- Amended Quarterly Report (10-Q/A)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q/A

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

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

For the transition period from __________ to __________

Commission File Number 000-32585

SUNRISE REAL ESTATE GROUP, INC.

(Exact name of registrant as specified in its charter)

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

Suite 701, No. 333, Zhaojiabang Road

Shanghai, PRC 200032

(Address of principal executive offices Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

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

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: May 10, 2008 - 23,691,925 shares of Common Stock

FORM 10-Q

For the Quarter Ended March 31, 2008

INDEX

		Page
PART I. FINANCIAL INFORMATION		4
Item 1. Financial Statements		4
Consolidated Balance Sheets		4
Consolidated Statements of Operations		5
Consolidated Statements of Cash Flows		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3. Quantitative and Qualitative Disclosures About Market Risk		25
Item 4. Controls and Procedures		25

PART II. OTHER INFORMATION		26
Item 1. Legal Proceedings		26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		26
Item 3. Defaults Upon Senior Securities		26
Item 4. Submission of Matters to a Vote of Security Holders		26
Item 5. Other Information		26
Item 6. Exhibits		26

SIGNATURES		26

PART I - FINANCIAL INFORMATION

Explanatory Note

This Quarterly Report on Form 10-Q/A (Amendment No. 1) discloses and discusses the impact and effect of a restatement of our previously filed unaudited consolidated financial statements contained in our originally-filed Quarterly Report on Form 10-Q for the period ended March 31, 2008 filed with the Securities and Exchange Commission on May 20, 2008. This restatement is necessary because we concluded that our previously reported consolidated financial statements for the fiscal years ended December 31, 2007, 2006 and 2005 and the quarters ended March 31, 2008, June 30, 2008 and September 30, 2008 did not correctly apply accounting principles for the recognition of underwriting sales revenue. The impact of the incorrect application of accounting principles is summarized below under Restatement Summary.

As a result, we are filing this amended Quarterly Report on Form 10-Q/A for March 31, 2008, to make the necessary corrections to account for the underwriting sales revenue, the overstatement of minority interests and provision for onerous contracts during this period, which contains an explanation in Note 1 to the financial statements.

ITEM 1. FINANCIAL STATEMENTS

Sunrise Real Estate Group, Inc.

Unaudited Condensed Consolidated Balance Sheets

(Expressed in US Dollars)

	March 31,			December 31,
	2008			2007
	(Restated)			(Restated)
ASSETS

Current assets
Cash and cash equivalents	$	1,455,685		$	2,281,516
Restricted cash (Note 10)		558,556			2,441,579
Accounts receivable		304,480			842,868
Promissory deposits (Note 3)		723,750			273,800
Amounts due from venturers (Note 4)		1,004,340			1,069,484
Amount due from related party (Note 12)		367,574			312,132
Other receivables and deposits (Note 5)		946,147			602,373

Total current assets		5,360,532			7,823,752

Property, plant and equipment – net (Note 6)		2,751,924			2,519,585
Equity investment (Note 7)		81,208			78,033
Investment properties (Note 8)		7,989,374			7,800,228
Deferred tax asset (Note 9)		1,073,326			1,021,059
Goodwill		13,307			13,307

Total assets	$	17,269,671		$	19,255,964

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities
Bank loans (Note 10)	$	199,459		$	191,660
Promissory notes payable (Note 11)		653,620			976,435
Accounts payable		98,103			230,654
Amount due to director (Note 12)		69,975			171,458
Amount due to related party (Note 12)		207,567			159,561
Other payables and accrued expenses (Note 13)		1,777,698			2,452,833
Other tax payable (Note 14)		550,017			546,873
Income tax payable		1,294,924			1,238,912

Total current liabilities		4,851,363			5,968,386

Commitments and contingencies (Note 15)
Long-term bank loans (Note 10)		6,035,678			5,847,606
Long-term promissory notes payable (Note 11)		77,778			111,112
Deposits received from underwriting sales (Note 16)		8,058,309			7,743,240
Minority interest		439,014			431,674

Shareholders’ equity
Common stock, par value $0.01 per share; 200,000,000 shares authorized; 23,691,925 and 23,691,925 shares issued and outstanding as of March 31, 2008 and December 31, 2007, respectively		236,919			236,919
Additional paid-in capital		3,620,008			3,620,008
Statutory reserve (Note 17)		729,744			729,744
Accumulated losses		(7,471,754	)		(6,157,723	)
Accumulated other comprehensive income (Note 18)		692,612			724,998

Total shareholders’ equity		(2,192,471	)		(846,054	)

Total liabilities and shareholders’ equity	$	17,269,671		$	19,255,964

See accompanying notes to unaudited condensed consolidated financial statements.

Sunrise Real Estate Group, Inc.

Unaudited Condensed Consolidated Statements of Operations

(Expressed in US Dollars)

	Three Months Ended March 31,
	2008			2007
	(Restated) (Restated)
Net Revenues	$	1,319,545		$	1,135,155

Cost of Revenues		(1,302,924	)		(1,289,618	)

Gross Profit/(Loss)		16,621			(154,463	)

Operating Expenses		(310,626	)		(239,509	)

General and Administrative Expenses		(893,222	)		(894,575	)

Operating Loss		(1,187,227	)		(1,288,547	)

Interest Income		5,769			4,227

Other Income, Net		6,532			55,641

Interest Expenses		(143,640	)		(202,562	)

Loss Before Income Tax and Minority Interest		(1,318,566	)		(1,431,241	)

Income Tax		(5,496	)		-

Loss Before Minority Interest		(1,324,062	)		(1,431,241	)

Minority Interest		10,031			3,080

Net Loss	$	(1,314,031	)	$	(1,428,161	)

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

Weighted average common shares outstanding – Basic and Fully Diluted 1		23,691,925			23,691,925

See accompanying notes to unaudited condensed consolidated financial statements.

¹ Share amounts have been retroactively restated to reflect the effect of a 3% stock dividend of common stock for each share of common stock outstanding at August 1, 2007.

Sunrise Real Estate Group, Inc.

Consolidated Statements of Cash Flows

Increase/(Decrease) in Cash and Cash Equivalents

(Expressed in US Dollars)

	Three Months Ended March 31,
	2008			2007
	(Restated)			(Restated)
Cash flows from operating activities
Net Loss	$	(1,314,031	)	$	(1,428,161	)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation of property, plant and equipment		191,144			83,581
(Gain) /loss on disposal of property, plant and equipment		(7,429	)		532
Minority interest		(10,031	)		(3,080	)
Change in:
Accounts receivable		561,901			2,829,625
Promissory deposits		(430,547	)		(643,882	)
Other receivables and deposits		(299,747	)		(359,592	)
Amount due from related party		(55,442	)		-

Accounts payable		(139,264	)		(339,773	)
Amounts with venturers		67,098			(122,892	)
Other payables and accrued expenses		(759,414	)		(500,970	)
Interest payable on promissory notes		17,291			84,830
Interest payable on amount due to director		2,897			(11,450	)
Amount due to related party		48,006			-
Other tax payable		(18,748	)		(145,130	)
Income tax payable		5,496			(161,804	)
Restricted cash		1,883,023			-
Net cash used in operating activities		(257,797	)		(718,166	)

Cash flows from investing activities
Acquisition of property, plant and equipment		(272,021	)		(375,073	)
Proceeds from disposal of property, plant and equipment		86,668			-
Net cash used in investing activities		(185,353	)		(375,073	)

Cash flows from financing activities
Bank loans repayment		(48,925	)		(312,166	)
Repayment of promissory note		(373,440	)		(183,334	)
Proceeds from promissory note		-			2,565,903
Repayment to director		(104,380	)		-
Net cash (used in)/provided by financing activities		(526,745	)		2,070,403

Effect of exchange rate changes on cash and cash equivalents		144,064			21,761

Net increase in cash and cash equivalents		(825,831	)		998,925
Cash and cash equivalents at beginning of period		2,281,516			945,727
Cash and cash equivalents at end of period	$	1,455,685		$	1,944,652

Supplemental disclosure of cash flow information
Cash paid during the period:
Income tax paid		-			174,206
Interest paid		129,468			129,182

See accompanying notes to unaudited condensed consolidated financial statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

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

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.

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

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

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

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

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

Figure 1: Company Organization Chart

SRRE and its subsidiaries, namely, CY-SRRE, LRY, SHXJY, SZXJY, SZXJYB, SZSY, BJXJY, SHSY and SZGFH 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 .

Restatement Summary

The Company discovered errors to previously issued financial statements for the fiscal years ended December 31, 2007, 2006 and 2005 and the condensed financial statements for period ended March 31, 2007 and 2008, June 30, 2007 and 2008 and September 30, 2007. The Company has filed the restated financial statements for these periods to make the correction of the errors.

The first restatement relates to the recognition of revenue from underwriting sales. The Company entered into an agreement in 2004 to underwrite an office building in Suzhou, known as Suzhou Sovereign Building. Under the Underwriting Model, our commission revenue is equivalent to the price difference between the final selling price and underwriting price. In marketing of the property, the Company also launched a promotional package by entering into leasing agreements with certain buyers to lease the properties for them. The leasing period started in the second quarter of 2006, and in the leasing period the Company has the right to sublease the leased properties to earn rental income. The Company recognised commission revenue from underwriting service when the property developer and the buyer complete a property sales transaction, which is normally at the time when the property developer has confirmed that the predetermined level of sales proceeds have been received from buyers. The Company accounted for its liability for its obligations under a guarantee in accordance with FASB Interpretation No. 45, (FIN45) Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Direct Guarantees of Indebtedness of Others. It is the only underwriting agreement the Company entered since its incorporation.

The Company has subsequently determined that the correct application of accounting principles had not been applied for the recognition of underwriting sales revenue. In this correction, the financial statements for the years ended December 31, 2007 and 2006 and 2005 were restated to increase the Company’s deferred tax assets, advances to venturers and deposits received from underwriting sales by deferring revenue recognition from the closing of the sale, to generally when the remaining maximum exposure to loss is reduced below the amount of gain deferred. As a result, the Company’s net asset values as of December 31, 2007, 2006 and 2005 were reduced by $5,574,548, $5,315,410 and $1,806,588, respectively. The Company’s net assets values as of March 31, 2008 and 2007 were reduced by $5,573,877 and $5,110,044 respectively. The correction of this error reduced the Company’s losses for the year ended December, 2007 by $157,811 and reduced the Company’s profit for the year ended December 31, 2006 and 2005 by $3,365,274 and $1,779,656, respectively. The correction of this error does not have any effect on Company’s income statement for the period ended March 31, 2008 and 2007.

The second restatement relates to correct the overstatement of the minority shareholders’ share of the Company’s result by $111,135. As a result of the correction of this item, the Company’s financial statements for the year ended 2007 were restated and the Company’s loss for the year ended December 31, 2007 were reduced by $106,759 and total of the accumulated losses and accumulated other comprehensive income as of December 31, 2007 and March 31, 2008 were reduced by $111,135and $115,658 respectively.

The third restatement relates to correct the unprovided commission accrual of $335,873 and the under-provision for China taxes of $566,879 for the year ended December 31, 2006. The effect of this restatement was taken up in the 10KSB for year ended December 31, 2007 and 2006, which were filed on May 16, 2008. As a result of the correction, the retained earnings and accumulated other comprehensive income for period ended March 31, 2007 were reduced by $902,752 in total.

The fourth restatement relates to reclassifying from the cost of revenue to minority interest in regards to the venturers’ profit sharing of the underwriting sales project. As a result of the reclassification, the cost of revenue in 2006 was reduced by $579,729.

The fifth restatement relates to recognize an accrual for onerous 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. The provisions for onerous contacts for the year ended December 31, 2007 and 2006 were $252,070 and $283,741, respectively while provision for onerous contracts for the period ended March 31, 2008 and 2007 were $521,088 and $322,667, respectively. As a result of the restatement, the retained earnings and accumulated other comprehensive income for 2007 and 2006 were reduced by $535,811 and $283,741, respectively. The retained earnings and accumulated other comprehensive income for period ended March 31, 2008 and March 31, 2008 are reduced by $521,088 and $322,667 respectively. The net loss for period ended March 31, 2008 reduced by $14,723 and loss for period ended March 31, 2007 are increased by $38,926.

The following summarizes the above restatements.

For the year ended December 31, 2007

	As reported			Adjustments			As restated
Deferred tax assets	$	-		$	1,021,059		$	1,021,059
Amount due from venturers		79,662			989,822			1,069,484
Other payables and accrued expenses		2,074,833			378,000			2,452,833
Deposits received from underwriting sales		-			7,743,240			7,743,240
Minority interest of consolidated subsidiaries		542,809			(111,135	)		431,674
Retained earnings (Accumulated losses)		(741,548	)		(5,416,175	)		(6,157,723	)
Accumulated other comprehensive income		1,308,047			(583,049	)		724,998
Cost of revenues		6,711,704			94,259			6,805,963
Minority interest of consolidated subsidiaries – Income statements		157,589			(106,759	)		50,830
Net profit (loss)		(4,765,749	)		(12,500	)		(4,753,249	)

For the year ended December 31, 2006

	As reported		Adjustments			As restated
Deferred tax assets	$	142,842	$	795,292		$	938,134
Amounts due from venturers		1,939,616		159,174			2,098,790
Other payables and accrued expenses		1,874,577		283,741			2,158,318
Deposits received from underwriting sales		-		7,243,366			7,243,366
Income tax payable		1,933,491		(142,842	)		1,790,649
Amounts due to venturers		1,410,377		1,410,377			-
Minority interest of controlled joint venture		-		579,729			579,729
Retained earnings (Accumulated losses)		4,857,948		(5,428,675	)		(570,727	)
Accumulated other comprehensive income		456,743		(170,476	)		286,267
Net revenues		16,417,471		(4,905,767	)		11,511,704
Cost of revenues		7,246,933		(1,285,810	)		5,961,123
Income tax		1,767,088		(550,667	)		1,216,421
Minority interest of consolidated joint venture – Income statements		-		579,729			579,729
Net profit (loss)		2,773,310		(3,649,019	)		(875,709	)

For the year ended December 31, 2005

	As reported		Adjustments			As restated
Deferred tax assets	$	144,333	$	214,590		$	358,923
Deposits received from underwriting sales		-		2,165,511			2,165,511
Income tax payable		511,700		(144,333	)		367,367
Retained earnings (Accumulated losses)		2,559,836		(1,779,656	)		780,180
Accumulated other comprehensive income		147,349		(26,932	)		120,417
Net revenues		10,880,468		(2,133,234	)		8,747,234
Income tax		500,732		(353,578	)		147,154
Net profit		2,096,143		(1,779,656	)		316,487

For the period ended March 31, 2007

	As reported		Adjustments			As restated
Deferred tax assets		144,218		805,491			949,709
Amounts due from venturers		1,958,300		989,822			2,948,122
Other payables and accrued expenses		1,011,452		658,540			1,669,998
Deposits received from underwriting sales		-		7,313,048			7,313,048
Income tax payable		1,217,319		422,661			1,639,980
Amounts due to venturers		1,410,377		(579,729	)		830,648
Minority interest of consolidated project venturers		-		579,729			579,729
Retained earnings (Accumulated loss)		4,353,351		(6,352,238	)		(1,998,887	)
Accumulated other comprehensive income		598,990		(246,671	)		352,319
Cost of revenues		1,250,692		38,926			1,289,618
Net loss		1,389,235		38,926			1,428,162

For the period ended March 31, 2008

	As reported			Adjustments			As restated
Other payables and accrued expenses		1,414,422			363,276			1,777,698
Amounts due from venturers		14,518			989,822			1,004,340
Deferred tax assets		-			1,073,326			1,073,326
Deposits received from underwriting sales		-			8,058,309			8,058,309
Minority interest		554,672			(115,658	)		439,014
Accumulated losses		(2,070,302	)		(5,401,452	)		(7,471,754	)
Accumulated other comprehensive income		1,533,939			(841,327	)		692,612
Cost of revenues		1,317,647			(14,723	)		1,032,924
Net loss		1,328,754			(14,723	)		1,314,031

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, BJXJY, SHSY and SZGFH. All inter-company transactions and balances have been eliminated.

Foreign Currency Translation and Transactions

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

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

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

The exchange rate between US$ and RMB had little fluctuation during the periods presented. The rates ruling as of March 31, 2008 and December 31, 2007 are US$1: RMB7.019 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.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires the Company’s management to make estimates and assumptions that affect 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Advertising Costs

All advertising costs incurred in the promotion of the Company’s real estate projects are expensed as incurred.

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 grant confirmation to us to be able to invoice them accordingly, which 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.

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

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 at the time 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.

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

All revenues represent gross revenues less sales and business tax.

Net Earnings per Common Share

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 gives recognizes common stock equivalents, however; potential common stock in the diluted EPS computation is excluded in net loss periods, as their effect is anti-dilutive.

Income Taxes

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

We continue to account for income tax contingencies using a benefit recognition model. Beginning January 1, 2007, if we consider 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.

Non-employee stock based compensation

The cost of stock based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in Emerging Issues Task Force Issue ("EITF") 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services" ("EITF 96-18").

Segment Information

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

NOTE 3 - PROMISSORY DEPOSITS

The balance of $723,750 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.

NOTE 4 – 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.

NOTE 5 - OTHER RECEIVABLES AND DEPOSITS

	March 31,		December 31,
	2008		2007
Advances to staff	$	17,417	$	20,486
Rental deposits		94,099		101,370
Prepaid rental		482,868		406,833
Renovation work deposit		257,253		-
Other receivables		94,510		73,684
	$	946,147	$	602,373

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT – NET

	March 31,			December 31,
	2008			2007
Furniture and fixtures	$	146,972		$	133,970
Computer and office equipment		301,322			275,988
Motor vehicles		677,711			618,024
Properties		2,155,502			2,071,225
		3,281,507			3,099,207
Less: Accumulated depreciation		(529,583	)		(579,622	)
	$	2,751,924		$	2,519,585

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

NOTE 7 – 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”).

NOTE 8 – INVESTMENT PROPERTIES

	March 31,			December 31,
	2008			2007
Investment property	$	8,421,592		$	8,092,319
Less: Accumulated depreciation		(432,218	)		(292,091	)
	$	7,989,374		$	7,800,228

During the past three years, the Company made some property investments in Suzhou by acquiring one floor and six units of the Sovereign Building. The properties under development were completed on March 31, 2006 and we have paid the full purchase price to the property developer. The Company decided that these properties will be held for long-term investment purposes. As of June 30, 2007, the title for these properties had been transferred to the Company. On September 19, 2007, the Bank of Jiangsu, Suzhou Branch and SHSY entered into an agreement for the sale of two units of the Suzhou Sovereign Building to the Bank of Jiangsu. As of December 31, 2007, the title of these two units had been transferred to the purchaser. Following the disposal, the investment property included one floor and four units of a commercial building in Suzhou, the PRC, which was acquired by the Company for long-term investment purposes.

As of May 10, 2008, the four units of the Sovereign Building were leased to SZBFND, a related party of the Company, and the remaining one floor of the Sovereign Building was still available for lease.

All above investment properties as of March 31, 2008 were pledged to secure a loan in note 10.

NOTE 9 – 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 March 31, 2008, the tax effect of the temporary differences mainly represent the deferred tax assets arising from the deferred gain of the underwriting sale using the deposit method.

NOTE 10 - BANK LOANS

Bank loans of March 31, 2008 included two bank loans, as listed below:

First, the balance includes a bank loan of $5,686,625. This bank loan is repayable before August 2, 2010 and bears interest at a rate of 8.217% per annum. This bank loan is secured by the properties as mentioned in Note 8 above. The repayment schedule of this bank loan is as follows:

February 1, 2010		$	1,424,704
August 2, 2010		$	4,261,921

Pursuant to the relevant loan agreement, the using of the bank loan after repaying certain bank loans at the date of the loan agreement date 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 drawings in excess of RMB1 million from the remaining balance. This balance is recorded as restricted cash on the balance sheet.

Second, the remaining bank loan of US$548,512 bears interest at 6.48% per annum, and is repayable before December 15, 2010 in monthly installments. The bank loan is secured by the properties as mentioned in Note 6 above.

NOTE 11 – PROMISSORY NOTES PAYABLE

There are four promissory notes, as listed below:

First, the balance includes a promissory note of $211,111. This promissory note of $211,111 bears interest at a rate of 5% per annum. The promissory note is unsecured and will be repayable before October 31, 2009 .

Second, the balance includes a promissory note of $75,000 and accrued interest of $7,917 thereon. This promissory note of $75,000 bears interest at a rate of 5% per annum. This promissory note is unsecured and the term of repayment is not specifically defined .

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

Four, the balance includes an outstanding balance of $137,370 of a promissory note, which is unsecured, bears interest at a rate of 1.5% per month. This promissory was fully settled in April 2008.

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.

Amount due to director

Prior to April 25, 2005, the amount due to one of the directors was interest-free. Thereafter, the amount due to this director has borne interest at a rate of 9.6% per annum. As of March 31, 2008, the balance of $69,975 includes principal of $62,742 and accrued interest of $7,233 thereon. The principal is unsecured and the term of repayment is not specifically defined .

Amount due from related party

The amount represents an advance to SZBFND which is unsecured, interest free and has no fixed term of repayment.

Amount due to related party

The amount represents a rental deposits received from SZBFND.

NOTE 13 - OTHER PAYABLES AND ACCRUED EXPENSES

	March 31,		December 31,
	2008		2007
	(Restated)		(Restated)
Accrued staff commission & bonus	$	250,525	$	1,013,650
Rental deposits received		594,614		519,352
Accrual for onerous contracts		521,087		535,811
Other payables		411,472		384,020
	$	1,777,698	$	2,452,833

NOTE 14 – OTHER TAX PAYABLE

Other tax payable mainly represents PRC business tax which is charged at a rate of 5% on the revenue from services rendered. The amount of PRC business tax charged for the period ended March 31, 2008 was $70,098.

NOTE 15- COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

During the three months ended March 31, 2008 and 2007, the Company incurred lease expenses amounting to $99,943 and $74,337, respectively. As of March 31, 2008, the Company had commitments under operating leases, requiring annual minimum rentals as follows:

	March 31,		December 31,
	2008		2007
Within one year	$	179,315	$	132,628
Two to five years		145,645		133,847
Operating lease commitments	$	324,960	$	266,475

In order to distribute the properties of the Sovereign Building underwriting project, during the year of 2005, the Company launched a promotional package by entering into leasing agreements with certain buyers 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 enjoy 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, 2008, 115 sub-leasing agreements have been signed, the area of these sub-leasing agreements represented 89% of total area with these lease commitments.

As of March 31, 2008, the lease commitments under the above promotional package are as follows:

	March 31,		December 31,
	2008		2007
Within one year	$	3,171,206	$	3,047,216
Two to five years		7,938,705		8,412,157
Over five years		2,254,351		2,181,446
Operating lease commitments arising from the promotional package	$	13,364,262	$	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 as of December 31, 2007 and 2006 were $535,811 and $521,087, respectively.

According to the sub-leasing agreements that have been signed through March 31, 2008, the rental income from these sub-leasing agreements will be $2,203,478 within one year and $1,811,168 within two to five years. However, no assurance can be given that we can collect all of the rental income. According to the leasing agreements, the Company has an option to terminate any agreement by paying a predetermined compensation. As of March 31, 2008, the compensation to terminate all leasing agreements is $3,069,463.

NOTE 16 –DEPOSITS RECEIVED FROM UNDERWRTING SALES

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

NOTE 17 – 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 18– ACCUMULATED OTHER COMPREHENSIVE INCOME

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

NOTE 19 – CONCENTRATION OF CUSTOMERS

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

	Percentage of Net Sales Three Months Ended March 31,						Percentage of Accounts Receivable as at March 31,
	2008			2007			2008			2007
	(Unaudited)
Customer A		15	%		*			*			*
Customer B		11	%		*			*			*
Customer C		*			*			21	%		*
Customer D		*			*			19	%		*
Customer E		*			16	%		*			69	%
Customer F		*			11	%		*			*

* less than 10%

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

CAUTIONARY STATEMENT

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Sunrise Real Estate Group, Inc. (“SRRE”). The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes. The information contained in this quarterly report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission, or SEC, including but not limited to our annual report on Form 10-KSB for the year ended December 31, 2007, which discusses our business in greater detail.

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

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

In addition to other matters identified or described by us from time to time in filings with the SEC, there are several important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or results that are reflected from time to time in any forward-looking statement. Some of these important factors, but not necessarily all important factors, include those relating to our ability to raise money and grow our business, and potential difficulties in integrating new acquisitions with our current operations, especially as they pertain to foreign markets and market conditions. Please also refer to the section entitled “Risk Factors” in our Annual Report on Form 10-KSB for the year ended December 31, 2007.

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”) and Suzhou Xin Ji Yang Real Estate Brokerage Company Limited(“SZXJYB”) 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

Before 2004, our major business was an agency business, whereby our only subsidiary at the time, SHXJY, 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. SHXJY has focused its sales on the whole China market, especially in secondary cities. To expand our agency business, SHXJY has established branches in NanChang, YangZhou, NanJing and ChongQing, and subsidiaries in Suzhou and Beijing.

In 2004, through another subsidiary, SHSY, we ventured into a higher risk business model (the “Underwriting Model”) whereby our commission is not calculated as a percentage of the sales price but is equal to the price difference between the final sales price and the underwriting price. In this model, we negotiate with the developer for an underwriting price that is as low as possible, with the guarantee that all or a majority of the units will be sold by a specific date. In return, we have the flexibility to establish the final sales price, and earn the price difference between the final sales price and the underwriting price. The risk in this kind of agreement is that if there are any unsold units with sales guarantees on the expiry date, we may have to buy them from developers at the underwriting price. If that occurs we would hold these units in our inventory or as investments.

In February 2004, SHSY entered into a property underwriting agreement with an independent property developer to underwrite the Sovereign Building Project, a commercial building located in the Suzhou Industry Park in Suzhou, PRC, at a fixed underwriting price. As the sole distribution agent for this office building, SHSY committed to a sales target of $56.53 million, representing all of the units of the building. We started selling units in January, 2005. As of the end of February, 2007, we have sold or acquired all of the units in the building and achieved the sales target by selling 47,093 square meters with a total sales price of $75.96 million. The properties under development were completed on March 31, 2006, and titles to the properties have been transferred to the respective buyers.

During the past three years, SHSY has also made some property investments in Suzhou by acquiring one floor and six units of the Sovereign Building. The properties under development were completed on March 31, 2006, and we have paid the full purchase price to the property developer. The Company decided that these properties will be held for long-term investment purposes. In 2007, the title for these properties has been transferred to the Company. On September 19, 2007, Bank of Jiangsu, Suzhou Branch and SHSY entered into an agreement for the sale of two units of the Suzhou Sovereign Building. As of December 31, 2007, the title of these two units has been transferred to the purchaser.

During 2005 SZGFH launched a promotional package by entering into leasing agreements with certain buyers 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. 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 of 2006, and as of March 31, 2008, 115 sub-leasing agreements were signed. The area represented by the signed sub-leasing agreements represents 89% of the total area represented by lease commitments. As of May 10, 2008, 120 sub-leasing agreements have been signed, the area of these signed sub-leasing agreements represent 93% of total area that have lease commitments.

RECENTLY ISSUED ACCOUNTING STANDARDS

In February 208, the FASB issued FSP FAS 157-2, which delayed the effective date of SFAS No 157 to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years for all non-financial assets and nonfinancial liabilities, except those are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).. The Company does not believe that the adoption of SFAS No. 157 will significantly impact its financial statements.

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.

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 impairment of goodwill, accounting for income taxes, revenue recognition and equity instruments issued to non-employees.

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.

Income Taxes

SFAS No. 109, “Accounting for Income Taxes,” establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact our financial position or results of our operations.

Revenue Recognition

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

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

All revenues represent gross revenues less sales and business taxes.

Equity Instruments Issued to Non-Employees

According to EITF 96-18, the cost for the warrants issued for services was expensed at either the fair value of the services rendered or the fair value at the warrant grant dates.

RESULTS OF OPERATIONS

We provide the following discussion and analyses of our changes in financial condition and results of operations for the first quarter, 2008, with comparisons to the first quarter, 2007.

Revenue

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

	Three months ended March 31,
	2008		% to total			2007		% to total			% change
Agency sales	$	746,777		57	%	$	774,372		68	%		(4	)%
Underwriting sales	$	-		0	%	$	180,062		16	%		(100	)%
Property management	$	572,768		43	%	$	180,721		16	%		217	%
Net revenue	$	1,319,545		100	%	$	1,135,155		100	%		16	%

The net revenue in the first quarter, 2008 was $1,319,545, which was an increase of 16% from $1,135,155 in the first quarter, 2007. In the first quarter, 2008, agency sales represented 57% of net revenue and property management represented 43%. In the first quarter, 2007, agency sales represented 68% of net revenue, underwriting sales represented 16% and property management represented 16%. The increase in net revenue in the first quarter, 2008 was mainly due to the increase in our property management.

Agency sales

Agency sales represented 57% of our net revenue in the first quarter, 2008 and net revenue of agency sales in the first quarter, 2008 decreased 4% compared with same period in 2007. The primary reason was that:

1)	In first quarter, 2008, there were 18 agency sales projects contributing net revenue to the Company, compared to 21 projects in the same period in 2007.

2)	There were several projects in the initial stage, which didn’t contribute net revenue to the Company in the first quarter, 2008.

Because of our diverse market locations, the current macro economic policies had little impact on our agency sales business, and we are seeking stable growth in our agency sales business in 2008. However, there can be no assurance that we will be able to do so.

Underwriting sales

As the Sovereign Building Project was closed in 2007 and the Company was continuing to seek opportunities in underwriting sales, there was no net revenue of underwriting sales in the first quarter, 2008.

Property Management

SZGFH launched a promotional package by entering into leasing agreements with certain buyers to lease the properties for them. These leasing agreements on the Sovereign Building are for 62% of the floor space that was sold to third party buyers. The leasing period started in the second quarter of 2006, and in the leasing period SZGFH has the right to sublease the leased properties to earn rental income. As of March 31, 2008, 115 sub-leasing agreements were signed. The area of these sub-leasing agreements represents 89% of total area under these lease commitments. We expect that the income from the sub-leasing business will be on a stable growth trend in 2008 and that it can cover the lease commitments in the leasing period as a whole. However there can be no assurance that we will achieve these objectives.

Cost of Revenue

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

	Three months ended March 31,
	2008		% to total			2007		% to total			% change
Agency sales	$	534,322		41	%	$	509,392		39	%		5	%
Underwriting sales	$	-		0	%	$	35,424		3	%		(100	)%
Property management	$	768,602		59	%	$	744,802		58	%		3	%
Cost of revenue	$	1,302,924		100	%	$	1,289,618		100	%		1	%

The cost of revenue in the first quarter, 2008 was $1,302,924, an increase of 1% from $1,289,618 in the same period in 2007. In the first quarter, 2008, agency sales represented 41% of cost of revenue and property management represented 59%. In the first quarter, 2007, agency sales represented 39% of cost of revenue, underwriting sales represented 3% and property management represented 58%. The increase in cost of revenue in first quarter, 2008 was mainly due to the increase in our property management.

Agency sales

The cost of revenue for agency sales in the first quarter, 2008 was $534,322, an increase of 5% from $509,392 in the same period in 2007. This increase was mainly due to the increase in our marketing expenses in the first quarter, 2008, compared to the same period in 2007, the increase of such expenses was $35,025.

Underwriting sales

As the Sovereign Building Project was closed in 2007 and the Company was continuing to seek opportunities in underwriting sales, there was no cost of underwriting sales in the first quarter, 2008.

Property management

During the year of 2005, SZGFH launched a promotional package by entering into leasing agreements with certain buyers 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 return under these leasing agreements as our cost.

Operating Expenses

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

	Three months ended March 31,
	2008		% to total			2007		% to total			% change
Agency sales	$	278,451		90	%	$	176,098		74	%		58	%
Underwriting sales	$	-		0	%	$	33,078		14	%		(100	)%
Property management	$	32,175		10	%	$	30,333		12	%		6	%
Operating expenses	$	310,626		100	%	$	239,509		100	%		30	%

The operating expenses in the first quarter, 2008 were $310,626, an increase of 30% from $239,509 in the same period in 2007. In the first quarter, 2008, agency sales represented 90% of operating expenses and property management represented 10%. In the first quarter, 2007, agency sales represented 74% of operating expenses, underwriting sales represented 14%, and property management represented 12%. The increase in operating expenses in the first quarter of 2008 was mainly due to the increase in our agency sales.

Agency sales

The operating expenses for agency sales in the first quarter, 2008 were $278,451 which increased 58% from $176,098 in the same period in 2007. This increase was mainly due to the increase in staff costs in the first quarter, 2008, compared to the same period in 2007, the increase of such expenses was $60,633.

Underwriting sales

As the Sovereign Building Project was closed in 2007 and the Company was continuing to seek opportunities in underwriting sales, there was no operating expense of underwriting sales in the first quarter, 2008.

Property management

The operating expenses for property management in the first quarter, 2008 were $32,175, an increase of 6% from $30,333 in the same period in 2007. This increase was mainly due to the increase in staff costs in the first quarter, 2008, compared to the same period in 2007, the increase of such expenses was $7,031.

General and Administrative Expenses

The general and administrative expenses in first quarter, 2008 were $893,222, as compared to $894,575 in the first quarter, 2007.

Interest Expenses

Interest expenses in the first quarter, 2008 were $143,640, decreasing 29% from $202,562 in the same period in 2007. The interest expenses were mainly incurred for bank loans and promissory notes payable.

LIQUIDITY AND CAPITAL RESOURCES

In the first quarter of 2008, our principal sources of cash were revenues from our agency sales business. We expect these sources of revenues will continue to meet our cash requirements, including debt service, operating expenses and promissory deposits for various property projects.

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 $2,014,241 (including cash and cash equivalents of $1,455,685 and restricted cash of $558,556). The Company’s operating activities used cash in the amount of $257,797 in the first quarter of 2008, which was primarily attributable to the Company’s net loss in the amount of $1,328,754.

The Company’s investing activities consumed cash in the amount of $185,353 in the first quarter, 2008, which was primarily attributable to the decreased in restricted cash balance.

The Company’s financing activities used cash in the amount of $526,745 in the first quarter, 2008, which was primarily attributable to the repayment of promissory notes.

The potential cash needs for 2008 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, underwriting services and management services, and sales proceeds from disposal of investment properties acquired will be sufficient to meet our anticipated needs for working capital expenditures, business expansion and the potential cash needs during 2008.

If our business 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.

OFF BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of March 31, 2008. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2008, our disclosure controls and procedures were ineffective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

During its review of our financial statements for the period ended June 30, 2008, our management became aware that our previously reported unaudited consolidated financial statements filed with our originally-filed Quarterly Report on Form 10-Q for the period ended March 31, 2008, did not properly account for its underwriting sales revenue and overstated its minority interests. As a result, we have filed this amended filing to restate our consolidated financial statements for this period. Management evaluated the impact of our failure to properly detect this error on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted in our failure to detect this error in the review of our quarterly financial statements represented a material weakness.

We rely on certain compensating controls, including substantive periodic review of the financial statements by our Chief Executive Officer, Chief Financial Officer and Audit Committee.

There were no changes in our internal controls over financial reporting during the quarter ended March 31, 2008, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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

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

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

SIGNATURES

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

	SUNRISE REAL ESTATE GROUP, INC.

Date: May 14, 2009	By:	/s/ Lin, Chi-Jung
		Lin, Chi-Jung, Chief Executive Officer


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

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