**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D. C. 20549**





**FORM
      10-Q**





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


**EXCHANGE
      ACT OF 1934**




For
      the
      quarterly period ended March 31, 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
            3Item
                1.
            Financial
                Statements
            3Consolidated
                Balance Sheets
            3Consolidated
                Statements of Operations
            4Consolidated
                Statements of Cash Flows
            5Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            15Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            21Item
                4.
            Controls
                and Procedures
            21PART
                II. OTHER INFORMATION
            22Item
                1.
            Legal
                Proceedings
            22Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            22Item
                3.
            Defaults
                Upon Senior Securities
            22Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            22Item
                5.
            Other
                Information
            22Item
                6.
            Exhibits
            22SIGNATURES
            22





2


**PART
      I - FINANCIAL INFORMATION**




**ITEM
      1. F** **INANCIAL
      STATEMENTS**





**Sunrise
      Real Estate Group, Inc.**


**Consolidated
      Balance Sheets**


**(Expressed
      in US Dollars)**




**March
                31,**
            
            **December 31,****2008**
            
            **2007****(Unaudited)**ASSETSCurrent
                assetsCash
                and cash equivalents
            
            $
            1,455,685
            
            $
            2,281,516Restricted
                cash (Note 9)
            
            
            558,556
            
            
            2,441,579Accounts
                receivable
            
            
            304,480
            
            
            842,868Promissory
                deposits (Note 3)
            
            
            723,750
            
            
            273,800Amounts
                due from venturers (Note 4)
            
            
            14,518
            
            
            79,662Amount
                due from related party (Note 11)
            
            
            367,574
            
            
            312,132Other
                receivables and deposits (Note 5)
            
            
            946,147
            
            
            602,373Total
                current assets
            
            
            4,370,710
            
            
            6,833,930Property,
                plant and equipment – net (Note 6)
            
            
            2,751,924
            
            
            2,519,585Equity
                investment (Note 7)
            
            
            81,208
            
            
            78,033Investment
                properties (Note 8)
            
            
            7,989,374
            
            
            7,800,228Goodwill
            
            
            13,307
            
            
            13,307Total
                assets
            
            $
            15,206,523
            
            $
            17,245,083LIABILITIES
                AND SHAREHOLDERS’ EQUITYCurrent
                liabilitiesBank
                loans (Note 9)
            
            $
            199,459
            
            $
            191,660Promissory
                notes payable (Note 10)
            
            
            653,620
            
            
            976,435Accounts
                payable
            
            
            98,103
            
            
            230,654Amount
                due to director (Note 11)
            
            
            69,975
            
            
            171,458Amount
                due to related party (Note 11)
            
            
            207,567
            
            
            159,561Other
                payables and accrued expenses (Note 12)
            
            
            1,414,422
            
            
            2,074,833Other
                tax payable (Note 13)
            
            
            550,017
            
            
            546,873Income
                tax payable
            
            
            1,294,924
            
            
            1,238,912Total
                current liabilities
            
            
            4,488,087
            
            
            5,590,386Commitments
                and contingencies (Note 14)Long-term
                bank loans (Note 9)
            
            
            6,035,678
            
            
            5,847,606Long-term
                promissory notes payable (Note 10)
            
            
            77,778
            
            
            111,112Minority
                interest
            
            
            554,672
            
            
            542,809Shareholders’
                equityCommon
                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
            
            
            236,919Additional
                paid-in capital
            
            
            3,620,008
            
            
            3,620,008Statutory
                reserve (Note 15)
            
            
            729,744
            
            
            729,744Accumulated
                losses
            
            
            (2,070,302
            )
            
            (741,548
            )Accumulated
                other comprehensive income (Note 16)
            
            
            1,533,939
            
            
            1,308,047Total
                shareholders’ equity
            
            
            4,050,308
            
            
            5,153,170Total
                liabilities and shareholders’ equity
            
            $
            15,206,523
            
            $
            17,245,083




See
      accompanying notes to consolidated financial statements.




3


**Sunrise
      Real Estate Group, Inc.**





**Consolidated
      Statements of Operations**





(Expressed
      in US Dollars)




**Three Months Ended March 31,****2008**
            
            **2007****(Unaudited)**Net
                Revenues
            
            $
            1,319,545
            
            $
            1,135,155Cost
                of Revenues
            
            
            (1,317,647
            )
            
            (1,250,692
            )Gross
                Profit/(Loss)
            
            
            1,898
            
            
            (115,537
            )Operating
                Expenses
            
            
            (310,626
            )
            
            (239,509
            )General
                and Administrative Expenses
            
            
            (893,222
            )
            
            (894,575
            )Operating
                Loss
            
            
            (1,201,950
            )
            
            (1,249,621
            )Interest
                Income
            
            
            5,769
            
            
            4,227Other
                Income, Net
            
            
            6,532
            
            
            55,641Interest
                Expenses
            
            
            (143,640
            )
            
            (202,562
            )Loss
                Before Income Tax and Minority Interest
            
            
            (1,333,289
            )
            
            (1,392,315
            )Income
                Tax
            
            
            (5,496
            )
            
            -Loss
                Before Minority Interest
            
            
            (1,338,785
            )
            
            (1,392,315
            )Minority
                Interest
            
            
            10,031
            
            
            3,080Net
                Loss
            
            $
            (1,328,754
            )
            $
            (1,389,235
            )Loss
                Per Share – Basic and Fully Diluted
            
            $
            (0.06
            )
            $
            (0.06
            )Weighted
                average common shares outstanding – Basic and Fully
                Diluted1
            
            
            23,691,925
            
            
            23,691,925





See
      accompanying notes to 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.




4


**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****(Unaudited)****Cash
                flows from operating activities****Net
                Loss**
            
            $
            (1,328,754
            )
            $
            (1,389,235
            )Adjustments
                to reconcile net loss tonet
                cash used in operating activitiesDepreciation
                of plant and equipment
            
            
            191,144
            
            
            83,581Loss
                on disposal of property, plant and equipment
            
            
            (7,429
            )
            
            532Minority
                interest
            
            
            (10,031
            )
            
            (3,080
            )Change
                in:Accounts
                receivable
            
            
            561,901
            
            
            2,829,625Promissory
                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
            
            
            (744,691
            )
            
            (539,896
            )Interest
                payable on promissory notes
            
            
            17,291
            
            
            84,830Interest
                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
            )**Net
                cash used in operating activities**
            
            
            (2,140,820
            )
            
            (718,166
            )**Cash
                flows from investing activities**Acquisition
                of plant and equipment
            
            
            (272,021
            )
            
            (375,073
            )Proceeds
                from disposal of plant and equipment
            
            
            86,668
            
            
            -Restricted
                cash
            
            
            1,883,023
            
            
            -**Net
                cash****generated from/(used in) investing
                activities**
            
            
            1,697,670
            
            
            (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
            
            
            -
            
            
            2,565,903Repayment
                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
            
            
            -
            
            
            174,206Interest
                paid
            
            
            129,468
            
            
            129,182





See
      accompanying notes to consolidated financial statements.




5




**NOTES
      TO 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.


6


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




Sunrise Real Estate Group, Inc.




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 .


7


**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
            
            
            5-10Computer
                and office equipment
            
            
            5Motor
                vehicles
            
            
            5Properties
            
            
            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.


8


**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.





Commission
      revenue from underwriting service is recognized 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.





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.


9


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.




**Guarantees**





The
      Company accounts 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. FIN 45 requires that guarantors recognize a liability
      for certain guarantees at the fair value of the guaranteed obligation at the
      inception of the guarantee, even if the likelihood of performance under the
      guarantee is remote.





**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(Unaudited)Advances
                to staff
            
            $
            17,417
            
            $
            20,486Rental
                deposits
            
            
            94,099
            
            
            101,370Prepaid
                rental
            
            
            482,868
            
            
            406,833Innovation
                construction deposit
            
            
            257,253
            
            
            -Other
                receivables
            
            
            94,510
            
            
            73,684$
            946,147
            
            $
            602,373


10


**NOTE
      6 – PROPERTY, PLANT AND EQUIPMENT** – **NET**





March 31,
            
            December 31,2008
            
            2007(Unaudited)Furniture
                and fixtures
            
            $
            146,972
            
            $
            133,970Computer
                and office equipment
            
            
            301,322
            
            
            275,988Motor
                vehicles
            
            
            677,711
            
            
            618,024Properties
            
            
            2,155,502
            
            
            2,071,2253,281,507
            
            
            3,099,207Less:
                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 9.





**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(Unaudited)Investment
                property
            
            $
            8,421,592
            
            $
            8,092,319Less:
                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
      9.





**NOTE
      9 - 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
            
            $
            1,424,704August
                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.


11


Second,
      the remaining bank loan 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
      10 – 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
      11 – 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
      12 - OTHER PAYABLES AND ACCRUED EXPENSES**





March 31,
            
            December 31,2008
            
            2007(Unaudited)Accrued
                staff commission & bonus
            
            $
            250,525
            
            $
            1,013,650Rental
                deposits received
            
            
            594,614
            
            
            519,352Other
                payables
            
            
            569,283
            
            
            541,831$
            1,414,422
            
            $
            2,074,833





**NOTE
      13 – 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.


12


**NOTE
      14- 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(Unaudited)Within
                one year
            
            $
            179,315
            
            $
            132,628Two
                to five years
            
            
            145,645
            
            
            133,847Operating
                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(Unaudited)Within
                one year
            
            $
            3,171,206
            
            $
            3,047,216Two
                to five years
            
            
            7,938,705
            
            
            8,412,157Over
                five years
            
            
            2,254,351
            
            
            2,181,446Operating
                lease commitments arising from the promotional package
            
            $
            13,364,262
            
            $
            13,640,819





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
      15 – 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
      16– ACCUMULATED OTHER COMPREHENSIVE INCOME**





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


13


**NOTE
      17 – 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%


14




**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.




15




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.




16




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**





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 the
      agency sales agreement with developer.





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





Commission
      revenue from underwriting service is recognized 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.





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.




17




**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.





**Guarantee
      Liability**





According
      to Interpretation No. (“FIN”) 45, “Guarantor’s Accounting and Disclosure
      Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
      of
      Others” (“FIN 45”), the Company’s liability for its obligations under a
      guarantee is recognized as a liability at the fair value of the guaranteed
      obligation at the inception of the guarantee, even if the likelihood of
      performance under the guarantee is remote.





**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
            
            % changeAgency
                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.




18




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
            
            % changeAgency
                sales
            
            $
            534,322
            
            
            41
            %
            $
            509,392
            
            
            41
            %
            
            5
            %Underwriting
                sales
            
            $
            -
            
            
            0
            %
            $
            35,424
            
            
            3
            %
            
            (100
            )%Property
                management
            
            $
            783,325
            
            
            59
            %
            $
            705,876
            
            
            56
            %
            
            11
            %Cost
                of revenue
            
            $
            1,317,647
            
            
            100
            %
            $
            1,250,692
            
            
            100
            %
            
            5
            %





The
      cost
      of revenue in the first quarter, 2008 was $1,317,647, an increase of 5% from
      $1,250,692 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 41% of cost of revenue,
      underwriting sales represented 3% and property management represented 56%.
      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
            
            % changeAgency
                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
            %





19




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, 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 $2,140,820 in the first quarter,
      2008, which was primarily attributable to the Company’s net loss in the amount
      of $1,328,754.





The
      Company’s investing activities generated cash in the amount of $1,697,670 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.




20




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
      Chief
      Executive Officer and our Chief Financial Officer have evaluated the
      effectiveness of our disclosure controls and procedures as of March 31, 2008.
      Based on this evaluation, the Chief Executive Officer and Chief Financial
      Officer have concluded that the Company's disclosure controls and procedures
      were effective at March 31, 2008, to ensure that information required to be
      disclosed in reports that we file or submit under the Securities Exchange Act
      of
      1934 is recorded, processed, summarized, and reported within the time periods
      specified in Securities and Exchange Commission rules and forms. 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.





21


**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.** **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





None.





**ITEM
      5.** **OTHER
      INFORMATION**





None.




**ITEM
      6.   EXHIBITS**




Exhibit
              Number
            Description31.1
            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 20, 2008
            By:
                /s/ Lin, Chi-JungLin,
                Chi-Jung, Chief Executive OfficerDate:
                May 20, 2008
            By:
                /s/ Art HonanyanArt
                Honanyan, Chief Financial Officer




22