**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D. C. 20549**





**FORM
      10-QSB**





**[x]
      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**


For
      the
      quarterly period ended September 30, 2007


**[
      ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT**


For
      the
      transition period from __________ to __________


*Commission
      File Number 000-32585*





**SUNRISE
      REAL ESTATE GROUP, INC.**





(Exact
      Name of Small Business Issuer 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)





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





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





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





State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: November 10, 2007 - 23,691,901 shares
      of Common Stock





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









**FORM
      10-QSB**




**For
      the Quarter Ended September 30, 2007**




**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
            16Item
                3.Controls
                and Procedures
            23PART
                II. OTHER INFORMATION
            24Item
                1.Legal
                Proceedings
            24Item
                2.Unregistered
                Sales of Equity Securities and Use of Proceeds
            24Item
                3.Defaults
                Upon Senior Securities
            24Item
                4.Submission
                of Matters to a Vote of Security Holders
            24Item
                5.Other
                Information
            24Item
                6.Exhibits
            24SIGNATURES
            24








**PART
      I - FINANCIAL INFORMATION**





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





**Sunrise
      Real Estate Group, Inc.**


**Consolidated
      Balance Sheets**


**(Expressed
      in US Dollars)**


**September
                30,**
            
            **December
                31,****2007**
            
            **2006****(Unaudited)**ASSETSCurrent
                assetsCash
                and cash equivalents
            
            $
            10,148,244
            
            $
            945,727Accounts
                receivable
            
            
            501,540
            
            
            4,824,031Promissory
                deposits (Note 3)
            
            
            865,420
            
            
            192,093Amounts
                due from venturers
            
            
            -
            
            
            1,939,616Other
                receivables and deposits (Note 4)
            
            
            1,103,681
            
            
            509,745Total
                current assets
            
            
            12,618,885
            
            
            8,411,212Property,
                plant and equipment - net (Note 5)
            
            
            2,473,892
            
            
            2,491,633Investment
                property (Note 6)
            
            
            12,939,554
            
            
            -Deferred
                tax assets
            
            
            -
            
            
            142,842Deposits
                for acquisitions of properties
            
            
            -
            
            
            10,662,642Goodwill
            
            
            214,996
            
            
            207,302Total
                assets
            
            $
            28,247,327
            
            $
            21,915,631LIABILITIES
                AND SHAREHOLDERS’ EQUITYCurrent
                liabilitiesBank
                loans (Note 7)
            
            $
            852,106
            
            $
            1,256,282Promissory
                notes payable (Note 8)
            
            
            3,458,647
            
            
            740,833Accounts
                payable
            
            
            209,920
            
            
            528,814Amounts
                due to venturers (Note 9)
            
            
            44,490
            
            
            1,410,377Amount
                due to director (Note 10)
            
            
            300,000
            
            
            180,630Other
                payables and accrued expenses (Note 11)
            
            
            7,860,858
            
            
            1,538,704Other
                tax payable (Note 12)
            
            
            48,248
            
            
            258,732Income
                tax payable (Note 13)
            
            
            238,107
            
            
            1,366,612Total
                current liabilities
            
            
            13,012,376
            
            
            7,280,984Commitments
                and contingencies (Note 14)Long-term
                bank loans (Note 7)
            
            
            8,407,893
            
            
            3,927,478Long-term
                promissory notes payable (Note 8)
            
            
            144,445
            
            
            244,445Minority
                interest
            
            
            500,751
            
            
            375,406Shareholders’
                equityCommon
                stock, par value $0.01 per share; 200,000,000 shares authorized;
                23,691,901 and 23,001,614 shares issued and outstanding as of September
                30, 2007 and December 31, 2006, respectively
            
            
            236,919
            
            
            230,016Additional
                paid-in capital
            
            
            3,619,984
            
            
            2,922,997Statutory
                reserve (Note 15)
            
            
            716,862
            
            
            716,862Retained
                earnings
            
            
            640,222
            
            
            5,742,586Accumulated
                other comprehensive income (Note 16)
            
            
            967,875
            
            
            474,857Total
                shareholders’ equity
            
            
            6,181,862
            
            
            10,087,318Total
                liabilities and shareholders’ equity
            
            $
            28,247,327
            
            $
            21,915,631





See
      accompanying notes to consolidated financial statements.




3




**Sunrise
      Real Estate Group, Inc.**





**Consolidated
      Statements of Operations**





(Expressed
      in US Dollars)


Three
                Months Ended September 30,
            
            Nine
                Months Ended September 30,2007
            
            2006
            
            2007
            
            2006(Unaudited)Net
                Revenues
            
            $
            1,817,590
            
            $
            2,760,874
            
            $
            4,472,792
            
            $
            12,715,223Cost
                of Revenues
            
            
            (1,423,582
            )
            
            (1,511,759
            )
            
            (4,109,220
            )
            
            (5,111,246
            )Gross
                Profit
            
            
            394,008
            
            
            1,249,115
            
            
            363,572
            
            
            7,603,977Operating
                Expenses
            
            
            (311,956
            )
            
            (259,381
            )
            
            (806,877
            )
            
            (697,128
            )General
                and Administrative Expenses
            
            
            (1,155,748
            )
            
            (720,890
            )
            
            (2,987,037
            )
            
            (2,071,733
            )Operating
                (Loss)/ Profit
            
            
            (1,073,696
            )
            
            268,844
            
            
            (3,430,342
            )
            
            4,835,116Interest
                Income
            
            
            5,505
            
            
            2,478
            
            
            13,076
            
            
            5,559Other
                (Expenses) / Income, Net
            
            
            (224,452
            )
            
            2,269
            
            
            (203,662
            )
            
            13,017Interest
                Expenses
            
            
            (267,551
            )
            
            (137,202
            )
            
            (692,898
            )
            
            (393,955
            )(Loss)/
                Income Before Income Tax and Minority Interest
            
            
            (1,560,194
            )
            
            136,389
            
            
            (4,313,826
            )
            
            4,459,737Income
                Tax
            
            
            (23,835
            )
            
            (149,933
            )
            
            (52,808
            )
            
            (1,045,457
            )(Loss)/
                Income Before Minority Interest
            
            
            (1,584,029
            )
            
            (13,544
            )
            
            (4,366,634
            )
            
            3,414,280Minority
                Interest
            
            
            3,613
            
            
            25,339
            
            
            (31,840
            )
            
            (32,265
            )Net
                (Loss)/ Income
            
            $
            (1,580,416
            )
            $
            11,795
            
            $
            (4,398,474
            )
            $
            3,382,015(Loss)/
                Earnings Per Share - Basic and Fully Diluted
            
            $
            (0.07
            )
            $
            0.00
            
            $
            (0.19
            )
            $
            0.14Weighted
                average common shares outstanding
              -
                Basic and Fully Diluted1
            
            
            23,691,901
            
            
            23,691,662
            
            
            23,691,901
            
            
            23,691,662





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)


**Nine
                Months Ended September 30,****2007**
            
            **2006****(Unaudited)****Cash
                flows from operating activities****Net
                (Loss)/income**
            
            $
            (4,398,474
            )
            $
            3,382,015Adjustments
                to reconcile net income tonet
                cash (used in)/provided by operating activitiesDepreciation
                of plant and equipment
            
            
            498,547
            
            
            108,469Loss
                on disposal of fixed assets
            
            
            6,749
            
            
            2,108Loss
                on disposal of equity interest in subsidiary
            
            
            14,750
            
            
            -Deferred
                tax credit
            
            
            -
            
            
            (42,245
            )Bad
                debts
            
            
            349,195
            
            
            -Minority
                interest
            
            
            31,840
            
            
            32,265Change
                in:Accounts
                receivable
            
            
            4,421,404
            
            
            (3,983,594
            )Promissory
                deposits
            
            
            (652,078
            )
            
            -Other
                receivables and deposits
            
            
            (840,816
            )
            
            (629,480
            )Accounts
                payable
            
            
            (332,909
            )
            
            (45,586
            )Amounts
                with venturers
            
            
            582,544
            
            
            992,247Deferred
                commission income
            
            
            -
            
            
            278,207Other
                payables and accrued expenses
            
            
            (66,319
            )
            
            (595,580
            )Interest
                payable on promissory notes
            
            
            301,911
            
            
            12,500Interest
                payable on amount due to director
            
            
            (21,604
            )
            
            7,397Other
                tax payable
            
            
            (216,226
            )
            
            10,446Income
                tax payable
            
            
            (1,158,493
            )
            
            704,710**Net
                cash (used in)/provided by operating activities**
            
            
            (1,479,979
            )
            
            233,879**Cash
                flows from investing activities**Acquisition
                of plant and equipment
            
            
            (79,733
            )
            
            (110,335
            )Deposits
                paid for acquisition of properties
            
            
            (1,981,956
            )
            
            (2,085,936
            )Refund
                of deposits paid for acquisition of properties
            
            
            -
            
            
            2,488,916Proceeds
                from disposal of properties
            
            
            6,199,246
            
            
            -Acquisition
                of equity interest in subsidiary
            
            
            -
            
            
            (60,000
            )**Net
                cash****provided
                by investing activities**
            
            
            4,137,557
            
            
            232,645**Cash
                flows from financing activities**Bank
                loan obtained
            
            
            8,477,008
            
            
            2,085,936Bank
                loans repayment
            
            
            (4,685,624
            )
            
            (2,479,572
            )Repayment
                of promissory note
            
            
            (250,000
            )
            
            (723,962
            )Proceeds
                from promissory note
            
            
            2,565,903
            
            
            600,000Capital
                contribution from minority interest
            
            
            -
            
            
            47,469Repayment
                to director
            
            
            (109,026
            )
            
            -Advances
                from director
            
            
            250,000
            
            
            -**Net
                cash provided by/(used in) financing activities**
            
            
            6,248,261
            
            
            (470,129
            )**Effect
                of exchange rate changes on cash and cash
                equivalents**
            
            
            296,678
            
            
            26,654**Net
                increase in cash and cash equivalents**
            
            
            9,202,517
            
            
            23,049**Cash
                and cash equivalents at beginning of****period**
            
            
            945,727
            
            
            855,588**Cash
                and cash equivalents at end of period**
            
            $
            10,148,244
            
            $
            878,637**Supplemental
                disclosure of cash flow****information**Cash
                paid during the period:Income
                tax paid
            
            
            1,181,313
            
            
            364,914Interest
                paid
            
            
            412,591
            
            
            381,455




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, the director of SZXJY holding a 12.5% equity interest in SZSY.
      Following that, CY-SRRE effectively holds 38.5% 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.





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 and SZSY commenced operations in November 2001, June
      2004, January 2004, February 2004, January 2005 and November 2006 respectively.
      Each of SHXJY, SZXJY, BJXJY, SHSY, SZGFH and SZSY 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











SRRE
      and
      its subsidiaries, namely, CY-SRRE, LRY, SHXJY, SZXJY, 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 Presentation**





The
      accompanying unaudited financial data as of and for the three and nine
      months ended September 30, 2007 and 2006 have been prepared by the Company
      pursuant to the rules and regulations of the Securities and Exchange Commission.
      Certain information and footnote disclosures normally included in financial
      statements prepared in accordance with accounting principles generally accepted
      in the United States of America have been condensed or omitted pursuant to
      such
      rules and regulations. These unaudited condensed consolidated financial
      statements should be read in conjunction with the audited financial statements
      and the Footnotes thereto included in the Company's annual Report on Form 10-KSB
      for the fiscal year ended December 31, 2006.





In
      the
      opinion of management, all adjustments (which include only normal recurring
      adjustments) necessary to present fairly the financial position, results of
      operations, and cash flows as of and for the three and nine months ended
      September 30, 2007 have been made. The results of operations for the three
      and
      nine months ended September 30, 2007 are not necessarily indicative of the
      operating results for the full year.





**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,
      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, 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 September 30, 2007 and December 31, 2006
      are
      US$1: RMB7.5108 and US$1: RMB7.8087, respectively.




8




**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.





**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, 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 when it can be confirmed that the balance of the bank loan to
      the
      buyer has been approved.





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.





9


**Net
      Earnings per Common Share**





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





**Income
      Taxes**





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





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




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




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




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




**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").





10


**NOTE
      3 - PROMISSORY DEPOSITS**





The
      balance includes the deposits of $865,420 placed with several property
      developers in respect of a number of real estate projects where the Company
      is
      appointed as sales agent.




**NOTE
      4 - OTHER RECEIVABLES AND DEPOSITS**





September
                30,
            
            December
                31,2007
            
            2006(Unaudited)Advances
                to staff
            
            $
            167,314
            
            $
            25,912Rental
                deposits
            
            
            83,834
            
            
            51,333Prepaid
                rental
            
            
            467,040
            
            
            365,138Prepayment
            
            
            81,316
            
            
            -Other
                receivables
            
            
            304,177
            
            
            67,362$
            1,103,681
            
            $
            509,745




**NOTE
      5 - PROPERTY, PLANT AND EQUIPMENT** - **NET**





September
                30,
            
            December
                31,2007
            
            2006(Unaudited)Furniture
                and fixtures
            
            $
            118,495
            
            $
            105,288Computer
                and office equipment
            
            
            258,916
            
            
            234,460Motor
                vehicles
            
            
            630,359
            
            
            607,431Properties
            
            
            2,014,362
            
            
            1,909,6713,022,132
            
            
            2,856,850Less:
                Accumulated depreciation
            
            
            (548,240
            )
            
            (365,217
            )$
            2,473,892
            
            $
            2,491,633




**NOTE
      6 - INVESTMENT PROPERTY**





September
                30,
            
            December
                31,2007
            
            2006(Unaudited)Investment
                property
            
            $
            13,257,446
            
            $
            -Less:
                Accumulated depreciation
            
            
            (317,892
            )
            
            -$
            12,939,554
            
            $
            -





Investment
      property included one floor and six units of a commercial building in Suzhou,
      the PRC acquired by the Company for commercial rental purposes.




11




**NOTE
      7 - BANK LOANS**





There
      are
      two bank loans, as listed below:





First,
      the balance includes a bank loan of $8,654,205. The period of this bank loan
      is
      3 years and bears interest at 8.415% per annum. This bank loan is secured by
      the
      properties as mentioned in Note 6 above. The repayment schedule of this bank
      loan is as follows:




August
                4, 2008
            $
                656,556February
                2, 2009
            $
                656,556August
                3, 2009
            $
                656,556February
                1, 2010
            $
                2,626,222August
                2, 2010
            $
                3,939,334





Second,
      the remaining bank loans bear interest at 6.48% per annum, and are repayable
      within four years in monthly installments. The bank loans are secured by the
      properties as mentioned in Note 5 above.




**NOTE
      8 - PROMISSORY NOTES PAYABLE**





There
      are
      four promissory notes, as listed below:





First,
      the balance includes a promissory note of $277,778. This promissory note of
      $277,778 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 $150,000 and accrued interest of
      $5,000 thereon. This promissory note of $150,000 bears interest at a rate of
      5%
      per annum. This promissory note is unsecured and the term of repayment is not
      specifically defined .





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





Fourth,
      the balance includes a promissory note of $2,565,903 and accrued interest of
      $304,411 thereon. This promissory note of $2,565,903 bears interest at a rate
      of
      18% per annum. This promissory note is unsecured and will be repayable before
      February 1, 2008.




**NOTE
      9 - AMOUNTS DUE TO 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 agreement. According to the agreement, 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
      10 - RELATED PARTY**





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 September 30, 2007, the balance includes principal of $300,000.
      The principal is unsecured and the
      term
      of repayment is not specifically defined .





12




**NOTE
      11 - OTHER PAYABLES AND ACCRUED EXPENSES**





September
                30,
            
            December
                31,2007
            
            2006(Unaudited)Accrued
                staff commission & bonus
            
            $
            550,234
            
            $
            997,794Rental
                deposits received
            
            
            419,735
            
            
            240,329Receipt
                in advance from disposal of properties
            
            
            6,328,830Other
                payables
            
            
            562,059
            
            
            300,581$
            7,860,858
            
            $
            1,538,704




**NOTE
      12 - OTHER TAX PAYABLE**





Other
      tax
      payable 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
      six months ended September 30, 2007 was $292,409.




**NOTE
      13 - INCOME TAX PAYABLE**





A.
            Adoption
                of New Accounting Standard





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




B.
            Income
                Taxes Payable





United
      States and State of Texas Taxes:





The
      Company incurred a US federal net operating loss in the amount of $360,000
      for
      the nine months ended September 30, 2007. It has US federal net operating loss
      carryforwards in the amount of $60,000 and $564,000 which expire in 2027 and
      2025 respectively.





The
      net
      operating loss generated in 2007 was different from the Sunrise US holding
      company’s book loss because $495,000 of foreign assets was considered
      repatriated to and, thus, taxable by the United States through loans made by
      CY-SRRE and indirectly by Shanghai Shang Yang to SRRE.





The
      net
      operating loss generated in 2006 was different from the Sunrise US holding
      company’s book loss because $583,000 of foreign assets was considered
      repatriated to and, thus, taxable by the United States through loans made
      directly by CY-SRRE and indirectly by Shanghai Shang Yang to SRRE. Another
      difference between book and tax income in 2006 was the exclusion from income
      of
      $165,000 of dividends which were previously taxed as subpart F
      income.





The
      realization of deferred tax assets depends upon the existence of sufficient
      taxable income in the carryforward period. We have considered the following
      possible sources of taxable income when assessing the realization of the
      deferred tax assets:





|l | Future
              taxable income exclusive of reversing temporary differences and
              carryforwards,
|- | -----------------------------------------------------------------------------------------------------------------

|l | Future
              reversals of existing taxable temporary
              differences,
|- | ---------------------------------------------------------------------------------------

|l | Taxable
              income in prior carry-back years,
|- | -------------------------------------------------------

|l | Tax
              planning strategies.
|- | --------------------------------------



13




We
      have
      not relied upon future taxable income exclusive of temporary differences and
      carryforwards for the realization of U.S. deferred tax assets. Reliance on
      this
      source is difficult when there is negative evidence such as current and
      cumulative losses in recent years.





We
      have
      not provided for U.S. deferred income taxes or foreign withholding taxes on
      undistributed earnings of $8.2 and $9.0 million, at September 30, 2007, and December  31,
      2006 ,
      respectively, of our non-U.S. subsidiaries because
      it is not practicable to estimate the amount of additional taxes that might
      be
      payable on such undistributed earnings. Distributions are limited under China
      corporate law to the entity’s earnings in the preceding calendar year and, then,
      must be approved by China regulators. It is believed that the maximum amount
      of
      distributions which would be approved in 2007 based on 2006 earnings would
      not
      exceed $750,000. Of this amount, it is expected that $600,000 would be retained
      at the Cayman Islands subsidiary and that only approximately $150,000 would
      be
      distributed to Sunrise US. As indicated above, the US tax net operating loss
      carryovers would completely shelter this amount.





The
      Tax
      Increase Prevention and Reconciliation Act (“TIPRA”) which was signed March
      17,  2006 ,
      modified what income is taxed to the
      Company as an
      owner of a controlled foreign corporation (“CFC”). This modification is
      effective for Sunrise’s 2006 through 2008 tax years. For Sunrise, the TIPRA
      modification means that certain dividend or interest income received by SRRE-CY
      or LRY-BVI will not trigger income recognition by SRRE US if the funds remain
      at
      the SRRE-CY or LRY-BVI level. Such dividends and interest must be properly
      allocable to non-subpart-F income, e.g., active income, of the Chinese level
      subs of SRRE-CY and LRY-BVI.





The
      SRRE
      is incorporated in the State of Texas, which does not have a corporate income
      tax.




**NOTE
      14- COMMITMENTS AND CONTINGENCIES**





Operating
      Lease Commitments





During
      the nine months ended September 30, 2007 and 2006, the Company incurred lease
      expenses amounting to $178,693 and $233,481, respectively. As of September
      30,
      2007, the Company had commitments under operating leases, requiring annual
      minimum rentals as follows:





September
                30,
            
            December
                31,2007
            
            2006(unaudited)Within
                one year
            
            $
            33,006
            
            $
            124,429Two
                to five years
            
            
            -
            
            
            2,349Operating
                lease commitments
            
            $
            33,006
            
            $
            126,778





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 September
      30 ,
      2007,
      78 sub-leasing agreements have been signed, the area of these sub-leasing
      agreements represented 66% of total area with these lease
      commitments.





As
      of
      September 30, 2007, the lease commitments under the above promotional package
      are as follows:





September
                30,
            
            December
                31,2007
            
            2006(unaudited)Within
                one year
            
            $
            2,963,559
            
            $
            2,807,847Two
                to five years
            
            
            8,922,101
            
            
            10,319,497Over
                five years
            
            
            2,121,557
            
            
            2,774,208Operating
                lease commitments arising from the promotional package
            
            $
            14,007,217
            
            $
            15,901,552





According
      to the leasing agreements, the Company has an option to terminate any agreement
      by paying a predetermined compensation. As of September 30, 2007, the
      compensation to terminate all leasing agreements is $2,997,562. As of September
      30, 2007, the management of the Company considers that no provision should
      be
      made for the Company’s obligations under the foregoing guarantees.




14




Contingent
      liability




In
      September 2007, the Company filed a claim for approximately US$108,093 in
      respect of the unsettled trade receivable balance. The directors are of the
      opinion that it is too early to predict its outcome at this stage but they
      believe that the final settlement of the case is not expected to have a material
      adverse effect on the financial position of the Company, accordingly no
      allowance for trade receivables for this claim has been made in the accounts.





**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
      September 30, 2007, the only component of accumulated other comprehensive income
      was translation reserve.




**NOTE
      17 - CONCENTRATION OF CUSTOMERS**





During
      the three months and nine months ended September 30, 2007 and 2006, the
      following customer accounted for more than 10% of total net
      revenue:





Percentage
                of
              Net
                Sales
              Three
                Months
              Ended
                September 30,
            
            Percentage
                of
              Net
                Sales
              Nine
                Months
              Ended
                September 30,
            
            Percentage
                of
              Accounts
                Receivable
              as
                of September 30,2007
            
            2006
            
            2007
            
            2006
            
            2007
            
            2006Customer
                A
            *
            
            31%
            
            *
            
            68%
            
            *
            
            82%Customer
                B
            *
            
            18%
            
            *
            
            *
            
            *
            
            *Customer
                C
            10%
            
            *
            
            10%
            
            *
            
            *
            
            *Customer
                D
            10%
            
            *
            
            *
            
            *
            
            39%
            
            *Customer
                E
            13%
            
            *
            
            *
            
            *
            
            *
            
            *





*
      less
      than 10%




**NOTE
      18 - SUBSEQUENT EVENTS**





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.




15


**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-QSB 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, 2006, 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, 2006.




**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 merger. Before the completion
      of the merger, 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”) and Suzhou
      Shang Yang Real Estate Consultation Company Limited (“SZSY”) 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 .





16





**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 $54.98 million, representing all of the units of the
      building. We started selling units in December 2004. As of the end of February,
      2007, we sold
      all
      of the units
      in
      the building and achieved the sales target by selling 47,093 square meters
      with
      a total sales price of $73.88 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 two and half 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. As of June
      30,
      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 for $7.04
      Million (or RMB 52.8 Million). The title of these two units will be transferred
      to the purchaser in the fourth quarter of 2007.





In
      order
      to distribute
      all the properties of the Sovereign Building, 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 September 30, 2007, 78 sub-leasing agreements were signed. The area
      represented by the signed sub-leasing agreements represents 66% of the total
      area represented by lease commitments. As of November 10, 2007, 87 sub-leasing
      agreements have been signed, the area of these signed sub-leasing agreements
      represent 73% of total area that have lease commitments.





17


**RECENTLY
      ISSUED ACCOUNTING STANDARDS**





In
      March
      2006, EITF 06-03: “How Taxes Collected from Customers and Remitted to
      Governmental Authorities Should be presented in the Income Statement (That
      Is,
      Gross versus Net Presentation)” was issued. EITF 06-03 provides guidance on how
      to account for any tax assessed by a governmental authority that is imposed
      concurrent with a revenue producing transaction between a seller and a customer.
      The adoption of EITF 06-03 does not have a material impact on the Company’s
      result operations, financial position or liquidity.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      157”). SFAS 157 defines fair value, establishes a framework for measuring fair
      value, and expands disclosure requirements regarding fair value measurement.
      This statement simplifies and codifies fair value related guidance previously
      issued and is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those fiscal
      years. The Company does not believe that SFAS 157 will significantly impact
      its
      financial statements.





In
      February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial
      Assets and Financial Liabilities Including an Amendment of SFAS No. 115”(“SFAS
      159”), which permits companies to measure many financial instruments and certain
      other assets and liabilities at fair value on an instrument-by-instrument basis
      (the fair value option). Adoption of SFAS 159 is optional and it may be adopted
      beginning in the first quarter of 2007. The Company does not believe that SFAS
      159 will significantly impact its financial statements.





In
      June
      2007, the EITF reached a consensus on EITF 06-11: "Accounting for Income Tax
      Benefits on Dividends on Share-Based Payment Awards". EITF 06-11 addresses
      share-based payment arrangements with dividend protection features that entitle
      employees to receive (a) dividends on equity-classified nonvested shares, (b)
      dividend equivalents on equity-classified nonvested share units, or (c) payments
      equal to the dividends paid on the underlying shares while an equity-classified
      share option is outstanding, when those dividends or dividend equivalents are
      charged to retained earnings under SFAS No. 123(R) and result in an income
      tax
      deduction for the employer. A realized income tax benefit from dividends or
      dividend equivalents that are charged to retained earnings are paid to employees
      for equity-classified non-vested shares, nonvested equity share units, and
      outstanding equity share options should be recognized as an increase in
      additional paid in capital. The amount recognized in additional paid-in capital
      for the realized income tax benefit from dividends on those awards should be
      included in the pool of excess tax benefits available to absorb potential future
      tax deficiencies on share-based payments. The Company does not believe the
      adoption of EITF 06-11 will have a material impact on its financial position
      or
      results of operation.




**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.





18


**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, 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 when we can confirm that the balance of the bank loan to the
      buyer
      has been approved, or recognized under the sales schedule 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 taxes.





**Equity
      Instruments Issued to Non-Employees**





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




**RESULTS
      OF OPERATIONS**





We
      provide the discussion and analysis of our changes in financial condition and
      results of operations for the three and nine months ended September 30, 2007,
      with comparisons to the historical three and nine months ended September 30,
      2006.





**Revenue**





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





Three
                Months Ended September 30,
            
            Nine
                Months Ended September 30,2007
            
            %
                to total
            
            2006
            
            %
                to total
            
            %
                change
            
            2007
            
            %
                to total
            
            2006
            
            %
                to total
            
            %
                changeAgency
                sales
            
            
            1,432,271
            
            
            79
            
            
            1,859,642
            
            
            67
            
            
            (23
            )
            
            3,432,808
            
            
            77
            
            
            4,362,515
            
            
            35
            
            
            (21
            )Underwriting
                sales
            
            
            0
            
            
            0
            
            
            876,438
            
            
            32
            
            
            (100
            )
            
            216,085
            
            
            5
            
            
            8,322,479
            
            
            65
            
            
            (97
            )Property
                Management
            
            
            385,319
            
            
            21
            
            
            24,794
            
            
            1
            
            
            1454
            
            
            823,899
            
            
            18
            
            
            30,229
            
            
            0
            
            
            2626Net
                revenue
            
            
            1,817,590
            
            
            100
            
            
            2,760,874
            
            
            100
            
            
            (34
            )
            
            4,472,792
            
            
            100
            
            
            12,715,223
            
            
            100
            
            
            (65
            )





The
      net
      revenue of the third quarter, 2007 was $1,817,590, which decreased 34% from
      $2,760,874 of the third quarter, 2006. The total net revenue of the first three
      quarters of 2007 was $4,472,792, which decreased 65% from $12,715,223 of the
      first three quarters of 2006. In the third quarter of 2007, agency sales
      represented 79% of the total net revenue, underwriting sales represented 0%
      and
      property management represented 21%. In the first three quarters of 2007, agency
      sales represented 77% of the total net revenue, underwriting sales represented
      5% and property management represented 18%. The decrease in net revenue in
      the
      third quarter and first three quarters, 2007 was primarily due to the decrease
      in our underwriting sales revenue.


Agency
      sales




19




In
      the
      third quarter and first three quarters of 2007, 79% and 77%, respectively,
      of
      our net revenue was due to agency sales, which were from the business activities
      of SHXJY and its subsidiaries and branches. As compared with same period in
      2006, net revenue of agency sales in the third quarter and first three quarters
      of 2007 decreased 23% and 21% respectively. The primary reason for the change
      was that two projects of SHXJY contributed net revenue of $1.55million to the
      Company in the first three quarters of 2006, and no project contributed
      comparable net revenue to SHXJY in the same period in 2007.





As
      a
      result of our diverse market locations and our professional performance in
      our
      agency sales business, in the first three quarters of 2007, net revenue from
      branches in Nan Chang, Yang Zhou, and Chong Qing increased 106% from the same
      period in 2006.





We
      are
      seeking stable growth in our agency sales business in 2007. 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 $54.98 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 condition that we
      guarantee all unsold units will be acquired within a certain period. 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 is any unsold unit on the
      expiry date of the agreement, we may have to absorb the unsold property units
      from developers at the underwriting price and hold them in our inventory or
      as
      investments.





We
      started selling units in the Sovereign Building in December 2004. 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 $73.88 million and this underwriting project
      has contributed total net revenue of $13,949,683 to the Company from January,
      2006 through February, 2007.





The
      Company continues to seek for and is negotiating opportunities in underwriting
      sales.





Property
      Management





In
      order
      to distribute all the properties of the Sovereign Building, 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. 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 November 10, 2007, 87 sub-leasing agreements were signed.
      The area of these sub-leasing agreements represents 73% 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 2007 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.





20


**Cost
      of Revenue**





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





Three
                Months Ended September 30,
            
            Nine
                Months Ended September 30,2007
            
            %
                to total
            
            2006
            
            %
                to total
            
            %
                change
            
            2007
            
            %
                to total
            
            2006
            
            %
                to total
            
            %
                changeAgency
                sales
            
            
            685,932
            
            
            48
            
            
            808,753
            
            
            53
            
            
            (15
            )
            
            1,709,911
            
            
            42
            
            
            1,889,946
            
            
            37
            
            
            (10
            )Underwriting
                sales
            
            
            0
            
            
            0
            
            
            65,417
            
            
            4
            
            
            (100
            )
            
            75,906
            
            
            2
            
            
            2,317,114
            
            
            45
            
            
            (97
            )Property
                Management
            
            
            737,650
            
            
            52
            
            
            637,589
            
            
            43
            
            
            16
            
            
            2,323,403
            
            
            56
            
            
            904,186
            
            
            18
            
            
            157Cost
                of revenue
            
            
            1,423,582
            
            
            100
            
            
            1,511,759
            
            
            100
            
            
            (6
            )
            
            4,109,220
            
            
            100
            
            
            5,111,246
            
            
            100
            
            
            (20
            )





The
      cost
      of revenue of the third quarter of 2007 was $1,423,582, which decreased 6%
      from
      $1,511,759 of the third quarter of 2006. The total cost of revenue of the first
      three quarters of 2007 was $4,109,220, which decreased 20% from $5,111,246
      of
      the first three quarters of 2006. In the third quarter of 2007, agency sales
      represented 48% of the total cost of revenue, underwriting sales represented
      0%
      and property management represented 52%. In the first three quarters of 2007,
      agency sales represented 42% of the total cost of revenue, underwriting sales
      represented 2% and property management represented 56%. The decrease in cost
      of
      revenue in the third quarter and first three quarters of 2007 was mainly due
      to
      the decrease in our underwriting sales.





Agency
      sales





As
      compared with same period in 2006, cost of revenue of agency sales in the third
      quarter and first three quarters of 2007 decreased 15% and 10% respectively.
      The
      primary reason for the change was the decrease in our staff cost and consulting
      fees of agency sales. In the first three quarters of 2007, our staff cost and
      consulting fees decreased $122,003 and $155,103, compared to the same period
      in
      2006.





Underwriting
      sales





Since
      all
      of the units under the
      Sovereign Building underwriting project were
      sold by the end of February, 2007, we incurred very few selling expenses
      relating to this project in the first two quarter of 2007.





Property
      management





In
      order
      to distribute all of the properties of the Sovereign Building underwriting
      project, 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
      coverage that we pay under these leasing agreements as our cost. As certain
      properties under this promotion package were not leased out in first three
      quarters of 2007, the Company recorded a negative gross profit margin for the
      three months period and nine months period ended September 30, 2007. We expect
      that these properties will be leased out in the remaining quarter of 2007,
      the
      gross margin will be improved. However, no assurance can be given that this
      will
      be the case.





21


**Operating
      Expenses**





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





Three
                Months Ended September 30,
            
            Nine
                Months Ended September 30,2007
            
            %
                to total
            
            2006
            
            %
                to total
            
            %
                change
            
            2007
            
            %
                to total
            
            2006
            
            %
                to total
            
            %
                changeAgency
                sales
            
            
            228,787
            
            
            73
            
            
            204,325
            
            
            79
            
            
            12
            
            
            598,299
            
            
            74
            
            
            602,689
            
            
            86
            
            
            (1
            )Underwriting
                sales
            
            
            25,451
            
            
            8
            
            
            18,460
            
            
            7
            
            
            38
            
            
            80,208
            
            
            10
            
            
            50,567
            
            
            7
            
            
            59Property
                Management
            
            
            57,718
            
            
            19
            
            
            36,596
            
            
            14
            
            
            58
            
            
            128,370
            
            
            16
            
            
            43,872
            
            
            7
            
            
            193Operating
                expenses
            
            
            311,956
            
            
            100
            
            
            259,381
            
            
            100
            
            
            20
            
            
            806,877
            
            
            100
            
            
            697,128
            
            
            100
            
            
            16





The
      operating expenses of the third quarter of 2007 were $311,956, which increased
      20% from $259,381 of the third quarter of 2006. The total operating expenses
      of
      the first three quarters of 2007 were $806,877, which increased 16% from
      $697,128 of the first three quarters of 2006. In the third quarter of 2007,
      agency sales represented 73% of the total operating expenses, underwriting
      sales
      represented 8% and property management represented 19%. In the first three
      quarters of 2007, agency sales represented 74% of the total operating expenses,
      underwriting sales represented 10% and property management represented 16%.
      This
      increase was mainly due to the increase in our property management
      operation.





Agency
      sales





When
      compared to 2006, the operating expenses for agency sales in the third quarter
      and first three quarters of 2007 increased 12% and decreased 1% respectively.
      The primary reason for the increase in the third quarter of 2007 was the
      increase in transportation expenses. In the third quarter of 2007, the
      transportation expenses increased $28,649, compared to the same period in
      2006.





Underwriting
      sales





When
      compared to 2006, the operating expenses for underwriting sales in the third
      quarter and first three quarters of 2007 increased 38% and 59% respectively.
      The
      primary reason for the change was the increase in our staff expenses. In the
      first three quarters of 2007, our staff expenses increased $22,767 over 2006
      levels.





Property
      management





When
      compared to 2006, the operating expenses for property management in the third
      quarter and first three quarters of 2007 increased 58% and 193% respectively.
      The main reason for the increase was the payment of agency commissions of SZGFH.
      In the first three quarters of 2007, the agency commissions increased $52,045,
      compared to the same period in 2006.





**General
      and Administrative Expenses**





When
      compared to 2006, the general and administrative expenses in the third quarter
      and first three quarters of 2007 increased 60% and 44% respectively. The primary
      reason for the change was




i)
            The
                increase in our legal fees. In the first three quarters of 2007,
                our legal
                fees increased $100,311, compared to the same period in 2006. The
                legal
                fees are mainlyfor
                the maintenance of the Company’s listing
                status.


ii)
            The
                increase in our depreciation expenses. In the first three quarters
                of
                2007, our depreciation expenses increased $133,113, compared to the
                same
                period in 2006. The increase in our depreciation expenses is mainly
                due to
                the increase of our property
                investments.


iii)
            The
                increase in our staff costs and lease expenses. In the first three
                quarters of 2007, our staff cost and lease expenses increase $126,622
                and
                $150,810, compared to the same period in 2006. The increase in our
                staff
                costs and lease expenses is mainly due to our diverse market location.


iv)
            A
                US$349,195 allowance for other receivables was required in the third
                quarter of 2007.





**Interest
      Expenses**





When
      compared to 2006, the interest expenses in the third quarter and first three
      quarters of 2007 increased 95% and 76% respectively. The interest expense
      relates to bank loans and promissory notes payable.





22




**LIQUIDITY
      AND CAPITAL RESOURCES**




The
      Company meets its working capital and capital investment requirements mainly
      by
      using operating cash flows and, to a limited extent, bank loans and promissory
      notes.





Our
      accounts receivable balance at September 30, 2007 was $501,540 compared to
      $4,824,031 as of December 31, 2006.





We
      ended
      the period with a cash position of $10,148,244. The Company’s operating
      activities used cash resources of $1,479,979 for the nine months ended September
      30, 2007, which are mainly for the decrease of income tax payable.





The
      Company’s investing activities provided cash resources of $4,137,557 for the
      nine months ended September 30, 2007, which are mainly from the proceeds from
      disposal of properties.





The
      Company’s financing activities provided cash resources of $6,248,261 for the
      nine months ended September 30, 2007, which are mainly derived from the bank
      loan obtained.





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 properties acquired will be sufficient to meet
      our anticipated needs for working capital expenditures, business expansion
      and
      the potential cash needs during 2007.





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. CONTROLS AND PROCEDURES**





Our
      Chief
      Executive Officer and our Chief Financial Officer have evaluated the
      effectiveness of our disclosure controls and procedures as of September 30,
      2007. 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 September 30, 2007, 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 September 30, 2007, that have materially affected, or are reasonably
      likely to materially affect, our internal controls over financial
      reporting.





23


**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:
              November 19, 2007
            By:
            /s/ Lin,
              Chi-JungLin,
              Chi-Jung, Chief Executive Officer





Date:
                November 19, 2007
              By:
              /s/ Art
                HonanyanArt
                  Honanyan, Chief Financial Officer
  24