SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q



                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934



        For the Quarter Ended                        Commission File Number
            June 30, 1997                                     0-19516



                             SUNRISE RESOURCES, INC.
             (Exact name of registrant as specified in its charter)


              Minnesota                                  41-1632858
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


                        5500 Wayzata Boulevard, Suite 725
                         Golden Valley, Minnesota 55416
                    (Address of principal executive offices)


                                 (612) 593-1904
              (Registrant's telephone number, including area code)



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

                 Yes          X              No


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.


     7,787,796 shares of Common Stock, $.01 par value as of August 13, 1997






<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.  Financial Statements
Included herein is the following unaudited financial information:

         Consolidated  Balance Sheets as of June 30, 1997 and March 31, 1997.

         Consolidated  Statements  of  Operations  for the  three-month
            periods ended June 30, 1997 and 1996.

         Consolidated  Statements  of Cash  Flows  for the  three-month
            periods ended June 30, 1997 and 1996.

         Notes to Consolidated Financial Statements.

<PAGE>

SUNRISE RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                       June 30,           March 31,
                                                                                          1997              1997
                                                                                    ---------------      -----------
ASSETS                                                                              (Unaudited)

<S>                                                                                 <C>                <C>             
   Cash and cash equivalents                                                        $     1,588,000    $      2,191,000
   Accounts receivable, less allowance for doubtful accounts
     of $451,000 and $494,000                                                             2,887,000           1,928,000
   Income taxes receivable                                                                       --           1,245,000
   Inventory held for sale                                                                  392,000             388,000
   Loans receivable, less allowance for possible losses of $3,431,000
     and $3,401,000                                                                       6,811,000           7,503,000
   Investment in leasing operations:
     Direct financing leases                                                             42,263,000          46,759,000
     Operating leases, less accumulated depreciation of
       $24,315,000 and $22,973,000                                                       43,017,000          42,211,000
     Equipment held for lease                                                            10,375,000           6,435,000
      Initial direct costs                                                                  570,000             590,000
                                                                                    ---------------    ----------------
       Total investment in leasing operations                                            96,225,000          95,995,000
                                                                                    ---------------    ----------------

   Furniture and fixtures, less accumulated depreciation
     of $575,000 and $535,000                                                               381,000             411,000
   Other assets                                                                           1,356,000           1,498,000
                                                                                    ---------------    ----------------
       Total Assets                                                                $    109,640,000    $    111,159,000
                                                                                   ================    ================

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
   Financing arrangements:
     Borrowings under lines of credit                                               $    12,457,000    $     13,329,000
     Securitized borrowings                                                              17,682,000          15,481,000
     Recourse participations in loans receivable                                            311,000             435,000
     Discounted lease rentals                                                            35,473,000          40,198,000
                                                                                    ---------------    ----------------
       Total financing arrangements                                                      65,923,000          69,443,000
                                                                                    ---------------    ----------------
   Accounts payable                                                                       7,478,000           6,808,000
   Accrued liabilities                                                                    4,453,000           6,252,000
   Accrued income taxes                                                                     230,000                  --
   Deferred tax liability                                                                 1,899,000           1,899,000
                                                                                    ---------------    ----------------
       Total Liabilities                                                                 79,983,000          84,402,000
                                                                                    ---------------    ----------------

COMMITMENTS AND CONTINGENCIES (Note 6)

SHAREHOLDERS' EQUITY

   Common stock, $.01 par value, 17,500,000
     shares authorized, 7,788,000 and 7,189,000
     shares issued and outstanding, respectively                                             78,000              72,000
   Capital stock, undesignated, $.01 par value,
     2,500,000 shares authorized, none issued or outstanding                                     --                  --
   Additional paid-in capital                                                            27,618,000          25,601,000
   Retained earnings                                                                      1,961,000           1,084,000
                                                                                    ---------------      --------------
       Total Shareholders' Equity                                                        29,657,000          26,757,000
                                                                                    ---------------      --------------
       Total Liabilities and Shareholders' Equity                                  $    109,640,000     $   111,159,000
                                                                                   ================     ===============
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
<PAGE>

SUNRISE RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                               Three Months
                                                                                              Ended June 30,
                                                                                    -----------------------------------
                                                                                         1997                1996
                                                                                    ---------------    ----------------
REVENUES

<S>                                                                                 <C>                <C>             
     Operating leases                                                               $    7,920,000     $      5,724,000
     Direct financing leases                                                             1,390,000            2,175,000
     Equipment sales                                                                     1,658,000            2,487,000
     Interest income                                                                        70,000              219,000
     Fee income                                                                             87,000               65,000
                                                                                    --------------     ----------------
              Total Revenues                                                            11,125,000           10,670,000
                                                                                    --------------     ----------------


COSTS AND EXPENSES

     Depreciation                                                                        4,332,000            3,156,000
     Interest                                                                            1,491,000            1,710,000
     Provision for lease and loan losses                                                   270,000              221,000
     Cost of equipment sold                                                              1,650,000            2,180,000
     Compensation expense                                                                  964,000              781,000
     Other operating expenses                                                              734,000              521,000
                                                                                    --------------     ----------------
              Total Costs and Expenses                                                   9,441,000            8,569,000
                                                                                    --------------     ----------------


INCOME FROM OPERATIONS BEFORE PROVISION
     FOR INCOME TAXES                                                                    1,684,000            2,101,000

PROVISION FOR INCOME TAXES                                                                 807,000            1,008,000
                                                                                    --------------     ----------------
NET INCOME                                                                          $      877,000     $      1,093,000
                                                                                    ==============     ================



NET INCOME PER COMMON AND COMMON
     EQUIVALENT SHARE                                                               $         0.12     $           0.15
                                                                                    ==============     ================


WEIGHTED AVERAGE NUMBER OF COMMON AND
     COMMON EQUIVALENT SHARES OUTSTANDING                                                7,291,000            7,189,000
                                                                                    ==============     ================

</TABLE>

The accompanying notes to the consolidated  financial statements are an integral
part of these statements.






<PAGE>


SUNRISE RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                               Three Months
                                                                                              Ended June 30,
                                                                                    -----------------------------------
                                                                                        1997                1996
                                                                                    ---------------     ---------------

CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                                                 <C>                 <C>            
Net Income                                                                          $       877,000     $     1,093,000
Adjustments to reconcile net income to net cash
      provided by operating activities:
    Provision for lease and loan losses                                                     270,000             221,000
    Depreciation                                                                          4,588,000           3,423,000
    Change in operating assets and liabilities:
        Accounts receivable                                                              (1,049,000)           (678,000)
        Income taxes receivable                                                           1,245,000           1,038,000
        Other assets                                                                         21,000              64,000
        Inventory held for sale                                                              (4,000)             31,000
        Accounts payable                                                                    670,000             646,000
        Accrued liabilities                                                              (1,799,000)            639,000
        Accrued income taxes                                                                230,000                  --
                                                                                    ---------------     ---------------
           NET CASH PROVIDED BY OPERATING
              ACTIVITIES                                                                  5,049,000           6,477,000
                                                                                    ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of equipment for lease                                                     (11,346,000)         (9,439,000)
    Principal portion of direct financing leases collected                                6,540,000           6,939,000
    Investment in loans receivable                                                               --          (1,063,000)
    Principal portion of loans receivable collected                                         661,000           3,325,000
    Purchase of furniture and fixtures                                                       (9,000)            (25,000)
                                                                                    ----------------    ---------------
           NET CASH USED IN INVESTING ACTIVITIES                                         (4,154,000)           (263,000)
                                                                                    ----------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Borrowings on lines of credit                                                         8,000,000           5,200,000
    Payments on lines of credit                                                          (8,872,000)           (747,000)
    Proceeds from securitized borrowings                                                  5,499,000                  --
    Payments on securitized borrowings                                                   (3,298,000)                 --
    Proceeds from discounted lease financing                                              1,420,000           1,101,000
    Payments on discounted lease financing                                               (6,145,000)         (8,223,000)
    Payments on participations in loans receivable                                         (124,000)         (2,479,000)
    Payments on note payable to King Holding Corporation                                         --          (1,437,000)
    Issuance of common stock                                                              2,022,000                  --
                                                                                    ---------------     ---------------
        NET CASH USED IN FINANCING
              ACTIVITIES                                                                 (1,498,000)         (6,585,000)
                                                                                    ----------------    ----------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                                  (603,000)           (371,000)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                          2,191,000           1,629,000
                                                                                    ---------------     ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                          $     1,588,000     $     1,258,000
                                                                                    ===============     ===============

SUPPLEMENTAL CASH FLOW INFORMATION
    Interest paid                                                                           821,000             873,000
    Income taxes paid                                                                            --               7,000

</TABLE>

The accompanying notes to the consolidated  financial statements are an integral
part of these statements.
<PAGE>

SUNRISE RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIODS ENDED JUNE 30, 1997 and 1996 (Unaudited)
-------------------------------------------------------------------------------

1.   ACCOUNTING POLICIES

     In the opinion of management, the accompanying financial statements contain
     all  adjustments  necessary  to present  fairly the  financial  position of
     Sunrise Resources,  Inc. and Subsidiaries (the Company) as of June 30, 1997
     and March 31,  1997 and the  results of  operations  and cash flows for the
     three months ended June 30, 1997 and 1996.  All such  adjustments  are of a
     normal and recurring nature.

     These  statements  should  be read in  conjunction  with  the  Notes to the
     Financial  Statements contained in the Company's Annual Report on Form 10-K
     for the fiscal year ended March 31,  1997,  filed with the  Securities  and
     Exchange  Commission,  and with  "Management's  Discussion  and Analysis of
     Financial Condition and Results of Operations"  appearing in this quarterly
     report.  Results for the interim periods are not necessarily  indicative of
     sales trends or future results and performance.

     During March 1997, the Financial  Accounting  Standards Board released SFAS
     No.  128,  Earnings  per Share,  which  requires  the  disclosure  of basic
     earnings per share and diluted  earnings per share.  The Company expects to
     adopt  SFAS  No.  128 in  fiscal  1998 and  anticipates  it will not have a
     material  impact on the financial  position or the results of operations of
     the Company.

2.   INCOME TAXES

     Income tax expense has been provided based on management's  estimate of the
     annualized  effective  tax rate of 48% for the three  months ended June 30,
     1997 and 1996.

3.   LOANS RECEIVABLE

     Loans by Collateral Type
     The composition of the loans receivable portfolio by collateral type was as
     follows:
<TABLE>
<CAPTION>
                                                                                       June 30,            March 31,
                                                                                         1997                1997
                                                                                    ---------------    ----------

<S>                                                                                 <C>                <C>            
     Commercial loans, collateralized primarily by receivables                      $       112,000    $       161,000
     Commercial loans, collateralized by equipment, marketable
       securities and other                                                               4,704,000          5,163,000
     Real estate loans                                                                    1,028,000          1,038,000
     Non-accrual loans                                                                    5,319,000          5,475,000
     Non-recourse participations                                                           (857,000)          (867,000)
                                                                                    ---------------    ---------------
                                                                                         10,306,000         10,970,000


     Less:

       Allowance for possible loan losses                                                (3,431,000)        (3,401,000)
       Unearned fees from loan origination                                                  (64,000)           (66,000)
                                                                                    ---------------    ---------------
                                                                                    $     6,811,000    $     7,503,000
                                                                                    ===============    ===============
</TABLE>



<PAGE>

     Loan Portfolio Activity and Allowance for Possible Loan Losses -

     As of June 30, 1997 and March 31, 1997, the Company's  recorded  investment
     in impaired  and other loans and the related  valuation  allowances  are as
     follows:
<TABLE>
<CAPTION>
                                                        June 30, 1997                         March 31, 1997
                                            ------------------------------------    ----------------------------------
                                                 Recorded           Valuation          Recorded            Valuation
                                                Investment          Allowance         Investment           Allowance

<S>                                         <C>                 <C>                 <C>                <C>
     Impaired loans -
       Nonaccrual                           $      5,094,000    $    3,206,000      $     5,250,000    $     3,176,000
       Other                                         225,000           225,000              225,000            225,000
     Performing loans                              5,844,000                --            6,362,000                 --
     Nonrecourse participations                     (857,000)               --             (867,000)                --
                                            -----------------   --------------      ----------------   ---------------
                                            $     10,306,000    $    3,431,000      $    10,970,000    $     3,401,000
                                             ===============     =============       ==============     ==============
</TABLE>

     The activity in the  allowance  for possible  loan losses  during the three
     months ended June 30, 1997 and 1996 was as follows:

                                                June 30,           June 30,
                                                  1997               1996
                                                --------           --------

         Balance, beginning of period          $3,401,000         $2,773,000
         Provisions for loan losses                30,000             30,000
         Write-offs                                 --                  --
                                               ----------         ----------
         Balance, end of period                $3,431,000         $2,803,000
                                               ==========         ==========

     Interest  payments  received  on  impaired  loans are  recorded as interest
     income unless collection of the remaining  recorded  investment is doubtful
     at which time  payments  received are recorded as  reductions of principal.
     The Company did not recognize any interest income on impaired loans for the
     respective three month periods ended June 30, 1997 and 1996.

     When,  in the opinion of  management,  a reasonable  doubt exists as to the
     collectibility  of interest  or fee  income,  the accrual of such income is
     discontinued and uncollected income accruals are reversed. During the three
     months ended June 30, 1997,  the Company did not recognize fee and interest
     income related to impaired loans.

4.   DISCOUNTED LEASE RENTALS

     Discounted lease rentals consist of the following:

                                                June 30,            March 31,
                                                  1997                1997
                                             ---------------    ---------------

         Non-recourse                        $    27,864,000    $    30,761,000
         Recourse                                  7,609,000          9,437,000
                                             ---------------    ---------------
                                             $    35,473,000    $    40,198,000
                                             ===============    ===============

5.   FINANCING ARRANGEMENTS

     Lines of Credit

     The Company has a $25 million line of credit  facility  with a bank for use
     in its normal operations. Advances under this line of credit are subject to
     a borrowing base  limitation of $24.7 million at June 30, 1997. The balance
     outstanding  as of quarter end was $12.4  million.  Advances under the line
     bear  interest  at  prime,  and are  collateralized  by  substantially  all
     otherwise  unsecured  assets of the Company.  This line of credit  facility
     matures on September 30, 1997.  The Company  believes this credit  facility
     will be renewed on terms similar to the current facility.
<PAGE>

     This  credit  facility  requires   compliance  with  financial   covenants,
     including  the  maintenance  of  certain  liquidity  and net worth  ratios,
     prohibits  the payment of  dividends  and  requires  compliance  with other
     financial  covenants.  As a result of fourth quarter  charges for lease and
     loans losses and related events,  as of March 31, 1997, the Company did not
     meet certain  financial and other covenants  contained in credit agreements
     with certain lenders.  With the assistance of King Management  Corporation,
     the lenders have  subsequently  modified the financial  covenants or waived
     the  events  of  noncompliance.  As of June 30,  1997,  the  Company  is in
     compliance with the revised terms of these agreements.

     Securitization

     On October 31, 1996, the Company,  Sunrise  Leasing  Corporation  ("Sunrise
     Leasing") and Sunrise  Funding  Corporation I (a newly formed  wholly-owned
     special purpose subsidiary of Sunrise Leasing)("Sunrise  Funding"), entered
     into an agreement with a subsidiary of Dougherty Dawkins,  Inc. to place up
     to $20 million of notes issued by Sunrise Funding to private  institutional
     investors. Dougherty Dawkins, Inc. is an investment banking firm of which a
     former  director of the Company is Vice Chairman.  The notes are secured by
     certain leases  contributed  to Sunrise  Funding by Sunrise  Leasing.  This
     securitization  facility  was closed on November  8, 1996,  with an initial
     funding of $13,000,000.  The funds were used to pay off the $3.1 million of
     loans from The King Management Corporation,  to pay accrued legal expenses,
     interest  and fees in  connection  with the  financing,  and to repay  $9.4
     million under the Company's  bank line of credit.  A subsequent  advance of
     $7.0  million was funded on January 31,  1997,  the  proceeds of which were
     used to reduce the outstanding balance of the Company's line of credit.

     On May 16, 1997, Sunrise Leasing Corporation completed a $5,500,000 funding
     on a securitization facility with National City Bank of Minneapolis.  These
     notes are secured by certain  leases of the Company.  These funds were used
     to reduce the debt outstanding under the Company's bank line of credit.

6.   COMMITMENTS AND CONTINGENCIES

     Litigation

     During  fiscal  1997,  former  shareholders  of ILC  commenced  arbitration
     proceedings against the Company relating to the February 1995 merger of the
     Company with The P.J. King  Companies,  Inc. (d/b/a  International  Leasing
     Corporation)  ("ILC") on the basis that, in their view, problems underlying
     the net investment in several direct financing loans and leases arose prior
     to the merger  and were not  disclosed.  They also  asserted  other  claims
     regarding  valuation of certain  other assets of the Company at the time of
     the merger.  In addition to seeking money  damages or additional  shares of
     the Company's Common Stock, the former ILC shareholders attempted to obtain
     rescission of the merger.

     On June 17,  1997,  a decision  was  released  by the  arbitrator  on these
     proceedings. ILC shareholders were denied rescission and reformation of the
     merger agreement as well as relief on five other claims.  They were however
     granted  relief on one count of breach of warranty  and awarded  damages of
     560,257  additional  shares of Sunrise  Resources,  Inc. common stock. This
     award,  valued at  $1,891,000,  was  charged  to expense  for fiscal  1997.
     Additionally, certain ILC shareholders were awarded repayment of attorneys'
     fees payable in the form of 38,818 additional shares of Sunrise  Resources,
     Inc.  common  stock.  This award  valued at  $131,000  was also  charged to
     expense  for  fiscal  1997.  These  proceedings  were  conducted  under the
     agreement  of binding  arbitration  and  therefore  no further  disputes or
     settlements  with the Company are expected to arise in connection  with the
     merger agreement.

<PAGE>
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

Revenues

The Company classifies its lease  transactions,  as required by the Statement of
Financial Accounting Standards No. 13 ("FASB 13"), as either direct financing or
operating leases. Revenue, costs and resulting income are recognized during each
of the accounting periods during the term of the lease. The allocation of income
among the  accounting  periods  within a lease term will vary depending upon the
lease classification.

The  Company  segregates  the sources of its revenue  into five  categories  for
financial  statement  purposes:  (i)  operating  leases;  (ii) direct  financing
leases; (iii) sales of new and used equipment; (iv) fee income; and (v) interest
income.

Operating Leases.  All leases that are not classified as direct financing leases
are  treated  as  operating  leases.  Monthly  payments  from  these  leases are
recognized as leasing  revenue.  The Company's  cost of the leased  equipment is
recorded on the balance sheet and is depreciated on a  straight-line  basis over
the  lease  term to the  Company's  estimate  of  residual  value.  Revenue  and
depreciation  expense for operating  leases are recorded evenly over the term of
the lease.  If the lease is discounted to a financial  institution,  the related
interest  expense  declines  over the  term of the  lease  as the  principal  is
reduced,  with the  resultant net margin being lower in the early periods of the
lease and higher in the later periods.

Direct Financing  Leases.  These leases transfer  substantially all benefits and
risks of equipment  ownership to the lessee. A lease is a direct financing lease
if the creditworthiness of the customer and the collectibility of lease payments
are reasonably certain and it meets one of the following criteria: (i) the lease
transfers  ownership  of the  equipment  to the customer by the end of the lease
term; (ii) the lease contains a bargain purchase option; (iii) the lease term at
inception  is at  least  75% of  the  estimated  economic  life  of  the  leased
equipment;  or (iv) the present value of the minimum lease  payments is at least
90% of the fair value of the leased equipment at inception of the lease.

Direct financing leases consist of future lease payments plus the residual value
(collectively  referred  to as the "gross  investment").  Residual  value is the
estimated  fair market value at the time of lease  termination.  The  difference
between the gross investment in the lease and the cost (or carrying  amount,  if
different)  of the leased  equipment is recorded as unearned  revenue.  The "net
investment"  in the lease is the gross  investment  less unearned  revenue.  The
unearned  revenue is amortized to leasing revenue over the lease term to produce
a constant  percentage return on the net investment  whether or not the lease is
discounted to a financial institution.

Equipment Sales.  Revenue from equipment sales transactions is recognized by the
Company at the time title to the equipment  passes to the customer.  Leases that
entitle the customer to purchase the leased  equipment  for a nominal sum at the
end of the lease term and which are  discounted  on a  nonrecourse  basis at the
lease   commencement   date,  leaving  the  Company  with  no  interest  in  the
transaction, are treated by the Company as a sale of equipment.

Fee Income.  The  Company  earns fee income  principally  for  arranging  leases
between  unrelated  parties.  These fees are  recognized  at the closing of such
transactions.  At  lease  termination,  the  Company  may  also be  entitled  to
additional  fee income equal to a portion of the net proceeds  from a subsequent
lease or sale of the equipment.  The Company's portion of such net proceeds,  if
any, is reported  as fee income at the time of the  subsequent  lease or sale of
the equipment.

Interest Income. Interest income is accrued on unimpaired loans receivable under
the effective interest method.  Interest income is not recognized on loans which
have been identified by the Company as impaired.

Cash Flows from Leases

Cash flows are not affected by how a  particular  lease is  classified,  but are
affected by the Company's  decision on how its investment in a particular  lease
will be financed.  When the Company discounts lease payments on a nonrecourse or
recourse  basis  with a  financial  institution,  the  discounted  future  lease
payments are received up-front,  and are recorded on the Company's balance sheet
as discounted  lease rentals.  If, however,  the Company chooses not to discount
the  remaining  lease  payments,  the total lease  payments  are received by the
Company over the lease term.
<PAGE>

Sunrise Financial Resources, Inc.

The Board of Directors made the  determination in fiscal 1996 to discontinue the
SFR  business.  The Company has sold the SFR  asset-based  lending  accounts and
one-half of its SFR commercial accounts.  Management believes the loan portfolio
is reflected at its estimated liquidation value as of June 30, 1997.

Results of Operations for the Three Months Ended June 30, 1997 and 1996

Total revenue increased approximately $455,000 (4.3%) for the three months ended
June 30,  1997 as  compared  to the  corresponding  period in fiscal  1997.  The
increase in revenue for the quarter came from a 38% increase in operating  lease
revenue over the previous quarter. This increase was offset by a 36% decrease in
direct financing revenue and a decrease of 33% in equipment sales in the quarter
as compared to the first quarter in fiscal 1997.

Total leasing revenues were as follows (dollar amounts in millions):

                                          Three Months
                                          Ended June 30,      
                                ------------------------------------
                                    1997                  1996
                                --------------        --------------
                                 Amount    %           Amount    %

   Leasing Revenues:

         Vendor                  $   6.4   69%         $   4.2   53%
         Direct                      2.9   31              3.7   47
                                 -------  ---          -------  ---
              Total              $   9.3  100%         $   7.9  100%
                                 =======  ====         =======  ====

   As a percent of total revenues    83.7%                 74.0%
                                     =====                 =====

Margins from leasing activities  (leasing revenue less depreciation and interest
expense) were 37.5% and 38.4% for the three months of first quarter  fiscal 1997
and fiscal  1996,  respectively.  Margins will  fluctuate  from period to period
based upon the mix of direct  financing and  operating  leases and the extent to
which the Company finances leases with internally  generated funds. Margins will
also be affected by the mix and age of direct  finance and  operating  leases in
the current portfolio.

In order to limit the impact of any interest  rate  fluctuations  on its leasing
transactions,  the Company continually  monitors its lease rate factors relative
to  interest  rates on  borrowed  funds.  The lease rate  factors  are  adjusted
periodically  on new leases to  correspond  to any change in  interest  rates on
borrowed funds supporting the related transactions.

Revenue  from  equipment  sales  decreased  $829,000  (33.3%) in the first three
months of fiscal 1998 compared to the same period in fiscal 1997.  This decrease
is  primarily a result of lower  off-lease  sales  coming  from direct  customer
leasing  business.  Gross  margins  on  equipment  sales  were 0.5% in the first
quarter of fiscal 1998 as compared to 12.3% for the same period in fiscal  1997.
This decrease in gross margins was due to lower than  anticipated  market values
of computer  equipment  coming off lease.  Gross margins will vary  depending on
the  Company's  ability  to  purchase  equipment  at  competitive  prices and to
negotiate attractive selling prices for such equipment.

Interest income  decreased  $149,000 (68.2%) in the first three months of fiscal
1998 as compared to the same period in fiscal 1997.  This decrease was caused by
the  liquidation  of the SFR loan portfolio  which  coincided with the Company's
decision to discontinue its commercial and asset-based lending services.

Fee income increased $22,000 (33.8%) in the first three months of fiscal 1998 as
compared to the same period in fiscal 1997. This increase was due to higher late
fees caused by the increased number of leases in the vendor leasing portfolio.

Total costs and expenses  increased  $872,000 (10.2%) for the first three months
of fiscal  1998 as  compared to the same  period in fiscal  1997.  The  increase
resulted  from higher  depreciation  expense  offset by lower costs of equipment
sold.

Depreciation  expense increased $1,176,000 (37.3%) for the first three months of
fiscal 1998 as compared to the same period in fiscal 1997, due to an increase in
activity  in the vendor  leasing  programs  and the  number of vendor  equipment
operating leases that were added in the first quarter.
<PAGE>

Interest expense decreased $219,000 (12.8%) for the first three months of fiscal
1998 as compared to the same period in fiscal 1997.  This decrease was caused by
the lower overall debt levels quarter to quarter.

Cost of equipment sold decreased  $530,000 (24.3%) for the first three months of
fiscal 1998 as compared to the same period in fiscal  1997.  This  decrease  was
primarily due to decreased sale activity in the direct customer leasing business
during the first quarter of fiscal 1997.

Compensation  expense  increased  $183,000  (23.5%) in the first three months of
fiscal 1998 as compared to the same period in fiscal  1997,  which was due to an
increase in commission expense and the addition of some compensation accruals in
the first quarter of fiscal 1998.

Other  operating  expenses  increased  $213,000  (40.9%) in the first quarter of
fiscal 1998 compared to the first  quarter in fiscal 1997.  The majority of this
increase was due to the acceleration of amortization of some capitalized funding
expenses.

Income tax  provision as a percentage  of income before taxes was 48.0% for both
the three months ended June 30, 1997 and 1996.

As a result of the foregoing factors,  net income decreased $216,000 (19.8%) for
the first three months of fiscal 1998 as compared to the corresponding period in
fiscal 1997.

Liquidity and Capital Resources

General

The Company uses a combination of its credit lines and internally generated cash
flows to finance, on an interim basis, loans to customers and the acquisition of
equipment  for  lease or sale.  Generally,  upon  commencement  of a lease,  the
Company  attempts to assign the remaining  lease  payment  stream to a financial
institution  on a discounted,  nonrecourse  basis.  In this manner,  the Company
finances a substantial  portion of the equipment  cost on a long-term  basis and
attempts  to limit its risk,  if any,  to its equity  investment  in the loan or
equipment.  The discounted  lease  proceeds  received by the Company are used to
reduce borrowings under the credit lines. An increasing percentage of leases and
loans  originated  in  fiscal  1995  were  required  to be  funded  by  recourse
obligations.  In this type of financing,  the Company assumes the entire risk on
its investment in the loan or equipment.

At June 30, 1997, the Company had total borrowings outstanding of $65.9 million,
of which  42.3% were  nonrecourse.  At March 31,  1997,  the  Company  had total
borrowings outstanding of $69.4 million, of which 44.3% were nonrecourse.

As of June 30, 1997, the Company had a total investment in leasing operations of
$96.2  million,  as  compared  to $96.0  million at March 31,  1997.  The slight
increase in investment in leasing operations is due to the increase in the first
quarter in new equipment installations and upgrades. The Company's investment in
leasing  operations  includes  equipment  held  for  lease,  which  consists  of
equipment for which a lease has been signed but which has not yet commenced. The
amount of equipment  held for lease  fluctuates  significantly  depending on the
dollar amounts and commencement dates of the Company's leases.

Net cash provided by operating  activities  was $7.1 million for the first three
month  period  of fiscal  1998.  Accounts  receivable  increased  $1.0  million,
accounts  payable  increased  by  $670,000,  and accrued  liabilities  increased
$223,000 due to an increase in the Company's  lease portfolio and other business
activities.  The Company expects to fund future requirements  through internally
generated  funds, as well as borrowings  under its lines of credit.  The Company
also expects to realize  additional  cash from the future  remarketing of leased
equipment.

Equipment  expenditures  of $11.3  million for the first  three month  period of
fiscal 1997 were  financed  through $7.1 million of cash flows from  operations,
through  the  discounting  of $1.4  million of  noncancelable  lease  rentals to
various  financial  institutions at fixed rates,  through the  securitization of
leases for $5.5 million,  and through the use of the Company's  lines of credit.
The Company does not have any  material  commitments  for capital  expenditures,
other than equipment held for lease.

Inflation has not been a significant  factor in the Company's business in any of
the periods presented.


<PAGE>


Liquidity and Financing Sources

As of June 30, 1997, the Company had available a $25 million line of credit.  Of
this amount, $12.5 million had been utilized as of June 30, 1997. Advances under
the line are  collateralized by substantially  all of the Company's assets.  The
interest rate is at prime,  and the Company is subject to certain  financial and
other  covenants  relating to net worth ratios and liquidity  requirements.  The
Company's line of credit matures  September 30, 1997. The Company  believes this
credit facility will be renewed on term similar to the current facility.

This credit facility requires compliance with financial covenants, including the
maintenance of certain liquidity and net worth ratios,  prohibits the payment of
dividends and requires compliance with other financial covenants. As a result of
fourth  quarter  charges for lease and loans  losses and related  events,  as of
March 31, 1997, the Company did not meet certain  financial and other  covenants
contained  in  credit   agreements  with  certain  lenders.   The  lenders  have
subsequently   modified  the  financial   covenants  or  waived  the  events  of
noncompliance.  As of August 14,  1997,  the Company is in  compliance  with the
revised terms of these agreements.

During  the  first  quarter  of  fiscal  1998,  the  Company's  Sunrise  Leasing
Corporation  subsidiary entered into a Discretionary  Revolving Credit Agreement
with National City Bank of Minneapolis. The agreement provides for discretionary
loan advances up to $5.5 million based on eligible  equipment  leases.  Advances
under the agreement are secured by the eligible  equipment leases and are repaid
over the term, up to 48 months, of such eligible  equipment leases with interest
at 3.25% above the yield on U.S.  Treasury  securities of equivalent  term.  The
credit facility is also guaranteed by Sunrise Resources, Inc.  In May 1997,  the
Company borrowed $5.5 million under this credit facility.

Based on its  completion of the  Securitized  Facility and its recent success in
obtaining  additional  discount  financing and the commitment of King Management
Corporation  to assist the Company in meeting its  financing  requirements,  the
Company  believes  that it will be able to  finance  its  anticipated  equipment
purchasing commitments in fiscal 1998.

Over the past year or more, the Company has continued to monitor several problem
leases and loans.  While  there  continue  to be  several  loans  payable to the
Company which could force the Company to take additional write-offs,  management
does  not  currently  believe  that  any such  write-offs,  other  than the loan
described  below,  would be  material  or that they would  create  new  covenant
violations  on  current  credit  facilities  or  otherwise  limit or reduce  the
Company's access to credit.  During fiscal 1997, a lessee, which has a lease and
loan agreement with remaining  investment totaling  $9,500,000,  did not fulfill
its commitments in an already  restructured  lease and loan agreement by failing
to increase its monthly  payments from  $159,000 to $199,000 in November,  1996.
The lessee has not paid the  incremental  monthly rent of $40,000 despite demand
and is  currently  in  default.  As a result of this  default  and the  lessee's
request to restructure its payments, management recorded a reserve of $3,161,000
against this  transaction  in the fourth  quarter of fiscal 1997.  However,  any
restructuring is subject to the approval of a federal  government agency and the
Company's  claims  against  the  assets and  collateral  may be subject to prior
claims of the federal government.  As a result, the remaining  $6,300,000 of net
book value is significantly undercollateralized.  While the Company believes the
lessee will  continue to make the $159,000  monthly  payments in fiscal 1998 and
that certain loan and lease  guarantees  are valid,  if the lessee ceases making
any payments and the Company is  unsuccessful  in asserting its claims under the
guarantees,  the Company would be required to write off the remaining  lease and
loan  balance.  This would have a  materially  adverse  affect on the  Company's
financial  statements  and its future  cash flow would be reduced by the monthly
payments for the total  remaining  amount of the agreement.  The lessee has made
the $159,000 monthly payments through August 1997.

Outlook

The  statements   contained  in  this  Outlook  section  are  based  on  current
expectations.  The statements are forward  looking and actual results may differ
materially.  The  forward  looking  statements  contained  in this  Outlook,  in
particular  the  statements  regarding  growth of the Company's  vendor  leasing
business, the Company's ability to finance its business, and management's belief
that any future loan or lease  write-off will not be material,  involve a number
of risks and  uncertainties  in addition to the  factors  discussed  above which
could  cause  actual  results to differ  from  those  projected,  including  the
following:


<PAGE>

Highly   Competitive   Industry.   The  equipment  leasing  business  is  highly
competitive.  The Company competes with numerous  companies,  including  leasing
companies,  commercial  banks  and  financial  institutions,  some of which  the
Company relies on to obtain capital to finance its leases. Most of the Company's
competitors are significantly  larger and have  substantially  greater resources
than the Company. Because of its relative lack of capital, the Company typically
chooses not to compete with large  leasing  companies  for those leases in which
the cost of the equipment  greatly  exceeds the amount of nonrecourse  financing
available.

Future Growth.  The Company's ability to grow at an acceptable rate is dependent
to a great extent on the expansion of its vendor  leasing  programs.  As of June
30, 1997, the Company has only two significant  vendor leasing  programs and has
signed  agreements  for ten other  vendor  leasing  programs.  While the Company
believes it has the ability and capacity to develop  other large vendor  leasing
programs,  there is no assurance  that it will be  successful  in this regard or
that it will be able to generate acceptable revenue growth.

Risk of Additional Loan and Lease  Write-Offs.  While the Company  believes that
its current reserves are adequate, it continues to monitor closely several loans
and a material lease, including a significant casino loan and lease currently in
default,  as to  which  the  Company  has a book  value  of $6.3  million  and a
remaining  investment of $9.5 million.  There is no assurance that such loans or
such lease will not go into  default or that they are  adequately  secured.  Any
future  losses  on such  loans  and lease  incurred  in excess of the  Company's
reserves would likely  materially  affect the Company's future earnings and cash
flows,  and will  cause the  Company  to be in  violation  of one or more of its
covenants under its credit agreements with its financing sources.

Financing.  The  Company's  growth and  profitability  are  dependent to a great
extent on the willingness of banks and other financial  institutions to lend the
Company  money to finance the purchase of equipment to be leased.  To date,  the
Company has financed  its  equipment  and vendor  leasing  businesses  primarily
through the sale of equity to the public, cash flow from operations,  bank lines
of credit,  non-recourse  discount  lease  financing,  recourse  discount  lease
financing  and  a  securitization  of  certain  lease  receivables  and  related
residuals. The Company normally seeks to fund its traditional equipment business
with non-recourse  discount financing.  There is no assurance that banks will be
willing to continue to finance the Company's equipment leasing transactions on a
non-recourse  basis,  and any  adverse  change  in the  willingness  of banks to
finance the Company's lease  transactions  on a non-recourse  basis could affect
the Company's  future equipment  leasing  revenue.  The Company's vendor leasing
business to date has been financed  with  internally-generated  cash flow,  bank
lines of credit and a significant  securitization program. The Company will seek
to  finance  its  future   vendor   leasing   business  in  part  with   similar
securitization   programs.  To  the  extent  such  financing  programs  are  not
available, the Company will assume a significantly higher degree of risk because
the  lender  has  direct  recourse  against  the  Company  for the amount of any
default.  A default on a lease with a  significant  lease  balance  could have a
material adverse impact on the Company.

Major  Customers/Vendors.  Total  investments in leases and loans receivables to
customers  considered  highly  leveraged  or with  cash  flows  from  operations
inadequate to service  existing  obligations  were  $25,755,000  or 26.8% of the
portfolio  as of June 30,  1997.  Defaults by such  customers  would result in a
significant  loss to the  Company,  to the extent  such  amounts are not already
reserved.  In  addition,  as these  leases  and loans are funded  internally  or
through  recourse  financing,  the  Company  would be  obligated  to  repay  the
remaining  principal  balance to the  financial  institution  out of  internally
generated funds while receiving no cash payments from the lessee/borrower  which
would result in a significant reduction in cash flow.

In addition,  52.5% of the Company's  total leasing revenue for the period ended
June 30,1997 was generated through a single vendor leasing program.  Should this
program terminate,  the Company would continue to realize related revenues for a
period of up to three years.  If the Company is unable to replace this business,
the  Company's  future  financial  results  could be  materially  and  adversely
affected.

Residual Values of Leased Equipment.  The value of the data processing equipment
leased by the Company to its customers  represents a substantial  portion of the
Company's  capital.  At the inception of each lease,  the Company  estimates the
residual value of the leased  equipment,  which is the estimated market value of
the equipment at the end of the initial lease term. The actual realized residual
value of  leased  equipment  may  differ  from  its  estimated  residual  value,
resulting in profit or loss when the leased equipment is sold or leased again at
the end of the  initial  lease term.  If a lessee  defaults on a lease which has
been  discounted  by the  Company  to a  financial  institution,  the  financial
institution may foreclose on its security  interest in the leased  equipment and
the Company may not realize any portion of such  residual  value.  In  addition,
data processing equipment is subject to rapid technological obsolescence typical
of the computer industry.  While the Company's  experience to date has generally
resulted in actual residual  values in excess of estimated  residual  values,  a
greater than expected  decrease in the market value of data  processing or other
equipment  leased by the  Company  could  materially  and  adversely  affect the
Company's financial condition and profitability.



<PAGE>

PART II-OTHER INFORMATION

-------------------------------------------------------------------------------


ITEM 1.  Legal Proceedings -  The arbitration proceeding between the Company and
         the former shareholders  of ILC  regarding the  February 1995 merger of
         ILC and the Company  was  resolved  during  the  quarter ended June 30,
         1997. See Note 6 to Financial Statements at Part I, Item 1 above.

ITEM 2.  Changes in Securities -  The  following  securities were  issued by the
         Company during the quarter ended June 30, 1997:

         (a)      Pursuant  to an  Agreement  dated  June  16,  1997  among  the
                  Company,  The King  Management  Corporation,  and Peter  King,
                  Chairman of the  Company,  the  Company  issued Mr. King as of
                  June 16,  1997,  in  connection  with  Mr.  King  becoming  an
                  employee of the Company,  (i) a five-year  nonqualified  stock
                  option to  purchase  270,753  shares of the  Company's  Common
                  Stock  at  $3.125  per  share,  which  option  is  immediately
                  exercisable, and (ii) a five-year nonqualified stock option to
                  purchase  270,753  shares  of the  Company's  Common  Stock at
                  $3.125 per share, which option will become exercisable on June
                  16,  2001  if Mr.  King  is  still  employed  by the  Company;
                  provided,  however,  that the  vesting of such  option will be
                  accelerated  if certain  conditions are met. Such options were
                  issued in reliance upon the exemption provided in Section 4(2)
                  of the Securities Act.

         (b)      The Company  issued  560,257  shares of Common  Stock to three
                  shareholders   of  The  P.J.  King   Companies,   Inc.  d/b/a/
                  International  Leasing Corporation ("ILC  Shareholders") as of
                  June 25, 1997 pursuant to an  arbitration  award in connection
                  with the arbitration  proceedings against the Company relating
                  to the  February  1995  merger of the  Company  with  ILC.  In
                  addition,  the Company issued 38,818 shares of Common Stock to
                  the ILC  Shareholders  pursuant  to the  arbitration  award as
                  repayment for the attorneys' fees. See Note 6 to the Financial
                  Statements in Part I, Item 1 above. Such shares were issued in
                  reliance  upon the  exemption  provided in Section 4(2) of the
                  Securities Act.


ITEM 3.  Defaults on Senior Securities - See Note 5 to Financial  Statements  at
         Part I, Item 1, above.

ITEM 4.  Submission of Matters to a Vote of Security Holders - NONE

ITEM 5.  Other Information - NONE

ITEM 6.  Exhibits and Reports on Form 8-K.

         a.       Exhibits

                  See Exhibit Index immediately following the signature page.

         b.       Form 8-K

                  There have been no Current Reports on form 8-K filed on behalf
                  of the Company during the quarter ended June 30, 1997.





<PAGE>


                                    SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                  SUNRISE RESOURCES, INC.



Date:   August 14, 1997           By: /s/ Errol Carlstrom
                                  Errol Carlstrom, President and Chief Executive
                                  Officer (principal executive officer)




                                  By: /s/ Barry J. Schwach 
                                  Barry J. Schwach
                                  Executive Vice President of Finance and
                                  Administration and Chief Financial Officer
                                  (principal financial officer)




                                   By:  /s/ Paul R. Wotta
                                   Paul R. Wotta
                                   Controller (principal accounting officer)




<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                           EXHIBIT INDEX TO FORM 10-Q


Commission File No.:  0-19516
For the quarter ended

June 30, 1997



                             SUNRISE RESOURCES, INC.


      Exhibit
      Number                                           Description

    3.1        Restated Articles of Incorporation, as amended - incorporated by
                 reference to Exhibit 3.1 to the Company's Annual Report on
                 Form 10-K for the year ended March 31, 1995
    3.2        Restated Bylaws--incorporated by reference to Exhibit 3.2
                 to the Company's Registration Statement on Form S-18,
                 Reg. No. 33-42477C.
    4.1        Specimen of Common Stock Certificate--incorporated by
                 reference to Exhibit 4 to Amendment No. 1 to the
                 Company's Registration Statement on Form S-18, Reg.
                 No. 33-42477C.
   10.1        The  Company's  1991 Stock  Option  Plan--As  amended
                 through February 1995.
   11.1        Per Share Earnings Computations
   27.0        Financial Data Schedule (filed with electronic version only)