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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 March 31, 2006

o
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 DEVELOPMENT GROUP, INC.(Exact Name of Small Business Issuer as Specified in its Charter)

|Texas                                                           |  | 75-2713701                              
|--------------------------------------------------------------- |  | ----------------------------------------
|                                                                |  |                                         
|(State or   other jurisdiction ofincorporation 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
oNo
x

State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: May 10, 2006 - 22,996,614 shares of Common Stock

Transitional Small Business Disclosure Format (check one):Yes
oNo
x

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FORM 10-QSB

For the Quarter Ended March 31, 2006

INDEX

|                                 |                                                                                         | Page
|-------------------------------- | --------------------------------------------------------------------------------------- | ----
|                                 |                                                                                         |     
|PART I.    FINANCIAL INFORMATION | 3                                                                                      
|                                 |                                                                                        
|Item 1.                          | Financial Statements                                                                    | 3   
|                                 | Consolidated Balance Sheets                                                             | 3   
|                                 | Consolidated Statements of Operations                                                   | 4   
|                                 | Consolidated Statements of Cash Flows                                                   | 5   
|Item 2.                          | Managements Discussion and Analysis of Financial   Condition and Results of Operations | 14  
|Item 3.                          | Controls and Procedures                                                                 | 20  
|                                 |                                                                                         |     
|PART II. OTHER INFORMATION       | 21                                                                                     
|                                 |                                                                                        
|Item 1.                          | Legal Proceedings                                                                       | 21  
|Item 2.                          | Unregistered Sales of   Equity Securities and Use of Proceeds                           | 21  
|Item 3.                          | Defaults Upon Senior   Securities                                                       | 21  
|Item 4.                          | Submission of Matters to a Vote of   Security Holders                                   | 21  
|Item 5.                          | Other Information                                                                       | 21  
|Item 6.                          | Exhibits                                                                                | 21  
|                                 |                                                                                         |     
|SIGNATURES                       | 22                                                                                     

2

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PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

Sunrise Real Estate Development Group, Inc.

Consolidated Balance Sheets

|(Expressed in US Dollars)                                                                                          |  | March 31,   2006 |            | December   31,   2005 |  
|------------------------------------------------------------------------------------------------------------------ |  | ---------------- | ---------- | --------------------- | -
|                                                                                                                   |  |                  |            |                       |  
|                                                                                                                   |  | (Unaudited)      |           
|ASSETS                                                                                                             |  |                  |            |                       |  
|Current   assets                                                                                                   |  |                  |            |                       |  
|Cash and cash equivalents                                                                                          |  | $                | 627,011    |                       | $
|Accounts receivable                                                                                                |  |                  | 631,920    |                       |  
|Deposits for acquisition of properties (Note 7)                                                                    |  |                  | 3,374,438  |                       |  
|Promissory deposits (Note 3)                                                                                       |  |                  | 249,470    |                       |  
|Amounts due from venturers                                                                                         |  |                  | 825,154    |                       |  
|Other receivables and deposits (Note 4)                                                                            |  |                  | 313,651    |                       |  
|                                                                                                                   |  |                  |            |                       |  
|Total current assets                                                                                               |  |                  | 6,021,644  |                       |  
|Plant   and equipment  net (Note 5)                                                                               |  |                  | 502,736    |                       |  
|Deferred tax   assets (Note 6)                                                                                     |  |                  | 280,721    |                       |  
|Deposits   for acquisitions of properties (Note 7)                                                                 |  |                  | 12,276,288 |                       |  
|Goodwill                                                                                                           |  |                  | 188,954    |                       |  
|                                                                                                                   |  |                  |            |                       |  
|Total assets                                                                                                       |  | $                | 19,270,343 |                       | $
|                                                                                                                   |  |                  |            |                       |  
|LIABILITIES   AND SHAREHOLDERS EQUITY                                                                             |  |                  |            |                       |  
|Current   liabilities                                                                                              |  |                  |            |                       |  
|Bank   loans (Note 8)                                                                                              |  | $                | 1,516,079  |                       | $
|Promissory   notes payable (Note   9)                                                                              |  |                  | 1,012,500  |                       |  
|Accounts   payable                                                                                                 |  |                  | 64,002     |                       |  
|Amounts   due to venturers (Note 10)                                                                               |  |                  | 1,326,522  |                       |  
|Amount   due to director (Note 11)                                                                                 |  |                  | 169,180    |                       |  
|Other   payables and accrued expenses (Note 12)                                                                    |  |                  | 524,683    |                       |  
|Other tax payable (Note 13)                                                                                        |  |                  | 255,216    |                       |  
|Income tax payable                                                                                                 |  |                  | 889,591    |                       |  
|                                                                                                                   |  |                  |            |                       |  
|Total current liabilities                                                                                          |  |                  | 5,757,773  |                       |  
|                                                                                                                   |  |                  |            |                       |  
|Commitments   and contingencies (Note 14)                                                                          |  |                  |           |                       |  
|Long-term   bank loan (Note 8)                                                                                     |  |                  | 5,800,202  |                       |  
|Minority   interest                                                                                                |  |                  | 253,108    |                       |  
|Shareholders   equity                                                                                             |  |                  |            |                       |  
|Common stock, par value $0.01 per share;   200,000,000 shares authorized; 22,996,614 shares issued and outstanding |  |                  | 229,966    |                       |  
|Additional paid-in capital                                                                                         |  |                  | 2,913,844  |                       |  
|Statutory   reserve (Note 15)                                                                                      |  |                  | 241,664    |                       |  
|Retained   earnings                                                                                                |  |                  | 3,874,754  |                       |  
|Accumulated   other comprehensive income (Note 16)                                                                 |  |                  | 199,032    |                       |  
|                                                                                                                   |  |                  |            |                       |  
|Total shareholders equity                                                                                         |  |                  | 7,459,260  |                       |  
|                                                                                                                   |  |                  |            |                       |  
|Total   liabilities and shareholders equity                                                                       |  | $                | 19,270,343 |                       | $
|                                                                                                                   |  |                  |            |                       |  

See accompanying notes to consolidated financial statements.

3

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Sunrise Real Estate Development Group, Inc.

Consolidated Statements of Operations

|                                                                |  | Three   Months Ended March 31, |           
|--------------------------------------------------------------- |  | ------------------------------ | ----------
|                                                                |  |                                |           
|(Expressed in US Dollars)                                       |  | 2006                           |           
|                                                                |  |                                |           
|                                                                |  | (Unaudited)                    |           
|Net   revenue                                                   |  | $                              | 4,599,414 
|Cost   of revenue                                               |  |                                | (1,903,528
|                                                                |  |                                |           
|Gross   profit                                                  |  |                                | 2,695,886 
|Operating expenses                                              |  |                                | (202,372  
|General   and administrative expenses                           |  |                                | (723,301  
|                                                                |  |                                |           
|Operating   profit                                              |  |                                | 1,770,213 
|Interest   income                                               |  |                                | 1,475     
|Other   income, net                                             |  |                                | 2,166     
|Interest expenses                                               |  |                                | (129,765  
|                                                                |  |                                |           
|Profit   before income tax and minority interest                |  |                                | 1,644,089 
|Income   tax                                                    |  |                                | (301,143  
|                                                                |  |                                |           
|Profit before minority interest                                 |  |                                | 1,342,946 
|Minority   interest                                             |  |                                | (28,028   
|                                                                |  |                                |           
|Net profit                                                      |  | $                              | 1,314,918 
|                                                                |  |                                |           
|Earnings per share  basic                                      |  | $                              | 0.06      
|                                                                |  |                                |           
|Weighted   average common shares outstanding basic and diluted |  |                                | 22,996,614
|                                                                |  |                                |           

See accompanying notes to consolidated financial statements.

4

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Sunrise Real Estate Development Group, Inc.

Consolidated Statements of Cash FlowsIncrease/(Decrease) in Cash and Cash Equivalents

|                                                                                             |  | Three   Months Ended March 31, |           
|-------------------------------------------------------------------------------------------- |  | ------------------------------ | ----------
|                                                                                             |  |                                |           
|(Expressed in US Dollars)                                                                    |  | 2006                           |           
|                                                                                             |  |                                |           
|                                                                                             |  | (Unaudited)                    |           
|Cash flows from operating activities                                                         |  |                                |           
|Net income                                                                                   |  | $                              | 1,314,918 
|Adjustments   to reconcile net income to net cash provided by/(used in) operating activities |  |                                |           
|Depreciation   of plant and equipment                                                        |  |                                | 33,817    
|Loss on disposal   of fixed assets                                                           |  |                                | 1,039     
|Deferred tax   credit                                                                        |  |                                | (136,388  
|Minority   interest                                                                          |  |                                | 29,528    
|Change   in:                                                                                 |  |                                |           
|Accounts   receivable                                                                        |  |                                | (2,863,420
|Other   receivables and deposits                                                             |  |                                | (134,605  
|Accounts   payable                                                                           |  |                                | (9,917    
|Amounts   with venturers                                                                     |  |                                | 1,321,408 
|Deferred   commission income                                                                 |  |                                | 909,254   
|Other   payables and accrued expenses                                                        |  |                                | (708,531  
|Other   tax payable                                                                          |  |                                | 95,195    
|Income   tax payable                                                                         |  |                                | 372,377   
|                                                                                             |  |                                |           
|Net cash provided by operating activities                                                    |  |                                | 224,675   
|                                                                                             |  |                                |           
|Cash flows from investing activities                                                         |  |                                |           
|Acquisition   of plant and equipment                                                         |  |                                | (2,951    
|Deposits paid   for acquisition of properties                                                |  |                                | (1,247,349
|                                                                                             |  |                                |           
|Net cash (used in) investing activities                                                      |  |                                | (1,250,300
|                                                                                             |  |                                |           
|Cash flows from financing activities                                                         |  |                                |           
|Bank loan   repayment                                                                        |  |                                | (336,419  
|Bank   loans obtained                                                                        |  |                                | 1,247,349 
|Repayment of   promissory note                                                               |  |                                | (124,735  
|Capital   contribution from minority interest                                                |  |                                |          
|Advances from director                                                                       |  |                                | (10,458   
|                                                                                             |  |                                |           
|Net cash (used in)/provided by financing activities                                          |  |                                | 775,737   
|                                                                                             |  |                                |           
|Effect of exchange rate   changes on cash and cash equivalents                               |  |                                | 21,311    
|                                                                                             |  |                                |           
|Net (decrease)/increase   in cash and cash equivalents                                       |  |                                | (228,577  
|Cash and   cash equivalents at beginning of period                                           |  |                                | 855,588   
|                                                                                             |  |                                |           
|Cash and   cash equivalents at end of period                                                 |  | $                              | 627,011   
|                                                                                             |  |                                |           
|Supplemental disclosure of cash flow  information                                            |  |                                |           
|Cash   paid during the period:                                                               |  |                                |           
|Income   tax paid                                                                            |  |                                | 62,831    
|Interest paid                                                                                |  |                                | 140,639   
|Non-cash   activities (Note 18)                                                              |  |                                |           

See accompanying notes to consolidated financial statements.

5

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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 (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. SHXJY holds 90% of 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 holds 80% 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, namely, Suzhou Gao Feng Hui Property Management Company Limited (SZGFH) in the PRC.  LRY holds 80% of the equity interest in SZGFH.

SHXJY, SZXJY, BJXJY, SHSY and SZGFH commenced operations in November 2001, June 2004, January 2004, February 2004 and January 2005, respectively.  Each of SXJY, SZXJY, BJXJY, SHSY and SZGFH 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 Development 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 was 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, 8,500,000 shares were issued to Ace Develop, 750,000 shares were issued to Planet Tech and 750,000 shares were issued to Systems Tech.

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

6

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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, Articles of Amendment were filed with the Texas Secretary of State changing the name of Sunrise Real Estate Development Group, Inc. to Sunrise Real Estate Group, Inc., with a delaying provision that the name change will not become effective until May 23, 2006

SRRE and its subsidiaries, namely, CY-SRRE, LRY, SHXJY, SZXJY, BJXJY, SHSY and SZGFH are collectively referred to as the Company hereafter.

The principal activities of the Company are the provision of property brokerage services, real estate marketing services, property leasing services and property management services in the PRC.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting and Principles of Consolidation

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America and present the financial statements of SRRE and its subsidiaries, CY-SRRE, LRY, SHXJY, SZXJY, 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, 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$, year-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.

Exchange rate between US$ and RMB had a little fluctuation during the periods presented.  The rates ruling as of March 31, 2006 and December 31, 2005 are US$1: RMB8.017 and US$1: RMB8.067, respectively.

Plant, Equipment and Depreciation

Plant and equipment are stated at cost. Depreciation is computed using the straight-line method to allocate the cost of depreciable assets over the estimated useful lives of the assets as follows:

|                                |  |  | Estimated   Useful   Life (in years) | 
|------------------------------- |  |  | ------------------------------------ | 
|                                |  |  |                                      | 
|Furniture   and fixtures        |  |  | 5-10                                 | 
|Computer and   office equipment |  |  | 5                                    | 
|Motor   vehicles                |  |  | 5                                    | 

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.

7

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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 we can confirm that the balance of the bank loan to the buyer has been approved.

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.

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

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 effect to 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.

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. The initial recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002.

NOTE 3 - PROMISSORY DEPOSITS

Promissory deposits represent deposits placed with several property developers in respect of a number of real estate projects where the Company is appointed sales agent.

8

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NOTE 4 - OTHER RECEIVABLES AND DEPOSITS

|                  |  | March 31,   2006 |         | December   31,   2005 |  
|----------------- |  | ---------------- | ------- | --------------------- | -
|                  |  |                  |         |                       |  
|                  |  | (unaudited)      |        
|Other receivables |  | $                | 222,645 |                       | $
|Advances to staff |  |                  | 37,387  |                       |  
|Rental deposits   |  |                  | 48,906  |                       |  
|Prepayment        |  |                  | 4,713   |                       |  
|                  |  |                  |         |                       |  
|                  |  | $                | 313,651 |                       | $
|                  |  |                  |         |                       |  

Other receivables represent sundry deposits and temporary payments of individual income tax.  The increase in other receivables is primarily attributable to the temporary payments of individual income tax, which are repayable in the second and third quarter of 2006.

NOTE 5 - PLANT AND EQUIPMENT, NET

|                                 |  | March 31,   2006 |          | December   31,   2005 |  
|-------------------------------- |  | ---------------- | -------- | --------------------- | -
|                                 |  |                  |          |                       |  
|                                 |  | (unaudited)      |         
|Furniture and fixtures           |  | $                | 57,648   |                       | $
|Computer and office   equipment  |  |                  | 185,291  |                       |  
|Motor vehicles                   |  |                  | 536,211  |                       |  
|                                 |  |                  |          |                       |  
|                                 |  |                  | 779,150  |                       |  
|Less: Accumulated   depreciation |  |                  | (276,414 | )                     |  
|                                 |  |                  |          |                       |  
|                                 |  | $                | 502,736  |                       | $
|                                 |  |                  |          |                       |  

NOTE 6  DEFERRED TAX ASSETS

The components of deferred tax assets are as follows:

|                                                          |  | Tax effect   on   deferred   commission   income   (Note 7) |        
|--------------------------------------------------------- |  | ----------------------------------------------------------- | -------
|                                                          |  |                                                             |        
|                                                          |  | (unaudited)                                                 |        
|The balance of deferred tax   assets on December 31, 2005 |  | $                                                           | 145,233
|Tax effect on deferred commission income   for the period |  |                                                             | 135,488
|                                                          |  |                                                             |        
|The balance of deferred tax   assets on March 31, 2006    |  | $                                                           | 280,721
|                                                          |  |                                                             |        

9

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NOTE7 DEPOSITS FOR ACQUISITION OF PROPERTIES

|                                                          |  | March 31,   2006 |            | December   31,   2005 |  
|--------------------------------------------------------- |  | ---------------- | ---------- | --------------------- | -
|                                                          |  |                  |            |                       |  
|                                                          |  | (unaudited)      |           
|Deposits paid for acquisition of properties               |  | $                | 17,522,201 |                       | $
|Less: Deferred commission income from properties acquired |  |                  | (1,871,475 | )                     |  
|                                                          |  |                  |            |                       |  
|                                                          |  | $                | 15,650,726 |                       | $
|                                                          |  |                  |            |                       |  

In 2004, the Company entered into sales and purchase agreements to acquire two floors of a commercial building at an aggregate consideration of $3,055,886, which is under development in Suzhou, the PRC.  During 2005, the Company entered into a sales and purchase agreement to further acquire two floors and six units of the commercial building at an aggregate consideration of $14,630,443.  As of March 31, 2006, deposits amounting to $17,522,201 have been paid to the property developer. The remaining balance of $164,128 will be payable before the title of these properties is passed to the Company. As the Company acts as that property developers sole distribution agent and earns commission income, the corresponding commission income of $1,871,475 generated from the properties purchased by the Company was therefore deferred and offset against the deposits paid.  The properties under development were completed on March 31, 2006, and in accordance
with the sales and purchase agreements, the title of these properties will be transferred to the Company within 90 days after the completion of these properties.  The Company decided that two floors will be held for sale, one floor will be held for the Companys own use, and the remaining properties will be held for long-term investment purpose.  Accordingly, deposits of $3,374,438 paid for the properties available for sale were classified as current assets.

NOTE 8 - BANK LOANS

Bank loans are guaranteed by the property developer mentioned in Note 7 above, bear interest at banks prevailing rates ranging from 5.85% to 6.435% per annum, and are repayable within five years by monthly installments. The bank loans will be secured by the properties as mentioned in Note 7 above when the title of the properties is transferred to the Company.

NOTE 9  PROMISSORY NOTES PAYABLE

The balance includes the promissory note of $1,000,000 and accrued interest of $12,500 thereon. The promissory note of $1,000,000 bears interest at a rate of 5% per annum. The promissory notes are unsecured and their terms of repayment are not specifically defined.

NOTE 10 AMOUNTS DUETOVENTURERS

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 under development 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.

10

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NOTE11 - 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 directorPrior to April 25, 2005, the amount due to one of the directors was interest-free. Thereafter, the amount due to this director has borne interest at a rate of 9.6% per annum. As of March 31, 2006, the balance includes principal of $159,026 and accrued interest of $10,154 thereon. The principal is unsecured and the term of repayment is not specifically defined.

NOTE 12 - OTHER PAYABLES AND ACCRUED EXPENSES

|                                   |  | March 31,   2006 |         | December   31,   2005 |  
|---------------------------------- |  | ---------------- | ------- | --------------------- | -
|                                   |  |                  |         |                       |  
|                                   |  | (unaudited)      |        
|Accrued staff commission   & bonus |  | $                | 344,007 |                       | $
|Other payables                     |  |                  | 180,676 |                       |  
|Accrued consulting services   fees |  |                  |        |                       |  
|                                   |  |                  |         |                       |  
|                                   |  | $                | 524,683 |                       | $
|                                   |  |                  |         |                       |  

Accrued consulting services fees represent fees related to financial consulting services.  During the months ended March 31, 2006, accrued consulting services fees were settled by the issuance of common stock.

NOTE 13  OTHER TAX PAYABLE

Other tax payable represents PRC business tax which is charged at a rate of 5% on the revenue from services rendered.

NOTE 14- COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

During the three months ended March 31, 2006 and 2005, the Company incurred lease expenses amounting to $94,428 and $91,392, respectively. As of March 31, the Company had commitments under operating leases, requiring annual minimum rentals as follows:

|                            |  | March 31,   2006 |         | December   31,   2005 |  
|--------------------------- |  | ---------------- | ------- | --------------------- | -
|                            |  |                  |         |                       |  
|                            |  | (unaudited)      |        
|Within one year             |  | $                | 241,132 |                       | $
|Two to five years           |  |                  | 23,756  |                       |  
|                            |  |                  |         |                       |  
|Operating lease commitments |  | $                | 264,888 |                       | $
|                            |  |                  |         |                       |  

In order to distribute all the properties of the property underwriting project mentioned in Note 7 above, during the year of 2005, the Company launched a promotional package by entering into leasing agreements with certain buyers to lease the properties from 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 would start 45 days after the titles of the relevant properties are passed to the buyers.  The Company would then sublease the leased properties to earn rental income.  As of March 31, 2006, no sub-leasing agreements have been signed.

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As of March 31, 2006, the lease commitments under the above promotional package are as follows:

|                                                                 |  | March 31,   2006 |            | December   31,   2005 |  
|---------------------------------------------------------------- |  | ---------------- | ---------- | --------------------- | -
|                                                                 |  |                  |            |                       |  
|                                                                 |  | (unaudited)      |           
|Within one year                                                  |  | $                | 2,453,189  |                       | $
|Two to five years                                                |  |                  | 9,812,758  |                       |  
|Over five years                                                  |  |                  | 3,394,427  |                       |  
|                                                                 |  |                  |            |                       |  
|Operating lease commitments arising from the promotional package |  | $                | 15,660,374 |                       | $
|                                                                 |  |                  |            |                       |  

According to the leasing agreements, the Company has an option to terminate any agreement by paying a predetermined compensation.  As of March 31, 2006, the compensation to terminate all leasing agreements is approximately $3.5 million.  As of March 31, 2006, the management of the Company considers that no provision should be made for the Companys obligations under the foregoing guarantees.

Capital Commitments

As of March 31, 2006, the Company had capital commitments for the acquisition of properties mentioned in Note 7 above as follows:

|                                                |  | March 31,   2006 |         | December   31,   2005 |  
|----------------------------------------------- |  | ---------------- | ------- | --------------------- | -
|                                                |  |                  |         |                       |  
|                                                |  | (unaudited)      |        
|Commitments for the   acquisition of properties |  | $                | 164,128 |                       | $
|                                                |  |                  |         |                       |  

The remaining balance of $164,128 will be payable before the title of these properties is transferred to the Company. The properties under development have been completed on March 31, 2006, and in accordance with the sales and purchase agreements, the title of these properties will be transfer to the Company within 90 days after the completion of these properties.

As of March 31, 2006, the Company had capital commitments for the acquisition of 20% of the equity interest of SZGFH as follows:

|                                                         |  | March 31,   2006 |        | December   31,   2005 |  
|-------------------------------------------------------- |  | ---------------- | ------ | --------------------- | -
|                                                         |  |                  |        |                       |  
|                                                         |  | (unaudited)      |       
|Commitments for the   acquisition of the equity interest |  | $                | 60,394 |                       | $
|                                                         |  |                  |        |                       |  

Following the acquisition, the Company will effectively hold 100% equity interest in SZGFH.

Other commitments

One of the buyers of the properties of the property underwriting project mentioned above appointed the Company as an agent to sell the properties held by him.  In accordance with this agreement with the buyer, the Company must sell the said properties on or before November 30, 2006; otherwise, the Company has to acquire the properties at a consideration of $4,361,459 or pay compensation of $1,027,066 to the buyer.

NOTE 15  STATUTORY RESERVE

According to the relevant corporation laws in the PRC, a PRC company is required to transfer a 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.

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NOTE 16 ACCUMULATED OTHER COMPREHENSIVE INCOME

As of March 31, 2006, the only component of accumulated other comprehensive income was translation reserve.

NOTE 17  CONCENTRATION OF CUSTOMERS

During the three months ended March 31, 2006 and 2005, the following customer accounted for more than 10% of total net revenue:

|           |  | Percentage of Net Sales  Three Months Ended   March 31, |    | Percentage of   Accounts Receivable  as at March 31, | 
|---------- |  | ------------------------------------------------------- | -- | ---------------------------------------------------- | 
|           |  |                                                         |    |                                                      | 
|           |  | 2006                                                    |    | 2005                                                 | 
|           |  |                                                         |    |                                                      | 
|           |  | (Unaudited)                                             |   
|Customer A |  |                                                         | 78 | %                                                    | 

|               
|---------------
|* less than 10%

NOTE 18NON-CASH ACTIVITIES

During the three months ended March 31, 2006, deposits for the acquisition of properties were settled by the accounts receivable from the property developer from whom the properties were acquired.

The non-cash financial information is as follows:

|                                       |  | Three   months   Ended   March 31,   2006 |          
|-------------------------------------- |  | ----------------------------------------- | ---------
|                                       |  |                                           |          
|Deposits for acquisition of properties |  | $                                         | 3,594,663
|Issue of common stock                  |  |                                           | 693,600  
|                                       |  |                                           |          
|                                       |  | $                                         | 4,288,263
|                                       |  |                                           |          
|Satisfied by:                          |  |                                           |          
|Accounts receivable                    |  | $                                         | 3,594,663
|Other payables                         |  |                                           | 693,600  
|                                       |  |                                           |          
|                                       |  | $                                         | 4,288,263
|                                       |  |                                           |          

NOTE 19-SUBSEQUENT EVENTS

On April 10, 2006, the Company repaid the bank loan mentioned in Note 8 above in the amount of $623,675 in advance.

On April 11, 2006, the Company cancelled the acquisition of 4 units in the commercial building mentioned in Note 7 above. These units were purchased at an aggregate consideration of $1,283,307, and on April 13, 2006, the Company sold these units at a premium of $424,280.

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ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSISOF FINANICAL CONDITION AND RESULTS OF OPERATIONS

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

OVERVIEW

In October 2004, the former shareholders of Sunrise Real Estate Development Group, Inc. (Cayman Islands) (CY-SRRE) and LIN RAY YANG Enterprise Ltd. (LRY) acquired a majority of our voting interests in a merger, and the transaction was treated as a reverse acquisition, with CY-SRRE and LRY treated as the acquirer for accounting purposes. 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 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 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), and Suzhou Gao Feng Hui Property Management Company Limited (SZGFH) are collectively referred to as the Company hereafter. The principal activities of the Company are real estate agency sales, real estate marketing services, property leasing services and property management services in the PRC.

RECENT DEVELOPMENTS

Before 2004, our major business was an agency business, whereby our only subsidiary then, SHXJY, contracted with property developers to market and sell their newly developed property units; in return we earned a commission fee calculated as a percentage of the sales price. SHXJY has focused its sales on the whole China market, especially at the secondary city level.  To expand our agency business, SHXJY has established branches in NanChang, YangZhou and ZhenJiang; subsidiaries in Suzhou and Beijing; and a branch in NanJing. Because of our diverse market locations, our performance did not decline in the first quarter of 2006 under the current macro economic policies, and we plan to continue this stable growth trend in 2006.  We expect our business operation in SHXJY will demonstrate a revenue growth in 2006.

In 2004, through another subsidiary, SHSY, we ventured into a higher risk business model (the Underwriting Model) whereby our commission was not calculated as a percentage of the sales price. Instead, our commission revenue 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 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 on the expiry date, we may have to absorb the unsold units from developers at the underwriting price. We would hold these units in our inventory or as investments.

14

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SHSY has 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.  Being the sole distribution agent for the foregoing office building, SHSY committed to a sales target of $50.71 million being achieved on or before November 25, 2005.  We started selling units in the building in December 2004, and as of April 14, 2006, we achieved the sales target by selling 232 units with a total sales price of $64 million. However, there are still unsold properties with floor area of 1,466 square meters, which represents 3.2% of total floor area underwritten, as of April 14, 2006.  The properties under development were completed on March 31, 2006, and in accordance with the sales and purchase agreements, the title of these properties will be transferred to the buyers within 90 days after
the completion of these properties. The underwriting period has been extended to the date that the title of properties can be transferred to the buyers.

For the past two years, we have also made some property investments in Suzhou by acquiring several units of the aforesaid building. In 2004, the Company entered into sales and purchase agreements to acquire two floors of the building at an aggregate consideration of $3,055,886.  During 2005, the Company entered into a sales and purchase agreement to further acquire two floors and six units of the same building at an aggregate consideration of $14,630,443. The Company decided that two floors will be held for sale, one floor will be held for the Companys own use, and the remaining properties will be held for long-term investment purpose.  As of March 31, 2006, deposits amounting to $17,522,201 have been paid to the property developer. The remaining balance of $164,128 will be payable before the title of these properties is transferred to the Company. On April 11, 2006, the Company cancelled the acquisition of 4 units in the same building, these units
were purchase at an aggregate consideration of $1,283,307, and on April 13, 2006, the Company sold these units at a premium of $424,280. The properties under development were completed on March 31, 2006, and in accordance with the sales and purchase agreements, the title of these properties will be transferred to the Company within 90 days after the completion of these properties.

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

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

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

There are several risks and uncertainties, including those relating to our ability to raise money and grow our business and potential difficulties in integrating new acquisitions with our current operations, especially as they pertain to foreign markets and market conditions. These risks and uncertainties can materially affect the results predicted. The Companys future operating results over both the short and long term will be subject to annual and quarterly fluctuations due to several factors, some of which are outside our control. These factors include but are not limited to fluctuating market demand for our services, and general economic conditions.

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RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2004, the Financial Accounting Standards Board (FASB) issued a revision of FASB Statement No. 123, (FASB 123R) Accounting for Stock-Based Compensation. This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. FASB 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity, equity instruments or that may be settled by the issuance of those equity instruments. FASB 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. FASB 123R does not change the accounting guidance for share-based payment transactions with parties other than employees provided in FASB 123 as originally issued
and EITF Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. FASB 123R does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, Employers Accounting for Employee Stock Ownership Plans. For small business issuers, FASB 123R is effective for fiscal years beginning after December 15, 2005.  The adoption of FASB 123R has no material impact on our financial statements.

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 and revenue recognition.

Goodwill

SFAS 142, Goodwill and Other Intangible Assets, requires that goodwill be tested for impairment on an annual basis (December 31 for us) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of a company. Application of the goodwill impairment test requires judgment, including the determination of the fair value of a company. The fair value of a company is estimated using a discounted cash flow methodology. This requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, the useful life over which cash flows will occur, and the determination of
our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for a company.

Income Taxes

SFAS 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.

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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.

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.

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

RESULTS OF OPERATIONS

We provide the following discussion and analyses of our changes in financial condition and results of operations for the first quarter, 2006, with comparisons to the first quarter, 2005.

Revenue

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

|                     |  | Three   months ended March 31, |          
|-------------------- |  | ------------------------------ | ---------
|                     |  |                                |          
|                     |  | 2006                           |          
|                     |  |                                |          
|Agency   sales       |  | $                              | 994,721  
|Underwriting   sales |  | $                              | 3,604,693
|                     |  |                                |          
|Net   revenue        |  | $                              | 4,599,414
|                     |  |                                |          

The net revenue in the first quarter, 2006 was $4,599,414, which was an increase of 147% from $1,864,589 in the first quarter, 2005. In the first quarter, 2006, agency sales represented 22% of net revenues, and underwriting sales represented 78% of net revenue. In the first quarter, 2005, agency sales represented 44% of net revenues and underwriting sales represented 56% of net revenue. The increase in net revenues in the first quarter, 2006 was mainly due to the increase in our underwriting sales revenues.

Agency sales

22% of our net revenue in the first quarter, 2006, was due to agency sales, which were from the business activities of SHXJY and its subsidiaries. Net revenue of agency sales in the first quarter, 2006 increased 22% compared with same period in 2005. The primary reason was that in the first quarter, 2006 14 agent sales projects contributed net revenue to the Company, compared to 10 projects in the same period in 2005. Because of our diverse market location and our professional performance in our agency sales business, the current macro economic policies have little impact on our agency sales performance. We hope we can keep this stable growth trend in our agency sales business in 2006.

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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 the foregoing office building, SHSY committed to a sales target of $50.71 million being achieved on or before November 25, 2005. Property underwriting sales is 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 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 upon the expiry period, we may have to absorb the unsold property units from developers at the underwriting price and hold them in our inventory or as an investment.

We started selling units in the building in December 2004, and as of April 14, 2006, we achieved the sales target by selling 232 units with a total sales price of $64 million. However, there are still unsold properties with floor area of 1,466 square meters, which represents 3.2% of total floor area underwritten, as of April 14, 2006.  The properties under development were completed on March 31, 2006, and in accordance with the sales and purchase agreements, the title of these properties will be transferred to the buyers within 90 days after the completion of these properties. The underwriting period has been extended to the date that the title of properties can be transferred to the buyers. As of March 31, 2006, the property developer confirmed a total net revenue of $8,143,451 for this underwriting project. As we approach the completion of this project, the property developer will gradually receive all sales proceeds from the buyers; at that time, we can
recognize the total underwriting sales revenue of this project.

Cost of Revenue

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

|                     |  | Three   months ended March 31, |          
|-------------------- |  | ------------------------------ | ---------
|                     |  |                                |          
|                     |  | 2006                           |          
|                     |  |                                |          
|Agency   sales       |  | $                              | 416,304  
|Underwriting   sales |  | $                              | 1,487,224
|                     |  |                                |          
|Cost   of revenue    |  | $                              | 1,903,528
|                     |  |                                |          

The cost of revenue in the first quarter, 2006 was $1,903,528, an increase of 319% from $454,169 in the same period in 2005. In the first quarter, 2006, agency sales represented 22% of cost of revenues and underwriting sales represented 78% of cost of revenue. In the first quarter, 2005, agency sales represented 77% of cost of revenue and underwriting sales represented 23% of cost of revenue.

Agency sales

The cost of revenue for agency sales in the first quarter, 2006 was $416,304, an increase of 19% from $349,728 in the same period in 2005. The primary reason was the increase of the staff cost incurred in SHXJY and its subsidiaries and branches. Compared with the staff cost in the first quarter, 2005, the staff cost in the first quarter, 2006 increased $136,068, mainly due to the increase of agency sales projects in the first quarter, 2006 and the expansion of our agency sales business.

Underwriting sales

The Company has entered into co-operation agreements with two venturers to jointly carry out the underwriting project mentioned above. According to the agreements, the venturers are entitled to share 35% of the net results of the underwriting project. In the first quarter, 2006, we recognized the profit sharing as the cost of the underwriting project. The cost we recognized in the first quarter, 2006 for the profit sharing was $1,321,536, and there was no such cost in the first quarter, 2005 a significant factor that contributed to the increase of the cost of underwriting sales.

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Operating Expenses

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

|                      |  | Three   months ended March 31, |        
|--------------------- |  | ------------------------------ | -------
|                      |  |                                |        
|                      |  | 2006                           |        
|                      |  |                                |        
|Agency   sales        |  | $                              | 187,496
|Underwriting   sales  |  | $                              | 13,283 
|Property   management |  | $                              | 1,593  
|                      |  |                                |        
|Operating   expenses  |  | $                              | 202,372
|                      |  |                                |        

The operating expenses in the first quarter, 2006 were $202,372, a decrease of 22% from $258,863 in the same period in 2005. In the first quarter, 2006, agency sales represented 93% of operating expenses; underwriting sales represented 6%, and property management represented 1%. In the first quarter, 2005, agency sales represented 88% of operating expenses and underwriting sales represented 12%.

Agency sales

The operating expenses for agency sales in the first quarter, 2006 were $187,496 which decreased 18% from $228,637 in the same period in 2005.

Underwriting sales

The operating expenses for underwriting sales in the first quarter, 2006 were $13,283, a decrease of 56% from $30,226 in the same period in 2005. This decrease was mainly due to the decrease in salary, travel expenses and official expenses of SHSY in the first quarter, 2006.

Property management

SZGFH is our property management subsidiary. SZGFH is still at the start-up stage, and there was a low level of daily operating expenses incurred in the first quarter, 2006. We expect to launch the property management business in the second quarter of 2006.

General and Administrative Expenses

The general and administrative expenses in first quarter, 2006 were $723,301, increasing 30% from $557,937 in the first quarter 2005. The increase in general and administrative expenses was mainly due to:

i) The increase in professional fees for maintaining our listing status, e.g., audit, legal and other professional fees.  The professional fees in the first quarter, 2006 were $95,505, and such expenses were $32,920 in the first quarter 2005.

ii)The expansion of our agency sales business. The general and administration expenses for SHXJY and its subsidiaries and branches in the first quarter 2006 and 2005 were $391,304 and $347,930, respectively.

Interest Expenses

Interest expenses in the first quarter, 2006 were $129,765, increasing 285% from $33,663 in the same period in 2005. The interest expenses were mainly incurred for bank loans and promissory notes payable.  The increase was due to increases in interest on bank loans for the acquisition of properties.

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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.

Our accounts receivable balance at March 31, 2006 was $631,920.

We ended the period with a cash position of $627,011. We had positive operating cash flow of $224,675. This is primarily attributable to the increase in amount with venturers.

The Companys investing activities used cash resources of $1,250,300 for the three months ended March 31, 2006, which are mainly devoted to the deposits paid for acquisition of properties.

During the three months ended March 31, 2006, our total loan balance increased from $6,380,156 as of December 31, 2005 to $7,316,281. This increase was primarily attributable to the new loan of $1,247,349 obtain in this quarter.

We anticipate that our current available funds, cash inflows from providing property agency services and underwriting 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 through 2006.  We also expect SZGFH can contribute cash flow to the Company as it will start its property management business in the second quarter of 2006.  However, we may need to raise additional funds in the future in order to fund acquisitions, develop new projects, or if our business otherwise grows more rapidly than we currently predict. If we do need to raise such additional funds, we expect to raise those funds through the issuance of additional shares of our equity securities in one or more public or private offerings, or through credit facilities obtained with lending institutions. There can be no guarantee that we will be able to
obtain such funding, whether through the issuance of debt or equity, on terms satisfactory to management and our board of directors.

ITEM 3.CONTROLS AND PROCEDURES

Based on the most recent evaluation, which was completed as of the end of the period covered by this Form 10-QSB, the Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures were effective at March 31, 2006, to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. There were no changes in our internal controls over financial reporting during the quarter ended March 31, 2006, that have materially affected, or are reasonably likely to materially affect, our internal controls for financial reporting.

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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 OFEQUITY SECURITIESAND USE OF PROCEEDS

None

ITEM 3.DEFAULTSUPON SENIOR SECURITIES

None

ITEM 4.SUBMISSION OF MATTERSTO A VOTE OF SECURITY HOLDERS

None

ITEM 5.OTHER INFORMATION

None

ITEM 6.EXHIBITS

|Exhibit   Number |  | Description                                                                                                                                                                                                                                                                                                               
|---------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                 |  |                                                                                                                                                                                                                                                                                                                           
|2.1              |  | Exchange Agreement dated   as of August 31, 2004 by and among Lin Ray Yang Enterprise Ltd., Lin   Chi-Jung, as agent for the beneficial shareholders of such company, and the   Company, incorporated by reference to our Current Report on Form 8-K filed on   September 8, 2004.                                        
|                 |  |                                                                                                                                                                                                                                                                                                                           
|2.2              |  | Exchange Agreement dated   as of August 31, 2004 by and among Sunrise Real Estate Development Group,   Inc., a Cayman Islands company, Lin Chi-Jung, as agent for the beneficial   shareholder of such company, and the Company, incorporated by reference to   our Current Report on Form 8-K filed on September 8, 2004.
|                 |  |                                                                                                                                                                                                                                                                                                                           
|3.1              |  | Articles of Incorporation,   incorporated by reference to Exhibit 3.1 of Form-10QSB filed on April 23,   2001.                                                                                                                                                                                                            
|                 |  |                                                                                                                                                                                                                                                                                                                           
|3.1a             |  | Amendments to the Articles   of Incorporation incorporated by reference to Exhibits 3.1a and 3.1b to   Form-10-KSB for the fiscal year ended December 31,2003 filed on April 14,   2004.                                                                                                                                  
|                 |  |                                                                                                                                                                                                                                                                                                                           
|3.2              |  | Bylaws, incorporated by   reference to Exhibit 3.2 of Form-10SB filed on April 23, 2001.                                                                                                                                                                                                                                  
|                 |  |                                                                                                                                                                                                                                                                                                                           
|10.1             |  | Financial Advisory   Agreement dated January 15, 2006 between Sunrise-Texas and Marco Partners,   Inc., incorporated by reference to Exhibit 10.1 to Form SB-2 filed on   February 13, 2006.                                                                                                                              
|                 |  |                                                                                                                                                                                                                                                                                                                           
|10.2             |  | Consultancy Service   Agreement dated January 15, 2006 between Sunrise-Texas and Chiang Hui Hsiung,   incorporated by reference to Exhibit 10.2 to Form SB-2 filed on February 13,   2006.                                                                                                                                
|                 |  |                                                                                                                                                                                                                                                                                                                           
|14               |  | Code of Ethics                                                                                                                                                                                                                                                                                                            
|                 |  |                                                                                                                                                                                                                                                                                                                           
|21.1             |  | Subsidiaries of the   Company, incorporated by reference to Exhibit 21.1 to Form SB-2 filed on   February 13, 2006.                                                                                                                                                                                                       
|                 |  |                                                                                                                                                                                                                                                                                                                           
|31.1             |  | Section 302 Certification   by the Corporations Chief Executive Officer.                                                                                                                                                                                                                                                 
|                 |  |                                                                                                                                                                                                                                                                                                                           
|31.2             |  | Section 302 Certification   by the Corporations Chief Financial Officer.                                                                                                                                                                                                                                                 
|                 |  |                                                                                                                                                                                                                                                                                                                           
|32.1             |  | Section 1350 Certification   by the Corporations Chief Executive Officer and Corporations Chief   Financial Officer.                                                                                                                                                                                                    

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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 DEVELOPMENT GROUP, INC.

|Date: May 15,   2006 | By: | /s/ Lin,   Chi-Jung                     
|-------------------- | --- | ----------------------------------------
|                     |     |                                         
|                     |     | Lin,   Chi-Jung, Chief Executive Officer
|                     |     |                                         
|Date: May 15,   2006 | By: | /s/ Art   Honanyan                      
|                     |     |                                         
|                     |     | Art   Honanyan, Chief Financial Officer 

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