income			Accumulated Losses			stockholders’ equity/ (deficit)
Balance, December 31, 2006		23,001,614	$	230,016	$	2,922,997	$	716,862	$	286,267		$	(570,727	)	$	3,585,415

Issuance of stock dividend		690,311		6,903		697,011		-		-			(703,914	)		-

Loss for the year		-		-		-		-		-			(4,753,249	)		(4,753,249	)

Profit return to minority interest in subsidiary		-		-		-		-		-			(116,951	)		(116,951	)

Transfer between reserves		-		-		-		12,882		-			(12,882	)		-

Translation of foreign operations		-		-		-		-		438,731			-			438,731

Balance, December 31, 2007		23,691,925	$	236,919	$	3,620,008	$	729,744	$	724,998		$	(5,157,723	)	$	(846,054	)

Loss for the year		-		-		-		-		-			(6,028,907	)		(6,028,907	)

Transfer between reserves		-		-		-		2,018		-			(2,018	)		-

Translation of foreign operations		-		-		-		-		(139,403	)		-			(139,403	)

Balance, December 31, 2008		23,691,925	$	236,919	$	3,620,008	$	731,762	$	585,595		$	(12,188,648	)	$	(7,014,364	)

See accompanying notes to consolidated financial statements.

Sunrise Real Estate Group, Inc.

Consolidated Statements of Cash Flows

Increase/(Decrease) in Cash and Cash Equivalents

(Expressed in US Dollars)

	Years Ended December 31,
	2008			2007
	(Audited)			(Audited)
Cash flows from operating activities
Net loss	$	(6,028,907	)	$	(4,753,249	)
Adjustments to reconcile net income to
net cash used in operating activities
Depreciation of property, plant and equipment		813,776			733,534
Impairment loss on amount due from venturers		989,822			-
Valuation allowance for deferred tax assets		1,085,723			-
(Gain)/Loss on disposal of property, plant and equipment		(2,608	)		9,092
Loss on disposal of equity interest in subsidiary		-			14,750
Bad debts		-			114,543
Profit on disposal of investment properties		-			(1,115,172	)
Impairment losses		397,536			199,217
Minority interest		26,506			50,830
Change in:
Accounts receivable		176,937			4,029,670
Promissory deposits		(819,613	)		(65,755	)
Other receivables and deposits		316,155			(355,030	)
Amount with related party		(22,775	)		76,753
Accounts payable		92,220			(321,477	)
Amounts with venturers		83,672			543,487
Other payables and accrued expenses		(257,916	)		57,257
Interest payable on promissory notes		(377,371	)		385,602
Interest payable on amount due to director		7,415			(17,268	)
Other tax payable		9,256			259,643
Income tax payable		(236,484	)		(795,410	)
Restricted cash		2,532,640			(2,441,597	)
Net cash used in operating activities		(3,214,016	)		(3,390,580	)

Cash flows from investing activities
Acquisition of plant and equipment		(372,702	)		(158,346	)
Proceeds from disposal of plant and equipment		146,679			36,116
Acquisition of equity investment		-			(74,961	)
Proceeds from disposal of equity interest in subsidiary		-			63,200
Proceeds from disposal of investment properties		-			6,470,212
Payment for investment properties		(404,009	)		(2,233,841	)
Net cash (used in) provided by investing activities		(630,032	)		4,102,380

Cash flows from financing activities
Bank loans repayment		(201,308	)		(8,069,964	)
Bank loan obtained		-			8,548,133
Repayment of promissory note		(175,002	)		(2,849,236	)
Proceeds from promissory note		431,375			2,565,903
Repayment to director		(104,380	)		(241,904	)
Advances from director		94,862			250,000
Net cash generated from financing activities		45,547			202,932

Effect of exchange rate changes on cash and cash equivalents		104,453			421,057

Net (decrease)/increase in cash and cash equivalents		(1,694,048	)		1,335,789
Cash and cash equivalents at beginning of year		2,281,516			945,727
Cash and cash equivalents at end of year	$	587,468		$	2,281,516

Supplemental disclosure of cash flow information
Cash paid during the period:
Income tax paid		315,067			1,166,869
Interest paid		623,928			576,490

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

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.

Going Concern

The Company’s financial statements are prepared according to the accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred losses of $6,028,907 for the year ended December 31, 2008 and had a net working capital deficiency of $7,014,364 as of December 31, 2008. 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.

The Company is negotiating a Share Purchase Agreement (note 21) with Whole World Holding Corporation (“Whole World”) to issue 57,000,000 underlying shares to Whole World for a consideration of $20,000,000, which is scheduled to close on or before May 17, 2009. Management believes that the successful completion of the aforesaid 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. Accordingly, the accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. However, there is no assurance that the share issuance exercise will be successful, and the business will be adversely affected if the Company do not obtain the $20 million to be paid by Whole World.

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 approximately 6% fluctuation during the periods presented. The rates as of December 31, 2008 and December 31, 2007 are US$1: RMB6.8346 and US$1: RMB7.3046, 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

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

Income Taxes

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.

Contingent Liabilities

Pursuant to SFAS No. 5, “Contingent Liabilities”, the Company accrues for a loss contingency when it is probable that a liability has been incurred and the amount of such loss can be reasonably estimated. If no accrual is made for a loss contingency because one or both of the conditions as stated above are not met, or if an exposure to loss exists in excess of the amount accrued, disclosure of the contingency shall be made when there is at least a reasonable possibility that a loss or an additional loss may have been incurred.

Classification of Obligations That Are Callable by the Creditor

Pursuant to SFAS No. 78, “Classification of Obligations That Are Callable by the Creditor”, the classification of long-term obligations that are or will be callable by the creditor either because the debtor's violation of a provision of the debt agreement at the balance sheet date makes the obligation callable or because the violation, if not cured within a specified grace period, will make the obligation callable.

The Company classified such callable obligations as current liabilities unless the creditor has waived or subsequently lost the right to demand repayment for more than one year (or operating cycle, if longer) from the balance sheet date; or, for long-term obligations containing a grace period within which the debtor may cure the violation, it is probable that the violation will be cured within that period, thus preventing the obligation from becoming callable.

Segment information

NOTE 3 - PROMISSORY DEPOSITS

The balance of $1,126,620 (2007: $273,800) 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 December 31, 2008, $731,572 (2007: Nil) out of the total promissory deposits was pledged to secure a promissory note payable in note 11.

NOTE 4 - OTHER RECEIVABLES AND DEPOSITS

	December 31		December 31,
	2008		2007
Advances to staff	$	11,389	$	20,486
Rental deposits		72,228		101,370
Prepaid rental		205,811		406,833
Other receivables		32,667		73,684
	$	322,095	$	602,373

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT – NET

	December 31,			December 31,
	2008			2007
Furniture and fixtures	$	146,873		$	133,970
Computer and office equipment		325,862			275,988
Motor vehicles		654,349			618,024
Properties		2,213,659			2,071,225
		3,340,743			3,099,207
Less: Accumulated depreciation		(690,720	)		(579,622	)
	$	2,650,023		$	2,519,585

All above properties as of December 31, 2008 and as of December 31, 2007 were pledged to secure a loan in note 10.

NOTE 6 – EQUITY INVESTMENT

On September 11, 2007, SHSY invested a 19% equity interest in a PRC company named Suzhou Bin Fen Nian Dai Administration Consultancy Company Limited (“SZBFND”). As of December 31, 2008, the amount of equity investment was $83,399 (2007: $78,033) and a corrsponding full impairment loss thereon was made in the year (2007: $Nil).

NOTE 7 – INVESTMENT PROPERTIES

	December 31,			December 31,
	2008			2007
Investment property	$	9,059,905		$	8,092,319
Less: Accumulated depreciation		(865,025	)		(292,091	)
	$	8,194,880		$	7,800,228

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 10 as of December 31, 2008 and 2007. The carrying amount of $6,004,869 was pledged to a promissory note payable in note 11 as of 31 December 2008.

As of December 31, 2008, the four units (2007: None) of the investment properties were leased to SZBFND, a related party of the Company, and 71% (2007: nil) of the total area of the one remaining floor was leased out.

NOTE 8 – DEFERRED TAX ASSET

The net deferred tax assets from continuing operations are determined under the liability method based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted statutory tax rates. The deferred tax provision (benefit) is the result of changes in these temporary differences. As of December 31, 2007 and December 31, 2008, the tax effect of the temporary differences represents the deferred tax assets arising from the deferred gain of the underwriting sale using the deposit method.

Deferred tax assets consist of the following:

	December 31,			December 31,
	2008			2007
Deferred gain from underwriting sale	$	1,085,724		$	1,021,059
Tax losses carried forward		2,158,736			1,208,127
		3,244,460			2,229,186
Less : Valuation allowances		(3,244,460	)		(1,208,127	)
	$	-		$	1,021,059

Deferred tax assets were primarily raised from the deferred gain from underwriting sale and the tax losses carryforwards. A valuation allowance has been established for the entire deferred tax assets as management believes that the Group may not be able to fully utilize the deferred tax assets because of the uncertainty of the future profit streams.

NOTE 9 - GOODWILL

The Company accounted for the acquisition of 20% of the equity interest in SZGFH as described in Note 1 in accordance with SFAS No. 141 "Business Combinations", which resulted in the recognition of goodwill. Goodwill represents the excess of acquisition cost over the estimated fair value of the net assets acquired as of May 8, 2006. The portion of the purchase price allocated to goodwill was $13,307. The Company has tested goodwill for impairment annually during the forth quarter of each fiscal year using a fair value approach, in accordance with the provisions of SFAS 142. As of December 31, 2008, the Company completed the annual impairment test. Based on the result of the first step of the test, the Company believes that there was no impairment of goodwill as of December 31, 2008. If an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying value, goodwill will be evaluated for impairment between annual year-end tests.

NOTE 10 - BANK LOANS

Bank loans included two bank loans, as listed below:

First, the balance includes a bank loan of $5,840,053 (2007: $5,464,286), bears interest at prime rate as announced by the People’s Bank of China and repayable by an approximately $1,451,000 (2007: $1,357,285) payment on February 1, 2010 and an approximately $4,389,000 (2007: $4,107,001) payment on August 2, 2010. This bank loan is secured by the properties as mentioned in Note 7 above as of December 31, 2008 and 2007.

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.

In the year, the Company transferred approximately $1,478,000 (2007: $Nil) from the restricted cash to the group companies other than the lending subsidiary to use as their working capital, which were not in compliance with the loan covenants. As these transfers were made without the consent of the lender, the lender has a right either to call for immediate full repayment of the loan or to charge interest at a rate of 150% of the rate as normally charged as stipulated by the loan agreement. Accordingly, under SFAS No. 78 “Classification of Obligations that are Callable by the Creditors”, the Company is required to reclassify the $5,840,053 (2007: $Nil) amount outstanding from long term to short term. A potential interest charge of $149,139 (2007: Nil) was disclosed as Contingent Liabilities in accordance with SFAS No. 5, “Contingent Liabilities under Note 21.

Second, the remaining bank loan of $409,680 (2007: $574,980) bears interest at prime rate as announced by the People’s Bank of China, and is repayable before December 15, 2010 in monthly installments. As of December 31, 2008 and 2007, the bank loan is secured by the properties as mentioned in Note 5 above.

NOTE 11 – PROMISSORY NOTES PAYABLE

There are four promissory notes, as listed below:

First, the balance includes a promissory note of $144,443(2007: $244,445) and accrued interest of $5,002 (2007: $Nil) thereon. This promissory note of $144,443 bears interest at a rate of 5% per annum. The promissory note is unsecured and repayable on a monthly basis until January 31, 2010.

Second, the balance includes a promissory note of $75,000 (2007: $150,000) and accrued interest of $10,729 (2007: $6,875) 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 (2007: $300,000). This promissory note of $300,000 (2007: $Nil) 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 $438,943 (2007: $Nil). This promissory note of $438,943 (2007: $Nil) 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 7 above as of December 31, 2008 and the term of repayment is not specifically defined.

NOTE 12 – 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.

Amounts due from venturers

The Company has entered into co-operation agreements with two venturers (one of them is an independent third party; the other is the Company’s ex-director, Chang Shu-Ching) to jointly carry out a property underwriting project for a commercial building in Suzhou, the PRC. According to the agreements, the Company, Chang Shu-Ching and the other venturer are entitled to share 65%, 10% and 25% of the net results of the project, respectively. On February 14, 2007, the venturers entered into an additional agreement that Chang Shu-Ching obtained 25% of the net results of the project from the other venturer. As a result, the Company and Chang Shu-Ching are entitled to share 65% and 35% of the net results of the project, respectively.

As of December 31, 2008, the amounts due from venturers were $989,822 (2007: $1,069,484) and a full impairment loss thereon was provided in the year (2007: $Nil).

Amount due from related party

The amount represents an advance to SZBFND which is unsecured, interest free and has no fixed term of repayment. As of December 31, 2008, the amount due from related party was $314,137(2007: $312,132) and a corresponding full impairment loss thereon was made in 2008.

Amount due to directors

Amount due to Lin Chin-Jung

As of December 31, 2008, the balance includes two loans and advances obtained from Lin Chin-Jung.

The first loan includes principal of $62,742 (2007: $167,122) and accrued interest of $11,751 (2007: $4,336) 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 second loan includes principal of $47,427 (2007: $Nil). The principal is unsecured, non-interest bearing and the term of repayment is not specifically defined .

The advances and reimbursements of $25,645 (2007: $Nil) represented the salary payable and rental reimbursement to Lin Chin-Jung outstanding as of December 31, 2008.

Amount due to Lin Chao-Chin

A balance of $21,790 (2007: $Nil) represented the salary payable and rental reimbursement to Lin Chao-Chin outstanding as of December 31, 2008.

Amount due to related party

The amount includes a rental deposit received from SZBFND. Rental income of $544,679 (2007: $Nil) is generated from leasing the investment properties to SZBFND during the period. This amount is unsecured, interest free and repayable on demand.

NOTE 13 - OTHER PAYABLES AND ACCRUED EXPENSES

	December 31,		December 31,
	2008		2007
Accrued staff commission & bonus	$	556,293	$	1,013,650
Rental deposits received		676,121		519,352
Accrual for onerous contracts		446,456		535,811
Other payables		680,198		384,020
	$	2,359,068	$	2,452,833

NOTE 14 – 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.

Business tax is charged at a rate of 5% on the revenue from services rendered. At December 31, 2008, the outstanding business tax payable was $188,639 (2007: $181,350).

Urban real estate tax is levied at 1.2% per annum on the standard value of the buildings or 12% of rental income generated in accordance with the Provisional Rules on Urban Real Estate Tax in the PRC. At December 31, 2008, the outstanding urban real estate tax payable was $143,357 (2007: 120,472).

Land appreciation tax is levied on the gain realized on the transfer of investment properties in the year. Tax is charged in progressive rates ranging from 30% to 60% depending on the percentage gain realized. At December 31, 2008, the outstanding land appreciation tax payable was $261,903 (2007: 245,051).

NOTE 15 – INCOME TAX PAYABLE

FIN 48 We adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48) on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” The Interpretation prescribes a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken within an income tax return. For each tax position, the enterprise must determine whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is then measured to determine the amount of benefit to recognize within the financial statements. No benefits may be recognized for tax positions that do not meet the more likely than not threshold. With respect to United States federal and Chinese income taxes, no reclassification was required.

Income tax represents current PRC income tax, which is calculated at the statutory income tax rate on the assessable income for the years ended December 31, 2008 and 2007. On January 1, 2008, China unified income tax rates for domestic and foreign companies at 25 %.

The provision for China income tax is consisted of:

	Years ended December 31,
	2008		2007
Current PRC corporate income tax	$	78,584	$	426,054
Deferred tax debit		-		-
	$	78,584	$	426,054

Reconciliation between the provision for income taxes computed by applying the statutory tax rate in Mainland China to income before income taxes and the actual provision for income taxes is as follows:

	Years ended December 31,
	2008			2007
Provision for income taxes benefit at statutory tax rate	$	(1,209,524	)	$	(1,380,096	)
Tax concessions		249,866			965,134
Permanent difference		87,632			(284,410	)
Effect of change in FEIT tax rate		-			202,146
Valuation allowances		2,036,333			923,280
Income tax	$	1,164,307		$	426,054

NOTE 16- COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

During the years ended December 31, 2008 and 2007, the Company incurred lease expenses amounting to $415,558 and $338,463, respectively. As of December 31, 2008, the Company had commitments under operating leases, requiring annual minimum rentals as follows:

	December 31,		December 31,
	2008		2007
Within one year	$	144,325	$	132,628
Two to five years		42,995		133,847
Operating lease commitments	$	187,320	$	266,475

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 December 31, 2008, 125 (2007:97) sub-leasing agreements have been signed, the area of these sub-leasing agreements represented 94% (2007: 76%) of total area with these lease commitments.

As of December 31, 2008, the lease commitments are as follows:

	December 31,		December 31,
	2008		2007
Within one year	$	3,225,101	$	3,047,216
Two to five years		7,850,226		8,412,157
Over five years		346,550		2,181,446
Operating lease commitments arising from the promotional package	$	11,421,877	$	13,640,819

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 $535,811 as of December 31, 2007 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 December 31, 2008, the compensation to terminate all leasing agreements is $2,843,206 (2007: $3,029,111). According to the sub-leasing agreements that have been signed through December 31, 2008, the rental income from these sub-leasing agreements will be $2,067,356 (2007: $1,991,366) within one year and $1,168,505 (2007: $1,812,374) within two to five years. However, no assurance can be given that we can collect all of the rental income.

NOTE 17 –DEPOSITS RECEIVED FROM UNDERWRTING SALES

NOTE 18 – 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 19 – ACCUMULATED OTHER COMPREHENSIVE INCOME

As of December 31, 2008 and 2007, the only component of accumulated other comprehensive income was translation reserve.

NOTE 20 – CONCENTRATION OF CUSTOMERS

During the years ended December 31, 2008 and 2007, the following customer accounted for more than 10% of total net revenue:

	Percentage of Net Revenue for the years ended December 31,						Percentage of Accounts Receivable as at December 31,
	2008			2007			2008			2007
Customer A		13	%		*			*			*
Customer B		10	%		*			24	%		*
Customer C		*			16	%		*			12	%

* less than 10%

NOTE 21 – CONTINGENT LIABILITIES

As mention in Note 10 above, the Company transferred approximately $1,478,000 from the restricted cash to the group companies other than the lending subsidiary to use as their working capital, which were not in compliance with the loan covenants during the year. As these transfers were made without the consent of the lender, the lender has a right either to call for immediate full repayment of the loan or to charge interest at a rate of 150% of the rate as normally charged as stipulated by the loan agreement. The contingent liabilities of estimated charge of interests for the year ended 31 December, 2008 are approximately $146,139 (2007: $Nil).

NOTE 22 – SUBSEQUENT EVENT

On March 10, 2009, Sunrise Real Estate Group, Inc., 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 May 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 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2008. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of December 31, 2008, 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 and ensure that information required to be disclosed is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

As of June 30, 2008, we had identified the significant deficiencies related to the failure to correctly apply accounting principle in underwriting revenue recognition and to recognize the minority interest. Our management have remediated these significant deficiencies by taking the following actions.

a. our Chief Financial Officer and our chief accounting officer have been required to review the application of accounting principles and clearly define the accounting method adopted in revenue recognition and accounting for minority interests;

b. management has been reviewed and approved these accounting methods before they have been adopted.

Except for the above, there were no changes in our internal controls over financial reporting during the year ended December 31, 2008, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Management's Report of Internal Control over Financial Reporting

The management of the company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The company’s management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2008. In making this assessment, the company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report. However, in connection with its audit of our financial statements, our independent registered public accounting firm reported no material weaknesses in our internal controls over our ability to produce financial statements free from material misstatements. We determined that there were no material weaknesses in the Company’s internal controls and therefore they were effective as of December 31, 2008.

ITEM 9B. OTHER INFORMATION

None

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Date of Appointment	Name of Individual	Age	Position with Company
October 28, 2003	LIN CHI-JUNG	49	Chief Executive Officer, President and Chairman
May 23, 2005	LIN CHAO-CHIN	59	Director and Senior Vice President
November 28, 2006	LIN HSIN-HUNG	54	Executive Director
November 23, 2004	CHEN REN	61	Director
November 23, 2004	FU XUAN-JIE	79	Director
November 23, 2004	LI XIAO-GANG	51	Director
August 23, 2005	ZHANG XI	38	Director

Following is biographical information for each of the 7 directors consisting of the age, principal occupation, and other relevant information. The designation of "Affiliated" noted beside the director’s name indicates that the director is an officer or employee of Sunrise. The designation of “Independent” noted beside the director’s name indicates that the director is considered an independent director with in the meaning of the Marketplace Rules of the Nasdaq Stock Market, Inc., which is the independence standard that we have chosen to report under.

Lin Chi-Jung, CEO, Chairman, and President (Affiliated)

Lin Chi-Jung, age 49, is the Chairman of the Board of Directors of SRRE. He also serves as our President and CEO and the Chairman of all of our operating subsidiaries. Mr. Lin began serving as a Director of SRRE on October 28, 2003, and was appointed Chairman on October 11, 2004. He founded Shanghai Xin Ji Yang Real Estate Consultation Co., Ltd. (“SHXJY”) in late 2001, Shanghai Shang Yang Real Estate Consultation Co., Ltd. (“SHSY”) in early 2004 and Suzhou Gao Feng Hui Property Management Co., Ltd. (“SZGFH”) in early 2005. Under his leadership and management, SHXJY, SHSY and SZGFH have grown rapidly. Prior to establishing this property business, Mr. Lin invested in the film making and publishing businesses. In his younger days, Mr. Lin was a well known actor in Chinese communities around the world, including Mainland China, Taiwan, North America and South East Asia.

Lin Chao-Chin, Director (Affiliated)

Lin Chao-Chin, age 59, was appointed as a director on May 23, 2005, and serves on our Compensation and Governance and Nominating Committees. He is one of the co-founders of SHXJY. Mr. Lin brings with him 28 years of real estate industry experience, particularly in the areas of agency, property investment, and development services. Prior to starting his business in Mainland China, he co-founded Taipei Xin Lian Yang Property Co. Ltd. in Taiwan in the early 1980’s. Under Mr. Lin’s leadership, this business had contracted sales of NTD 120 Billion (approx. US$ 3.4 billion) and 800 employees. In 2001 he joined Lin Chi-Jung to re-establish his career in Mainland China. Currently, Lin Chao-Chin is managing the day-to-day business operation of SHXJY. Lin Chao-Chin graduated from Taiwan Chung Yuan University with a Bachelors Degree in Business Administration.

Lin Hsin-Hung, Executive Director

Lin Hsin Hung, age 54, was appointed as an executive director on November 28, 2006. He graduated from the Economics Department of Taiwan Wen Hua College in 1981. Mr. Lin has served as the Chairman of the Board of Tian Li Manufacture Corporation, Ding Kai Industry Corporation, Hua Wei Development Corporation and an executive Director of Di Heng Capital Management Corporation.

Chen Ren, Director (Independent)

Chen Ren, age 61, was appointed an independent director on November 23, 2004. Mr. Chen is Chairman and General Manager of Shanghai Real Estate Group of Companies. He has been involved in the Shanghai real property market for the past 15 years. Among some of the companies that he has been associated with are: Shanghai She-ye Property Ltd, Shanghai Rui Nan Property Limited, the General Manager of Shanghai Gong Zhi Jing Center and Shanghai An Ju Property Development Center.

Fu Xuan-Jie, Director (Independent)

Fu Xuan-Jie, age 79, was appointed an independent director on November 23, 2004, and serves on our Audit, Compensation, and Governance and Nominating Committees. Mr. Fu has been an attorney since February 1980 and has practiced law in his co-founded firm, Fu Xuan-Jie & Associates Law Office since April 1994. Mr. Fu specializes in corporate and international law, especially in the areas of international compensation and other financial matters. Among the clientele that Mr. Fu serves are Coca-Cola, Banque Endosuez, AT&T, and L'Oreal.

Li Xiao-Gang, Director (Independent)

Li Xiao-Gang, age 51, was appointed an independent director on November 23, 2004, and serves on our Audit, Compensation, and Governance and Nominating Committees. Mr. Li graduated from Shanghai Finance and Economics University in 1984, and joined the Shanghai Academy of Social Science. In 1992, he was appointed the deputy director of the Economics Law Consultation Center of the Shanghai Academy. In 2000, he was the Director of the Foreign Investment Research Center of the Academy. From 1992 to the present, Mr. Li has served as a Director cum Deputy Secretary-General of the Shanghai Consultation Association.

Zhang Xi, Director (Independent)

Zhang Xi, age 38, was appointed an independent director on August 23, 2005, and serves as Chairman of our Audit Committee. He has a Doctorate Degree in Economics, and he is a Senior Economist, a Certified Public Accountant and a Certified Public Appraiser. He is working as a Vice President of Shanghai General Building Material Group Corporation. He has also served in Shanghai Zhonghua Audit Company as the manager of the International Department, Shanghai Zhangjiang Hi-tech Zone Development Company, Ltd. as Vice General Manager and Financial Controller, and Shanghai Zhang Jiang Semiconductor Industry Park Co., Ltd. as General Manager.

Other Executive Officers

Wang Wen Yan , the Company’s Chief Financial Officer. Previously the financial controller, Mr. Wang, 30 years old, has been with the Company since May 2005. He worked in a real estate development company for 4 years before joining the Company. He graduated from Shanghai University with a Bachelor’s degree in accounting and has a Master’s degree at the Shanghai University of Finance and Economics.

Family Relationships

There are no family relationships among directors, executive officers, or person nominated or chosen to become the directors or executive officers.

Code of Ethics

On October 8, 2005, we adopted a code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. The Company will provide to any person without charge, upon request, a copy of the corporate code of ethics. Any person wishing a copy should write to Alice Wang, Sunrise Real Estate Group, Inc., Suite 701, No. 333, Zhaojiabang Road, Shanghai, PRC 200032.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Copies of these filings must be furnished to the Company. Based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ending December 31, 2008, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners have been met on a timely basis.

Information Concerning our Board and Committees of our Board

The Company’s Board has three standing committees: an Audit Committee, a Governance and Nominating Committee, and a Compensation Committee. We have a written Audit Committee Charter, a written Governance and Nominating Committee Charter and a written Compensation Committee Charter. Except for Lin Chao-Chin, all of our directors serving on our committees are “independent” within the meaning of the Marketplace Rules of the Nasdaq Stock Market, Inc., which is the independence standard that we have chosen to report under.

Audit Committee and Audit Committee Financial Expert

Our Board established the Audit Committee on August 23, 2005. The Audit Committee consists of three members, Fu Xuan-Jie, Li Xiao-Gang, and Zhang Xi, all of whom are “independent” within the meaning of the Marketplace Rules of the Nasdaq Stock Market, Inc., which is the independence standard that we have chosen to report under. At least one member of the Audit Committee, Zhang Xi, is a financial expert, as that term is used under Item 407(d)(5) of Regulation S-B.

Governance and Nominating Committee

The Governance and Nominating Committee of the Board consists of Mr. Lin Chao-Chin, Mr. Li Xiao-Gang and Mr. Fu Xuan-Jie. The primary duties of the Governance and Nominating Committee are to identify and review candidates for the Board and recommend candidates for election to the Board, periodically review the skills and characteristics required of Board members in the context of the current Board, and periodically review the Company’s corporate governance policies and recommend modifications to the Board as appropriate. The Governance and Nominating Committee operates pursuant to a charter that was approved by our Board, a current copy of which is available on our website at www.sunrise.sh under the heading “Investor” and subheading “Corporate Governance.”

Our shareholders may recommend director nominees, and the Governance and Nominating Committee will consider nominees recommended by shareholders. We anticipate that nominees recommended by shareholders will be evaluated in the same manner as nominees recommended by anyone else, although the Governance and Nominating Committee may prefer nominees who are personally known to the existing directors and whose reputations are highly regarded. The Governance and Nominating Committee will consider all relevant qualifications as well as the needs of the company in terms of compliance with SEC rules.

While the selection of qualified directors is a complex, subjective process that requires consideration of many intangible factors, the Governance and Nominating Committee and the Board takes into account the following criteria, among others, in considering directors and candidates for the board: judgment, experience, skills and personal character of the candidate, and the needs of the Board.

The Governance and Nominating Committee conducts a process of making a preliminary assessment of each proposed nominee based upon the resume and biographical information, an indication of the individual’s willingness to serve and other background information. This information is evaluated against the criteria set forth above and our specific needs at that time. Based upon a preliminary assessment of the candidate(s), those who appear best suited to meet our needs may be invited to participate in a series of interviews, which are used as a further means of evaluating potential candidates. On the basis of information learned during this process, the Governance and Nominating Committee determines which nominee(s) to recommend to the Board to submit for election at the next annual meeting. The Governance and Nominating Committee uses the same process for evaluating all nominees, regardless of the original source of the nomination.

Compensation Committee

The Compensation Committee of the Board consists of Mr. Lin Chao-Chin, Mr. Li Xiao-Gang and Mr. Fu Xuan-Jie. The primary duties of the Compensation Committee are to annually review and approve the Company’s compensation strategy to ensure that employees are rewarded appropriately; review annually and approve corporate goals and objectives relevant to executive compensation; annually review and determine elements of compensation of the CEO and other officers; and review and recommend compensation for non-employee members of our Board. The Compensation Committee operates pursuant to a charter that was approved by our Board, a current copy of which is available on our website at www.sunrise.sh under the heading “Investor” and subheading “Corporate Governance.”

ITEM 11. EXECUTIVE COMPENSATION

The following table reflects the compensation paid to the Company’s Chief Executive Officer and each of the Company’s compensated executive officers whose compensations exceeded $100,000 in fiscal years 2008 and 2007 for services rendered to the Company and its subsidiaries.

Name and Principal Position (a)	Year (b)		Salary ($) (c)		Bonus ($) (d)		Stock Awards ($) (e)		Option Awards ($) (f)		Non-Equity Incentive Plan Compensation ($) (g)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h)		All Other Compensation ($) (i)		Total ($) (j)
Lin Chi-Jung CEO, President & Chairman Executive Officer of subsidiaries		2008 2007		130,851 145,976		0 21,950		0 0		0 0		0 0		0 0		23,869 (2) 91,796		154,720 259,722

Lin Chao-Chin Senior Vice President Managing director of subsidiaries		2008 2007		130,851 145,976		0 21,950		0 0		0 0		0 0		0 0		23,869 (2) 91,796		154,720 259,722

(1)	There are no stock option, retirement, pension, or profit sharing plans for the benefit of our officers.

(2)	Lin Chi-Jung and Lin Chao-Chin each received housing allowance of $18,693 and travel allowance of $5,176 during the year 2008.

Option/SAR Grants

The Company has no stock option plan or other equity incentive plan in place. Accordingly, no individual grants of stock options, whether or not in tandem with Stock Appreciation Rights (“SARs”) and freestanding SARs have been made to any executive officer or any director since the Company’s inception, accordingly, no stock options have been exercised by the Company’s officers or directors in any fiscal year.

DIRECTOR COMPENSATION

Name (a)	Fees Earned or Paid in Cash ($) (b)		Stock Awards ($) (c)		Option Awards ($) (d)		Non-Equity Incentive Plan Compensation ($) (e)		Change in Pension Value and Nonqualified Deferred Compensation Earnings (f)		All Other Compensation ($) (g)		Total ($) (h)
LIN CHI-JUNG		14,379		0		0		0		0		0		14,379
LIN CHAO-CHIN		14,379		0		0		0		0		0		14,379
LIN HSIN-HUNG		16,680		0		0		0		0		0		16,680
FU XUAN-JIE		13,804		0		0		0		0		0		13,804
LI XIAO-GANG		13,804		0		0		0		0		0		13,804
CHEN REN		13,804		0		0		0		0		0		13,804
ZHANG XI		13,804		0		0		0		0		0		13,804

(1)	There are no stock option, retirement, pension, or profit sharing plans for the benefit of directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of March 31, 2009, the number and percentage of our 23,691,925 shares of common stock outstanding that were beneficially owned by (1) each person known to the Company to be the beneficial owner of five percent or more of our common stock, (2) each director and named executive officer, and (3) all of the Company's directors and executive officers as a group. Unless otherwise indicated, the person listed in the table is the beneficial owner of, and has sole voting and investment power with respect to, the shares indicated.

Title of Class	Name and Address	Amount and Nature of Beneficial Ownership			Percent of Class
Common	Lin Chi-Jung		9,022,800	(1)		38.08	%
	Suite 701, No. 333, Zhaojiabang Road
	Shanghai, PRC 200032

Common	LIN HSIN-HUNG		334,750	(2)		1	%
	Suite 701, No. 333, Zhaojiabang Road
	Shanghai, PRC 200032

(1)	These shares are owned by Ace Develop Properties Limited, of which Mr. Lin Chi-Jung is the sole beneficiary owner

(2)	These shares are owned by Glorystar International Enterprise Limited, of which Mr. Lin Hsing Hung is a minority shareholder and an officer.

Changes in Control

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Certain Relationships

Amounts due from venturers

As of December 31, 2008, the amounts due from venturers were $989,822 (2007: $1,069,484) and a full impairment loss thereon was provided in the year (2007: $Nil).

Amount due from related party

The amount represents an advance to SZBFND which is unsecured, interest free and has no fixed term of repayment. As of December 31, 2008, the amount due from related party was $314,137 and a corresponding full impairment loss thereon was made.

Amount due to directors

Amount due to Lin Chin-Jung

As of December 31, 2008, the balance includes two loans and advances obtained from Lin Chin-Jung.

The first loan includes principal of $62,742 and accrued interest of $11,751 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 second loan includes principal of $47,427. The principal is unsecured, non-interest bearing and the term of repayment is not specifically defined .

The advances and reimbursements of $25,645 represented the salary payable and rental reimbursement to Lin Chin-Jung outstanding as of December 31, 2008.

Amount due to Lin Chao-Chin

A balance of $21,790 represented the salary payable and rental reimbursement to Lin Chao-Chin outstanding as of December 31, 2008.

Amount due to related party

The amount includes a rental deposit received from SZBFND. Rental income of $544,679 is generated from leasing the investment properties to SZBFND during the period. This amount is unsecured, interest free and repayable on demand.

Director Independence

Fu Xuan-Jie, Li Xiao-Gang, Chen Ren and Zhang Xi, constitute a majority of the Board of Directors and are each “independent” within the meaning of the Marketplace Rules of the Nasdaq Stock Market, Inc.,

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed by BDO Limited (formerly known as BDO McCabe Lo Limited) for services rendered during the year ended December 31, 2008 and 2007 are described as follows:

Fees for audit and review services amounted to $130,300 in 2008 and $141,500 in 2007, respectively. Fees for audit and review services include the annual audit of the consolidated financial statements of the Company and its subsidiaries, and review of the Company's Quarterly Reports on Form 10-Q.

Audit-Related Fees

Aggregate fees billed for all audit-related services rendered by BDO Limited were $13,000 for 2007. Fees for audit related services include audits required in the Form 8-K and review of related documents. There were no audit-related fees billed by BDO Limited in 2008.

Tax Fees

There were no tax services fees paid to BDO Limited; they are not the tax accountants of the Company.

All Other Fees

BDO Limited did not bill the Company any additional fees for professional services rendered to the Company during fiscal years ended December 31, 2008 and 2007.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

According to the charter of the Audit Committee, the Company’s policy on pre-approval of audit and permissible non-audit services of independent auditors is to pre-approve all audit services and permissible non-audit services by the independent accountants, as set forth in Section 10A of the Exchange Act and the rules and regulations promulgated thereunder by the SEC. The Audit Committee may establish pre-approval policies and procedures, as permitted by Section 10A of the Exchange Act and the rules and regulations promulgated thereunder by the SEC, for the engagement of independent accountants to render services to the Company, including but not limited to policies that would allow the delegation of pre-approval authority to one or more members of the Audit Committee, provided that any pre-approvals delegated to one or more members of the Audit Committee are reported to the Audit Committee at its next scheduled meeting.

ITEM 15. EXHIBITS

Exhibit Number		Description
31.1		Certification of Lin Chi-Jung, pursuant to Rule 15d-14(a).

31.2		Certification of Wang Wen-Yan, pursuant to Rule 15d-14(a).

32.1		Certifications of Lin Chi-Jung, pursuant to 18 U.S.C. 1350.

32.2		Certifications of Wang Wen-Yan, pursuant to 18 U.S.C. 1350.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Sunrise Real Estate Group, Inc.

		/s/ Lin Chi-Jung
		BY: Lin Chi-Jung
		Principal Executive Officer and Director
		DATE: May 14, 2009

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

Signature	Title	Date

/s/ Lin Chi-Jung	Principal Executive Officer	May 14, 2009
Lin Chi-Jung	and Director

/s/ Wang Wen-Yan	Chief Financial Officer	May 14, 2009
Wang Wen-Yan

/s/ Lin Chao-Chin	Director	May 14, 2009
Lin Chao-Chin

/s/ Lin Hsin-Hung	Director	May 14, 2009
Lin Hsin-Hung

/s/ Fu Xuan-Jie	Director	May 14, 2009
Fu Xuan-Jie

/s/ Li Xiao-Gang	Director	May 14, 2009
Li Xiao-Gang

/s/ Chen Ren	Director	May 14, 2009
Chen Ren

/s/ Zhang Xi	Director	May 14, 2009
Zhang Xi