SRRE 10-Q Quarterly Report June 30, 2010

SUNRISE REAL ESTATE GROUP INC

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10-Q 1 v194652_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

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

EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

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

EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 000-32585

SUNRISE REAL ESTATE GROUP, INC.

(Exact name of registrant as specified in its charter)

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

Suite 701, No. 333, Zhaojiabang Road

Shanghai, PRC 200032

(Address of principal executive offices Zip Code)

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

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

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

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: August 10, 2010 - 23,691,925 shares of Common Stock

FORM 10-Q

For the Quarter Ended June 30, 2010

INDEX

	Page
PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Consolidated Balance Sheets	3
Consolidated Statements of Operations	4
Consolidated Statements of Cash Flows	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	24
Item 4. Controls and Procedures	24

PART II. OTHER INFORMATION	25
Item 1. Legal Proceedings	25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3. Defaults Upon Senior Securities	25
Item 4. (Removed and Reserved)	25
Item 5. Other Information	25
Item 6. Exhibits	25

SIGNATURES	25

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Sunrise Real Estate Group, Inc.

Unaudited Condensed Consolidated Balance Sheets

(Expressed in US Dollars)

	June 30,			December 31,
	2010			2009
	(Unaudited)			(Audited)
ASSETS

Current assets
Cash and cash equivalents	$	2,295,101		$	3,444,600
Accounts receivable		1,522,705			651,329
Promissory deposits (Note 3)		1,178,047			732,257
Other receivables and deposits (Note 4)		669,057			177,001

Total current assets		5,664,910			5,005,187

Property, plant and equipment – net (Note 5)		2,592,512			2,291,995
Investment properties (Note 6)		7,334,397			7,597,074

Total assets	$	15,591,819		$	14,894,256

LIABILITIES AND SHAREHOLDERS’ DEFICIT

Current liabilities
Bank loans (Note 7)	$	-		$	205,032
Promissory notes payable (Note 8)		892,774			1,036,119
Accounts payable		285,391			316,064
Amount due to directors (Note 9)		166,087			290,210
Amount due to related party (Note 9)		128,699			127,996
Other payables and accrued expenses (Note 10)		2,761,998			2,283,359
Other tax payable (Note 11)		267,682			384,290
Income tax payable		1,112,677			987,187

Total current liabilities		5,615,308			5,630,257

Long-term bank loans (Note 7)		8,099,074			8,054,831
Deposits received from underwriting sales (Note 13)		3,788,793			4,316,655
Deferred tax liabilities		330,075			-
Total liabilities	$	17,833,250		$	18,001,743

Noncontrolling interests of consolidated subsidiaries		1,081,086			636,881
Commitments and contingencies (Note 12)

Shareholders’ deficit
Common stock, par value $0.01 per share; 200,000,000 shares authorized; 23,691,925 shares issued and outstanding as of June 30, 2010 and December 31, 2009		236,919			236,919
Additional paid-in capital		3,620,008			3,620,008
Statutory reserve (Note 14)		758,070			759,855
Accumulated losses		(8,526,107	)		(9,023,506	)
Accumulated other comprehensive income (Note 15)		588,593			662,356

Total shareholders’ deficit		(3,322,517	)		(3,744,368	)

Total liabilities and shareholders’ deficit	$	15,591,819		$	14,894,256

See accompanying notes to consolidated financial statements.

Sunrise Real Estate Group, Inc.

Unaudited Condensed Consolidated Statements of Operations

(Expressed in US Dollars)

	Three Months Ending June 30,						Six Months Ending June 30,
	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Net Revenues	$	2,942,915		$	1,759,981		$	7,642,434		$	3,255,509

Cost of Revenues		(2,106,356	)		(1,076,930	)		(4,123,068	)		(2,307,201	)

Gross Profit		836,559			683,051			3,519,366			948,308

Operating Expenses		(293,090	)		(267,871	)		(661,607	)		(459,511	)

General and Administrative Expenses		(532,981	)		(597,260	)		(1,115,343	)		(1,078,815	)

Operating Profit/(Loss)		10,488			(182,080	)		1,742,416			(590,018	)

Interest Income		2,132			730			5,115			1,629

Other Income, Net		(22,531	)		7,604			(5,597	)		22,217

Interest Expenses		(157,604	)		(122,139	)		(306,107	)		(266,513	)

Profit/(Loss) Before Income Tax and Minority Interest		(167,515	)		(295,885	)		1,435,827			(832,685	)

Income Tax		(527,169	)		(14,271	)		(550,298	)		(23,040	)

Profit/(Loss) Before Minority Interest		(694,684	)		(310,156	)		885,529			(855,725	)

Minority Interest		187,764			(62,403	)		(368,332	)		285

Net Profit/(Loss)	$	(506,920	)	$	(372,559	)	$	517,197		$	(855,440	)

Profit/(Loss) Per Share – Basic and Fully Diluted	$	(0.02	)	$	(0.02	)	$	0.02		$	(0.04	)

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

See accompanying notes to unaudited condensed consolidated financial statements.

Sunrise Real Estate Group, Inc.

Consolidated Statements of Cash Flows

Increase/(Decrease) in Cash and Cash Equivalents

(Expressed in US Dollars)

	Six Months Ending June 30,
	2010			2009
	(Unaudited)			(Unaudited)

Cash flows from operating activities
Net Profit/(Loss)	$	517,197		$	(855,440	)
Adjustments to reconcile net income to net cash used in operating activities
Depreciation of property, plant and equipment		422,518			429,783
Loss/ (Gain) on disposal of property, plant and equipment		741			113,027
Minority interest		368,332			(92	)
Change in:
Accounts receivable		(863,855	)		(55,343	)
Promissory deposits		(439,760	)		171,025
Other receivables and deposits		(488,852	)		(76,188	)
Accounts payable		(32,262	)		688,298
Other payables and accrued expenses		463,979			(552,891	)
Deposit from underwriting sales		(549,065	)		-
Interest payable on promissory notes		(24,897	)		106,896
Interest payable on amount due to director		1,220			146,183
Amount due to related party		-			42,615
Deferred tax liabilities		328,575			-
Other tax payable		(210,396	)		(39,707	)
Income tax payable		119,522			(26,515	)
Restricted cash		-			19,634
Net cash provided by/(used in) operating activities		(387,003	)		111,285

Cash flows from investing activities
Acquisition of property, plant and equipment		(435,308	)		(2,415	)
Proceeds from disposal of plant and equipment		4,529			18,292
Net cash provided by/(used in) investing activities		(430,779	)		15,877

Cash flows from financing activities
Bank loans repayment		(205,221	)		(102,434	)
Repayment of promissory note		(143,345	)		(44,444	)
Proceeds from promissory note		-			146,334
Repayment to director		(125,514	)		(64,889	)
Advance from director		-			160,882
Net cash provided by/ (used in) financing activities		(474,080	)		95,449

Effect of exchange rate changes on cash and cash equivalents		142,363			(295,713	)

Net decrease in cash and cash equivalents		(1,149,499	)		(73,102	)
Cash and cash equivalents at beginning of period		3,444,600			587,468
Cash and cash equivalents at end of period	$	2,295,101		$	514,366

Supplemental disclosure of cash flow information
Cash paid during the period:
Income tax paid		96,233			49,134
Interest paid		329,785			297,528

See accompanying notes to unaudited condensed consolidated financial statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

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

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

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

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

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

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

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

On April 22, 2010, ACE Develop Properties Limited, whose sole beneficiary owner is Lin Chi Jung, Chairman of the Board, CEO and director of the Company, transferred 4,511,400 shares of common stock of the Company to Robert Lin Investment, Inc. whose sole beneficiary owner is Lin Chao Chin, President, COO and director of the Company.

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 that include 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.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and all highly liquid investments with an original maturity of three months or less.

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 Accounting Standards Codification (ASC) Topic 830 “Foreign Currency Matters”. 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 some fluctuation during the periods presented. The rates as of June 30, 2010 and December 31, 2009 are US$1: RMB6.7909 and US$1: RMB6.8282, 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.

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, fees associated to services are fixed or determinable, and collection of the fees is assured.

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 the FASB guidance of ASC Topic 260, “Earnings per Share.” Under the provisions of ASC Topic 260, 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 the FASB ASC Topic 740 “Income Taxes.” Under ASC Topic 740, deferred tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

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

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

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

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

Segment information

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

Recently Issued Accounting Guidance

In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance became effective for us with the reporting period beginning January 1, 2010, except for the disclosure on the roll forward activities for Level 3 fair value measurements, which will become effective for us with the reporting period beginning July 1, 2011. Other than requiring additional disclosures, adoption of this new guidance did not have a material impact on our financial statements.

We adopted guidance issued by the FASB that changes the accounting and reporting for non-controlling interests. Non-controlling interests are to be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control are to be accounted for as equity transactions. In addition, net income attributable to a non-controlling interest is to be included in net income and, upon a loss of control, the interest sold, as well as any interest retained, is to be recorded at fair value with any gain or loss recognized in net income. Adoption of the new guidance did not have a material impact on our financial statements.

In June 2009, the FASB issued guidance on the consolidation of variable interest entities, which is effective for us beginning July 1, 2010. The new guidance requires revised evaluations of whether entities represent variable interest entities, ongoing assessments of control over such entities, and additional disclosures for variable interests. We believe adoption of this new guidance will not have a material impact on our financial statements.

In May 2009, the FASB Issued guidance on accounting for and disclosure of subsequent events. The objective of this guidance is to establish general standards of accounting and disclosure of events after the balance sheet date but before financial statements are issued or are available to be issued.

The Company does not anticipate that adoption of the above guidance will have a material effect on the Company’s financial condition and results of operations.

NOTE 3 - PROMISSORY DEPOSITS

The balance of $736,279 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.

The balance of $441,767 represents the deposit for participating in a land auction in SanDong, the PRC.

As of June 30, 2010, $441,767 out of the total promissory deposits was pledged to secure a promissory note payable in Note 8.

NOTE 4 - OTHER RECEIVABLES AND DEPOSITS

	June 30,		December 31,
	2010		2009

Advances to staff	$	39,612	$	80,288
Rental deposits		152,346		72,870
Other receivables		477,099		23,843
	$	669,057	$	177,001

NOTE 5 – PROPERTY, P LANT AND EQUIPMENT – NET

	June 30,			December 31,
	2010			2009

Furniture and fixtures	$	81,383		$	80,938
Computer and office equipment		359,958			349,964
Motor vehicles		792,256			491,799
Properties		2,226,702			2,214,539
		3,460,299			3,137,240
Less: Accumulated depreciation		(867,787	)		(845,245	)
	$	2,592,512		$	2,291,995

NOTE 6 – INVESTMENT PROPERTIES

	June 30,			December 31,
	2010			2009

Investment property	$	9,118,206		$	9,068,396
Less: Accumulated depreciation		(1,783,809	)		(1,471,322	)
	$	7,334,397		$	7,597,074

The investment properties include one floor and four units of a commercial building in Suzhou, the PRC. The investment properties were acquired by the Company for long-term investment purposes and were pledged to secure a bank loan in note 7. The carrying amount of one floor as $2,439,094 was pledged to a promissory note payable in Note 8.

As of June 30, 2010, the four units of the investment properties were leased to SZBFND, a related party of the Company, and 95% of the total area of the one remaining floor was leased out.

NOTE 7 - BANK LOANS

The balance includes one bank loan of $8,099,074, which has an interest increase of 10% of one year prime rate as announced by the People’s Bank of China to 5.84%, and is secured by the properties as mentioned in Note 6 above. The period of this bank loan was 3 years and can be extended to the next 3 years automatically.

NOTE 8 – PROMISSORY NOTES PAYABLE

There are three promissory notes, as listed below:

First, the balance includes a promissory note of $300,000 and accrued interest of $3,750 thereon. This promissory note of $300,000 bearing an interest rate of 15% per annum. This promissory note is unsecured and the term of repayment is not specifically defined.

Second, the balance includes a promissory note of $147,256. This promissory note of $147,256 bears interest at a rate of 15% per annum. This promissory note is unsecured and the term of repayment is not specifically defined.

Third, the balance includes a promissory note of $441,768. This promissory note of $441,768 bears interest at a rate of 18% per annum. This promissory note is secured by the promissory deposit of $441,767 as mentioned in Note 3 above and one floor of the investment properties as mentioned in Note 6 above and the term of repayment is not specifically defined.

NOTE 9 – AMOUNTS WITH RELATED PARTIES AND DIRECTORS

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

Amount due to directors

As of June 30, 2010, the balance includes one loan and advances obtained from Lin Chin-Jung.

The loan includes principal of $103,288 and accrued interest of $29,666 thereon. The principal is unsecured, bears interest at a rate of 9.6% per annum and the term of repayment is not specifically defined.

The advances and reimbursements of $33,133 represented the salary payable and rental reimbursement to Lin Chin-Jung outstanding as of June 30, 2010.

Amount due to related party

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

NOTE 10 - OTHER PAYABLES AND ACCRUED EXPENSES

	June 30,		December 31,
	2010		2009

Accrued legal fee	$	242,187	$	0
Accrued staff commission & bonus		905,504	$	694,717
Rental deposits received		751,773		596,090
Accrual for onerous contracts		18,869		39,360
Other payables		843,665		953,192
Total other payables and accrued expense	$	2,761,998	$	2,283,359

NOTE 11 – OTHER TAX PAYABLE

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

NOTE 12- COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

During the six months ended June 30, 2010 and 2009, the Company incurred lease expenses amounting to $164,833 and $142,194, respectively. As of June 30, 2010, the Company had commitments under operating leases, requiring annual minimum rentals as follows:

	June 30,		December 31,
	2010		2009

Within one year	$	235,558	$	31,878
Two to five years		84,672		4,394
Operating lease commitments	$	320,230	$	36,272

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 a rental return of 8.5% and 8.8% per annum for a period of 5 years and 8 years, respectively. In regards to the leasing agreements, we have negotiated with the buyers and have lowered the annual rental return rate for the remaining leasing period from 8.5% for 5 years to 5.8%, and from 8.8% for 8 years to 6%. As of June 30, 2010, 67% of the buyers agreed upon the lowered rate and 22% of the buyers agreed to cancel the leasing agreements. 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 June 30, 2010, 111 sub-leasing agreements have been signed, the area of these sub-leasing agreements represented 93% of total area with these lease commitments.

As of June 30, 2010, the lease commitments are as follows:

	June 30,		December 31,
	2010		2009

Within one year	$	1,953,603	$	2,141,087
Two to five years		3,374,643		4,478,477
Operating lease commitments arising from the promotional package	$	5,328,246	$	6,619,564

An accrual for onerous contracts was recognized which is equal to the difference between the present value of the sublease income and the present value of the associated lease expense at the appropriate discount rate. The accrual for onerous contracts was $18,876 as of June 30, 20 10 and $39,360 as of December 31, 2009.

According to the leasing agreements, the Company has an option to terminate any agreement by paying a predetermined compensation. As of June 30, 20 10 , the compensation to terminate all leasing agreements is $1,662,135. According to the sub-leasing agreements that have been signed through June 30, 2010, the rental income from these sub-leasing agreements will be $ 1,257,043 within one year and $543,024 within two to five years. However, no assurance can be given that we can collect all of the rental income.

NOTE 13 –DEPOSITS RECEIVED FROM UNDERWRTING SALES

The Company accounts for its underwriting sales revenue with underwriting rent guarantees in accordance with the FASB ASC Topic 360. Under ASC 360, the deposit method should be used for the revenue from the sales of floor space with underwriting rent guarantees until the revenues generated by sub-leasing properties exceed the guaranteed rental amount due to the purchasers.

NOTE 14 – STATUTORY RESERVE

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

NOTE 15 – ACCUMULATED OTHER COMPREHENSIVE INCOME (FIND IN PROJECT 2010 Q2)

As of June 30, 2010 and December 31, 2009, the only component of accumulated other comprehensive income was translation reserve.

NOTE 16 – CONCENTRATION OF CUSTOMERS (FIND IN PROJECT 2010 “CUSTOMER SHEET”)

During the three months and six months ended June 30, 2010 and 2009, the following customers accounted for more than 10% of total net revenue:

	Percentage of Net Sales Three Months Ended June 30,					Percentage of Net Sales Six Months Ended June 30,					Percentage of Accounts Receivable as of June 30,
	2010			2009		2010			2009		2010			2009

Customer A		19	%		*		18	%		*		15	%		*
Customer B		14	%		*		17	%		*		38	%		*
Customer C		10	%		*		*			*		*			*

* less than 10%

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

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Sunrise Real Estate Group, Inc. (“SRRE”). The MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes. The information contained in this quarterly report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission, or SEC, including but not limited to our annual report on Form 10-K for the year ended December 31, 2009, which discusses our business in greater detail.

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

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

In addition to other matters identified or described by us from time to time in filings with the SEC, there are several important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or results that are reflected from time to time in any forward-looking statement. Some of these important factors, but not necessarily all important factors, include those relating to our ability to raise money and grow our business, and potential difficulties in integrating new acquisitions with our current operations, especially as they pertain to foreign markets and market conditions. Please also refer to the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009.

OVERVIEW

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

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

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

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

RECENT DEVELOPMENTS

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

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 a rental return of 8.5% and 8.8% per annum for a period of 5 years and 8 years, respectively. In regards to the leasing agreements, we have negotiated with the buyers and have lowered the annual rental return rate for the remaining leasing period from 8.5% for 5 years to 5.8%, and from 8.8% for 8 years to 6%. As of June 30, 2010, 67% of the buyers agreed upon the lowered rate and 22% of the buyers agreed to cancel the leasing agreements. The leasing period started in the second quarter of 2006, and the Company has the right to sublease the leased properties to cover these lease commitments in the leasing period. As of June 30, 2010, 111 sub-leasing agreements have been signed, the area of these sub-leasing agreements represented 93% of total area with these lease commitments.

RECENTLY ISSUED ACCOUNTING STANDARDS

The Company does not anticipate that adoption of the above guidance will have a material effect on the Company’s financial condition and results of operations.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

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

Revenue Recognition

Revenue from marketing consultancy services is recognized when services are provided to clients, fees associated to services are fixed or determinable, and collection of the fees is assured.

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

All revenues represent gross revenues less sales and business tax.

Net Earnings per Common Share

Income Taxes

Segment Information

RESULTS OF OPERATIONS

We provide the discussion and analysis of our changes in financial condition and results of operations for the three and six months ended June 30, 2010, with comparisons to the historical three and six months ended June 30, 2009.

Revenue

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

	Three Months Ended June 30,											Six Months Ended June 30,
	2010		% to total		2009		% to total		% change			2010		% to total		2009		% to total		% change

Agency Sales		1,882,031		64		957,581		54		97			5,653,952		74		1,685,295		52		235

Underwriting Sales		405,862		14		0		0		N/A			716,607		9		0		0		N/A

Property Management		655,022		22		802,400		46		( 18	)		1,271,875		17		1,570,214		48		(19	)

Net revenue		2,942,915		100		1,759,981		100		6 7			7,642,434		100		3,255,509		100		135

The net revenue in the second quarter of 2010 was $ 2,942,915 , which increased 67% from $1,759,981 in the second quarter of 2009. The total net revenue of the first two quarters of 2010 was $ 7,642,434 , which increased 135% from $3,255,509 of the first two quarters of 2009. In the second quarter of 2010, agency sales represented 64% of the total net revenue, underwriting sales represented 14% and property management represented 22%. In the first two quarters of 2010, agency sales represented 74% of the total net revenue, underwriting sales represented 9% and property management represented 17%. The increase in net revenue in the second quarter and first two quarters of 2010 was due to the increase in our agency sales and underwriting sales .

Agency sales

In the second quarter and first two quarters of 2010, 64% and 74%, respectively, of our net revenue was due to agency sales. As compared with same period in 2009, net revenue of agency sales in the second quarter and first two quarters of 2010 increased 97% and 235% respectively. The primary reason was there were two projects that were major contributors to the increase in our agency sales revenue. Such projects contributed $1,090,022 to the agency sales revenue in the second quarter of 2010 and $2,791,966 to the agency sales revenue in six months ending June 30, 2010.

Because of our diverse market locations, the risk of market fluctuations has been minimized on our business operations in agency sales in 2010, and we are seeking stable growth in our agency sales business in 2010. However, there can be no assurance that we will be able to do so.

Underwriting Sales

In February 2004, SHSY entered into an agreement to underwrite an office building in Suzhou, known as Suzhou Sovereign Building. Being the sole distribution agent for this office building, SHSY committed to a sales target of $56.53 million. Property underwriting sales are comparatively a higher risk business model compared to our pure commission based agency business. Under this higher risk business model, the Underwriting Model, our commission is not calculated as a percentage of the selling price; instead, our commission revenue is equivalent to the price difference between the final selling price and underwriting price. We negotiate with a 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 are given the flexibility to establish the final selling price and earn the price difference between the final selling price and the underwriting price. The risk of this kind of arrangement is that if there are any unsold units on the expiration date of the agreement, then we may have to purchase the unsold property units from the developer at the underwriting price and hold them in our inventory or as investments.

We started selling units in the Sovereign Building in January, 2005. As of December 31, 2006, we have achieved the sales target by selling 46,779 square meters with a total sales price of $70.45 million. However, there are still unsold properties with floor area of 314 square meters, which represents 1% of total floor area underwritten, as of December 31, 2006. As of the end of February, 2007, we have sold or acquired all of the units in the building, and we have achieved the sales target by selling 47,093 square meters with a total sales price of $75.96 million.

The Company accounts for underwriting sales in accordance with the FASB guidance of ASC Topic 360, “ Property, Plant and Equipment ” . The commission revenue on underwriting sales is recognized when the criteria in ASC 360 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 income deferred. In early 2009, the Company renegotiated the rental payments with buyers. As of June 30th, 2010, 67% of the buyers agreed upon the lowered rate and 22% of the buyers agreed to cancel the leasing agreements. Based on the renegotiated agreements, $716,607 of the deferred revenue on underwriting sales was recognized in the first two quarters of 2010.

Property Management

We expect that the income from the sub-leasing business will be on a stable growth trend in 2010 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 June 30,											Six Months Ended June 30,
	2010		% to total		2009		% to total		% change			2010		% to total		2009		% to total		% change

Agency Sales		1,316,654		63		291,376		27		352			2,575,896		63		536,686		23		380

Underwriting Sales		94,891		4		0		0		N/A			167,554		4		0		0		N/A

Property Management		694,811		33		785,554		73		(12	)		1,379,628		33		1,770,515		77		(22	)

Cost of revenue		2,106,356		100		1,076,930		100		96			4,123,068		100		2,307,201		100		79

The cost of revenue of the second quarter of 2010 was $ 2,106,356 , which increased 96% from $1,076,930 of the second quarter of 2009. The total cost of revenue of the first two quarters of 2010 was $ 4,123,068 , which increased 79% from $2,307,201of the first two quarters of 2009. In the second quarter of 2010, agency sales represented 63% of the total cost of revenue, underwriting sales represented 4%, and property management represented 33%. In the first two quarters of 2010, agency sales represented 63% of the total cost of revenue, underwriting sales represented 4%, and property management represented 33%. The increased in cost of revenue in the second quarter and first two quarters of 2010 was mainly due to the increase in our agency sales while property management cost of revenue stayed decreased by 73% and 77% respectively.

Agency sales

As compared with same period in 2009, net revenue of agency sales in the second quarter and first two quarters of 2010 increased 97% and 235% respectively, and the cost of revenue in the same period increased by 352% and 380% accordingly. This increase in cost was mainly due to the increase in our commissions and consulting costs in the first two quarters of 2010, compared to the same period in 2009, the increase of such expenses was $882,295 and $916,829, respectively.

Underwriting Sales

The cost of underwriting sales represents selling costs, such as staff costs and advertising expenses, associated with underwriting sales.

Property management

In connection with our leasing guarantees to third party buyers in the Sovereign Building, an accrual for onerous contracts was recognized equal to the difference between the present value of the sublease income and the present value of the associated lease expense at the appropriate discount rate. The accrual for onerous contracts was $18,876 as of June 30, 2010 and $39,360 as of December 31, 2009.

Operating Expenses

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

	Three Months Ended June 30,										Six Months Ended June 30,
	2010		% to total		2009		% to total		% change		2010		% to total		2009		% to total		% change

Agency sales		255,894		87		250,305		93		2		593,529		90		397,025		86		49

Property Management		37,196		13		17,566		7		112		68,078		10		62,486		14		9

Operating expenses		293,090		100		267,871		100		9		661,607		100		459,511		100		44

The operating expenses of the second quarter of 2010 were $293,090, which increased 9% from $267,871 of the second quarter of 2009. The total operating expenses of the first two quarters of 2010 were $661,607, which increased 44% from $459,511 in the first two quarters of 2009. In the second quarter of 2010, agency sales represented 87% of the total operating expenses and property management represented 13%. In the first two quarters of 2010, agency sales represented 90% of the total operating expenses and property management represented 10%. This increase in operating expense in the second quarter was due to the increase in our property management. In addition, the increase in operating expenses in connection with agency sales for the six months ended June 30, 2010 was attributable to the increase in revenue of agency sales.

Agency sales

When compared to 2009, the operating expenses for agency sales in the second quarter and first two quarters of 2009 increased 2% and 49% respectively. The primary reason for the change was that in the first two quarters of 2010, our staff cost and consulting expense increased $47,908 and $120,297 compared to the same period in 2009.

Property management

When compared to 2009, the operating expenses for property management in the second quarter of 2010 increased 112%. The primary reason for the change was that in the second quarter of 2010, our consulting expense increased $11,727, compared to the same period in 2009.

General and Administrative Expenses

General Administrative Expense increased for the first two quarters in 2010 as compared to 2009 by 3%. The main reason for the increase in the first two quarters in 2010 was the increase in our staff cost, which increased $97,294 compared to the same period in 2009.

Int erest Expenses

When compared to 2009, the interest expenses in the second quarter and first two quarters of 2010 increased 29% and 15% respectively. The interest expenses relate to bank loans and promissory notes payable.

LIQUIDITY AND CAPITAL RESOURCES

In 2010, 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 $2,295,101.

The Company's operating activities used cash in the amount of $387,003, which was primarily attributable to the increase of our accounts receivables.

The Company's investing activities used cash resources of $430,779, which was primarily attributable to the acquisition of property, plant and equipment.

The Company's financing activities used cash resources of $474,080, which was primarily attributable to the repayment of bank loan and promissory notes.

The potential cash needs for 2010 will be the repayments of our bank loans and promissory notes, the rental guarantee payments and promissory deposits for various property projects.

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.

OFF BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2010. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective at June 30, 2010, to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. There were no changes in our internal controls over financial reporting during the quarter ending June 30, 2010, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. (REMOVED AND RESERVED)

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: August 1 9 , 2010	By:	/s/ Lin, Chi-Jung
	Lin, Chi-Jung, Chief Executive Officer

Date: August 1 9 , 2010	By:	/s/ Wang Wen-Yan
	Wang Wen-Yan, Chief Financial Officer

TABLE OF CONTENTS

Part I - Financial Information Item 1. Financial Statements Note 1 Organization and Description Of Business Note 2 Summary Of Significant Accounting Policies Note 3 - Promissory Deposits Note 4 - Other Receivables and Deposits Note 5 Property, P Lant and Equipment Net Note 6 Investment Properties Note 7 - Bank Loans Note 8 Promissory Notes Payable Note 9 Amounts with Related Parties and Directors Note 10 - Other Payables and Accrued Expenses Note 11 Other Tax Payable Note 12- Commitments and Contingencies Note 13 Deposits Received From Underwrting Sales Note 14 Statutory Reserve Note 15 Accumulated Other Comprehensive Income (find in Project 2010 Q2)Note 16 Concentration Of Customers (find in Project 2010 Customer Sheet )Item 2. Management S Discussion and Analysis Of Finanical Condition and Results Of Operations Cautionary Statement Item 2. Management S Discussion and Analysis Of Finanical Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II - Other Information Item 1. Legal Proceedings Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. (removed and Reserved)Item 5. Other Information Item 6. Exhibits

SRRE 10-Q Quarter ended June 30, 2010