# U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

# FORM
10-KSB

For Annual
and Transition Reports pursuant to Section 13 or 15(d) of theSecurities Exchange Act of
1934 (Mark One)

|[X] | Annual
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|--- | ------------------------------------------------------------------------------------

For the
fiscal year endedDecember 31, 2004

|[  ] | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|---- | ----------------------------------------------------------------------------------------

# Commission
File Number 1-11248

SUNRISE
ENERGY SERVICES, INC.(Name of Registrant as specified in its charter)

|                                | 
|------------------------------- | 
|Delaware                        | 
|(State or other jurisdiction of | 
|incorporation or organization)  | 

|                                                       | 
|------------------------------------------------------ | 
|551 Fifth Avenue, Suite 601                            | 
|New York, New York                                     | 
|(Address of principal executive office)                | 
|5353 Memorial Drive, Suite 4012                        | 
|Houston, TX 77007                                      | 
|(Former name or address, if changed since last report) | 

Registrants
telephone number, including area code: (212) 973-0063

Securities
registered pursuant to Section 12(b) of the Act: NoneSecurities
registered pursuant to Section 12(g) of the Act:
Common Stock

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

Indicate  by
check mark if disclosure of delinquent filers pursuant to Item 405 of  Regulation S-K is
not contained herein, and will not be contained, to the best  of Registrants
knowledge, in definitive proxy or information statements  incorporated by reference in
Part III of this Form 10-K or any amendment to this  Form 10-K. [   ]

Indicate  by
check mark whether the registrant is an accelerated filer (as defined in  Rule 12b-2
of the Act).  Yes [   ]  No [X]

The  aggregate
market value of the common stock held by non-affiliates of the  Registrant was unknown as
of April 5, 2005, as there was no public trading  market for Registrants
common stock and no reported bid or asked on such  date. As of April 5, 2005, the
Registrant had 17,000,000 shares of common stock  issued and outstanding, or committed
for issuance, of which, issuance of  10,479,900 shares is subject to the closing of the
transaction to acquire  Registrants operating subsidiary.

---

SUNRISE
ENERGY RESOURCES, INC.FORM 10-KSBTABLE OF CONTENTS

Part
I.

|Item 1. |  | Description of Business                             |  | 3  | 
|------- |  | --------------------------------------------------- |  | -- | 
|Item 2. |  | Description of Properties                           |  | 13 | 
|Item 3. |  | Legal Proceedings                                   |  | 16 | 
|Item 4. |  | Submission of Matters to a Vote of Security Holders |  | 17 | 

Part
II.

|Item 5.  |  | Market for Common Equity and Related Stockholder Matters        |  | 17 | 
|-------- |  | --------------------------------------------------------------- |  | -- | 
|Item 6.  |  | Managements Discussion and Analysis of Financial Condition     | 
|         |  | and Results of Operations                                       |  | 18 | 
|Item 7.  |  | Financial Statements and Supplementary Data                     |  | 29 | 
|Item 8.  |  | Changes in and Disagreements with Accountants on Accounting and | 
|         |  | Financial Disclosure                                            |  | 30 | 
|Item 8a. |  | Controls and Procedures                                         |  | 30 | 

Part
III.

|Item 9.  |  | Directors, Executive Officers, Promoters and Control Persons   |  | 31 | 
|-------- |  | -------------------------------------------------------------- |  | -- | 
|Item 10. |  | Executive Compensation                                         |  | 34 | 
|Item 11. |  | Security Ownership of Certain Beneficial Owners and Management | 
|         |  | and Related Stockholders Matters                               |  | 35 | 
|Item 12. |  | Certain Relationships and Related Transactions                 |  | 36 | 
|Item 14. |  | Principal Accountant Fees and Services                         |  | 36 | 

Part
IV.

|Item 13.       |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K |  | 37 | 
|-------------- |  | --------------------------------------------------------------- |  | -- | 
|Signatures     |  |                                                                 |  | 38 | 
|Certifications |  |                                                                 |  | 42 | 

2

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PART I.

ITEM  1.
DESCRIPTION OF BUSINESS

This  Annual
Report contains forward looking statements (as such term is defined in  the Private
Securities Litigation Reform Act of 1995). All statements, other  than statements of
historical fact, contained in this report are forward looking  statements, including,
without limitation, statements regarding the future  financial position, business
strategy, proposed acquisitions, budgets,  litigation, projected costs and plans and
objectives of or involving Sunrise or  EP. Sunrise Shareholders can identify many of
these statements by looking for  words such as believe, expects,
will,  intends, projects, anticipates,
estimates, continues or similar words or the negative  thereof.
There can be no assurance that the plans, intentions or expectations  upon which these
forward looking statements are based will occur. Forward  looking statements are subject
to risks, uncertainties and assumptions,  including those discussed elsewhere in this
report. Although Sunrise believes  that the plans, intentions and expectations
represented in such forward looking  statements are reasonable, there can be no assurance
that such plans, intentions  and expectations will prove to be correct. Some of the risks
which could affect  future results and could cause results to differ materially from
those expressed  in the forward looking statements contained herein include: risks
inherent in  the future prices for oil and natural gas, political and regulatory risks,
risks  inherent in currency exchange rates, risks inherent in the prices for services
and government fiscal regimes and the risk that actual results will vary from  the
results forecasted and such variations may be material.

The
information contained in this report, including the information set forth under  Risk
Factors, identifies additional factors that could affect the  operating results and
performance of Sunrise. We urge you to carefully consider  those factors.

The  forward
looking statements contained herein are expressly qualified in their  entirety by this
cautionary statement. The forward looking statements included  in this Report are made as
at the date of this Annual Report and Sunrise  undertakes no obligation to publicly
update such forward looking statements to  reflect new information, subsequent events or
otherwise.

As used in this
annual report,  the terms "we", "us", "our",
"Company" and "Sunrise" mean Sunrise Energy Resources,  Inc.,
whereas the term "Group"  means  Sunrise  Energy  Resources,  Inc. and its
consolidated  subsidiary,  unless  otherwise indicated.

All  dollar
amounts refer to US dollars unless otherwise indicated.

The  following
discussion should be read in conjunction with our financial statements  and the related
notes that appear elsewhere in this annual report.

3

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COMPANY
OVERVIEW

Sunrise  Energy
Resources, Inc. (Sunrise or the Company) was  incorporated in the
State of Delaware on April 1 1991. We are engaged in the  development and production of
oil and gas properties. Our business activities  are primarily conducted in Ukraine and
our primary oil and gas property is  located in Kharkov Region. Our activities on the
property are governed by  License number 2489 issued by the Ukrainian State Licensing
Agency, on July 2,  2004 for a period of 5 years, which is further subject to the
fulfillment of the  license agreement investment terms. In addition to the above
mentioned license,  in 2004 we were granted License Number 2581 and License
Number 2507  for the exploration and development of the Rogan and Rakitnyansk sites for a
period of 5 years, however, we have not performed any activities on these sites  to date.
Following the completion of the acquisition of 100% of the Ukrainian  oil and gas
development and production company Esko Pivnich (EP), we  will conduct all
our operations in Ukraine through this subsidiary. As of March  30, 2005 the only
remaining condition to the Closing of the acquisition  transaction is Sunrises
obligation to regain its public trading status,  and listing its shares on Over The
Counter Pink Sheets Quotation System or  NASDs OTC Bulletin Board quotation system.
On or about January 31, 2005,  NetWest Securities Corp has filed with the NASD Form
15c-211 and related  information on behalf of the Company and will be acting as a market
maker for  the Companys securities once the Company has regained its trading
status.  Once the acquisition transaction is completed and EP becomes a wholly owned
subsidiary, the business and operations of EP shall become those of the Company.  We
expect the transaction to be completed before April 30, 2005. For purposes of  this
report we therefore assume that the transaction has become effective.

As  of December
31, 2004, EPs estimated total proved reserves were around 7  million barrels of oil
(BBLS) and around 7.7 billion cubic feet of  gas. All of these reserves are
located in the Karaikozovsks field in  Ukraine. The present value of estimated
future net reserves before income taxes  discounted at 10% per annum based on market
prices at the end of 2004, with  assumptions held constant throughout the estimated
production life of the  reserves (10% Present Value) was around $19 million.
After deducting  future taxes at current expected rates the net present value of such
reserves is  $17 million. The amount of the reserves stated in accordance with the
Ukrainian statutory guidelines has been appraised by Ukraines State  Reserve
Committee and the net present value of such reserves has been calculated  by EPs
specialists. The amount and valuation of the above reserves have  not been restated in
accordance with the SEC guidelines and have not been  reviewed by an independent
internationally recognized petroleum engineering  company. Sunrise plans to engage an
internationally recognized petroleum  engineering company in 2005 to perform an
independent valuation and restatement  of the reserves in accordance with the above
mentioned SEC guidelines for the  reserves included in the Karaikozovsks and other
licenses.

Availability
of Reports

Sunrises
Annual Report on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current Reports  on Form
8-K and amendments to those reports filed or furnished pursuant to  Section 13 (a) or 15
(a) of the Securities Act of 1934 are available from the  Securities and Exchange
Commission and can be found on the SECs website at  www.sec.gov.

4

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Strategy

Our  business
strategy is to expand production of the Karaikozovsks property  following the
completion of workovers on the existing wells. In addition, we  plan to drill two other
wells on the property to increase production and produce  proven recoverable reserves. We
intend to conduct a series of geological tests  on the new licenses awarded to EP in
order to establish the most efficient  development scenario. We will increase our
reserves, production and cash flow  through (a) the acquisition and development of oil
and gas properties (b)  exploring for new reserves on the existing properties; and (c)
optimizing  production and value from the existing reserve base.

Drilling
Activity

During  the
fourth quarter of 2004, EP carried out the necessary workovers on the  existing Wells #2
and #3 on the Karaikozovsks property and began extensive  testing of the wells in
order to determine the most efficient development method  for the reservoir.

Customers

During  2003 EP
produced approximately 28 MBBLS of crude. In addition, EP produced 118  MMCF of natural
gas during 2003. In 2004, EP did not have any production due to  the expiration of its
previous development license, which was renewed in early  2005. The produced Oil & Gas
were separated and primed to pipeline grade at  Kachanozovskiy refinery and sold to
end-buyers, which were mostly independent  oil & gas traders.

Competition

The  oil & gas
industry is highly competitive, and our future plans can be  adversely affected by
competition from larger and more established oil & gas  companies. We compete for
reserve acquisitions, exploration licenses,  concessions and marketing agreements against
companies with financial resources  that may significantly exceed ours.

As  a result of
the recent election of Mr. Yuschenko as the new president of Ukraine  in December 2004,
the Ukrainian government may take broad actions to overhaul  the current oil & gas
regulations, which could allow the entry into the  market of additional oil & gas
companies, thus increasing the current  competition and changing the business climate.
However, these changes would also  allow EP to further develop its current properties as
well as apply for  additional licenses, while using our advantages of operating
experience,  distribution channels and qualified personnel to further advance our plans.

Government
Regulation

Our  operations
are subject to various levels of governmental controls and  regulations in the United
States and in Ukraine.  We attempt to comply with  all legal requirements in the
conduct of our operations and employ business  practices that we consider to be prudent
under the circumstances in which we  operate.  It is not possible for us to
separately calculate the costs of  compliance with environmental and other governmental
regulation as such costs  are an integral part of our operations.

5

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In  Ukraine
legislation affecting the oil and gas industry is under constant review,  and may be
amended to address industry trends and governmental objectives.  Pursuant to such
legislation, various governmental departments and agencies have  issued extensive rules
and regulations that affect the oil and gas industry,  some of which carry substantial
penalties for failure to comply.  These  laws and regulations can have a significant
impact on the industry by increasing  the cost of doing business and, consequentially,
can adversely affect our  profitability.  Inasmuch as new legislation affecting the
industry is  commonplace and existing laws and regulations are frequently amended or
reinterpreted, we are unable to predict the future cost or impact of complying  with such
laws and regulations.

Regulations
Governing Ukrainian Companies

Our  operating
subsidiary Esko Pivnich was organized in the form of a Closed Joint  Stock Company (CJSC).
Ukrainian CJSC companies are corporate  entities with limited liability similar to that
awarded to corporations formed  under US law. Shareholders of Ukrainian joint stock
companies are generally not  liable for debts and obligations of the company. In limited
liability companies,  any transfer of shares by a shareholder to a third party is subject
to the  pre-emptive right of the other shareholders to acquire such shares at the price
offered to a third party.

Under
Ukrainian law, a simple majority of voting shares is sufficient to control  adoption of
most resolutions. Resolutions concerning amendment of the  companys charter,
reorganizations (including mergers and/or acquisitions),  liquidation, increase in
authorized shares, and certain other  significant transactions require the
approval of the shareholders  holding two thirds of the outstanding shares.

A  Ukrainian
limited liability company has no obligation to pay dividends to the  holders of common
shares. Any dividends paid to the shareholders must be  recommended by the board of
directors and subsequently approved by a majority  vote of shareholders. If approved,
dividends may be paid on a quarterly basis.

Regulations
Governing Ukrainian Production Sharing Agreements

Production
Sharing Agreements (PSA) in Ukraine are made between the State and a particular  investor
(normally an oil & gas company). According to such PSAs the State  assigns to the
investor the right to explore and extract mineral resources in  the designated subsoil
area(s) and to perform the works set forth in the  agreement for a specified period of
time. In return, the investor undertakes to  perform the assigned works at its own cost
and risk, with further compensation  of the costs and receipt of payment (remuneration)
in the form of a portion of  the profit production.

The  State
guarantees to the investor the issuance, in compliance with established  procedures, of
approvals, quotas, permits (licenses) to use subsoil and carry  out business activity
associated with the proposed exploration deposits, acts  for the provision of mining
allocations, documents certifying the right to use  the land, as well as other permits
related to the use of subsoil, and  performance of the works stipulated by the PSA.

Profit
production (or profit interest) means the portion of the actual  production
which is shared between the investor and the State, and is defined as  the difference
between produced production and cost-recovery production, which  is defined as portion of
the produced production which is transferred to the  Company for its ownership as
reimbursement of its costs.

6

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Title  to all
production produced under the agreement remains with the State until such  time as the
minerals are extracted and have been measured in accordance with the  terms of the PSA.
Once extracted and measured, the portion allocated to the  Company is transferred to the
Company and is lawfully owned by the Company.

The  Company
has the right to freely dispose of the portion of its allocated  production pursuant to
the terms and conditions set forth in the PSA, which  include: to sell in Ukraine,
export, exchange, transfer free of charge and  perform any other operations with such
production. Such production shall not be  subject to licensing or quotas during export,
or similar restrictions during its  sale in the territory of Ukraine.

Taxation  in
Ukraine

As  a Ukrainian
resident entity, Esko Pivnich is subject to all applicable Ukrainian  taxes, many of
which currently impose a significant burden on profits. The most  significant Ukrainian
taxes and duties affecting Esko Pivnich include:

1.  20%
value added tax, applicable only to domestic sale of goods in Ukraine. No  value added
tax is payable for goods exported to the West from Ukraine and  denominated in foreign
currency.

2.  25%
income tax which includes 6% federal income tax, 17% regional income tax and  2% local
income tax;

3.  Withholding
tax on dividends payable to Sunrise Energy Resources Inc as the  overseas shareholder of
Esko Pivnich. The tax must be withheld by Esko Pivnich  from any amount distributed to
Sunrise Energy Resources Inc. The current rate of  withholding tax on dividends payable
to corporate foreign shareholders is 15%.  However, such dividends are subject to and
must be made in accordance with  regulations contained in the United States  Ukraine
tax treaty which  limits the tax on dividends payable to Sunrise to 5% (as long as
Sunrise holds  more than a 10% interest in Esko Pivnich);

4.  A
number of payroll related taxes and duties, such as Statutory Pension Fund,  Social
Insurance Fund, Unemployment Fund, and Emergency Insurance Fund. The  official rates
applicable to the respective funds in 2004 and in the nearest  future are set out below:

|Name                     | % rateaccrued on the total payrolland payable by the Company | % rateaccrued on the total payrolland payable by the employee
|------------------------ | ------------------------------------------------------------ | -------------------------------------------------------------
|Statutory Pension Fund   |                                                              | 32.0%                                                        
|Social Insurance Fund    |                                                              | 2.90%                                                        
|Unemployment Fund        |                                                              | 1.90%                                                        
|Emergency Insurance Fund |                                                              | 2.62%                                                        
|Personal Income Tax      |                                                              | --                                                           
|                         |                                                              |                                                              
|Total payable            |                                                              | 39.42%                                                       
|                         |                                                              |                                                              
|                         |                                                              |                                                              

7

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5.  Currently,
there are three main taxes related to the extraction of oil and gas  in Ukraine. Rates
and calculation bases undergone certain changes during  2002-2004, the rates effective as
of the date of the current report are as  follows:

|Name                 | Rate per 1 Bblaccrued on the total producedOIL | Rate per 1 MCFaccrued on the total producedGAS
|-------------------- | ---------------------------------------------- | ----------------------------------------------
|Exploration Tax      |                                                | $     7.75                                    
|Mineral Resource Tax |                                                | $     0.53                                    
|Mineral Usage Tax    |                                                | $     0.26                                    
|                     |                                                |                                               
|Total                |                                                | $     8.54                                    
|                     |                                                |                                               
|                     |                                                |                                               

The  Ukrainian
tax system is undergoing a major review. New tax laws, including those  applicable to
value-added tax and income tax, were introduced and/or reviewed in  the last four years.
The cost of legal and accounting advice attributable to  keeping up with changes in the
Ukrainian tax laws has been steadily increasing.  Similarly, penalties for violations,
even inadvertent ones, have also gradually  increased over the above-mentioned period.
These and other regulations could  affect our profitability and the amounts charged to us
on production.

Offices  and
Employees

Sunrise  Energy
Resource, Inc. carries its operations in the United States from its  headquarters located
in New York City at 551 Fifth Avenue, Suite 601, New York,  NY 10017. EPs offices
in Ukraine are located at the following address:  13/10 Novokonstantinovskaya Street
Kiev, Ukraine. The Group currently has 34  full time employees, the majority of which are
located in Ukraine with the  remaining personnel located in Sunrise offices in New York.

Risk Factors

The  following
offers a brief overview of some of the risk factors to be considered  in relation to the
business of Sunrise, including its related subsidiaries.  Specific risk factors to be
considered include, but are not limited to, the  following:

Risks  and
Issues Associated with Sunrise

An  investment
in Sunrise is highly speculative, involves a considerable degree of  risk and is suitable
only for persons or entities which have very substantial  financial means and who can
afford to hold their ownership interests for an  indefinite period of time. While various
oil and gas investment opportunities  are abundant, potential investors should consider
the risks that pertain to oil  and gas development projects in general, and ventures in
Ukraine in particular.

Technical
Risk

Return  on
investment is dependent upon successful oil and gas production from EPs  projects.
Sunrise may experience a revenue decrease due to overestimation of  reserves and oil or
gas production profiles or higher capital costs or operating  costs. However, the
opposite may occur if reserves or production profiles are  underestimated or if the costs
are less than forecast. Sunrise may also suffer  reduced revenues because of product
transportation difficulties, or project  delays, neither of which are foreseen. The
reserve data set forth in this Annual  Report, including the Statement of Reserves, is
believed to represent only the  most reliable estimates currently available. Estimation
of reserves is  inherently inexact and the accuracy of any reserve estimate is a function
of the  quality of available data, engineering and geological interpretation, judgment,
production projections, maintenance and development capital, and other  uncertainties
inherent in estimating quantities of recoverable oil and gas.  Thus, there can be no
guarantee that estimates of the quantities of oil and gas  disclosed in the Statement of
Reserves will be produced.

8

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We  calculate
the value of the reserves which represents aggregate future net cash  flows from
anticipated production based on market prices at year-end. The  calculation is performed
in accordance with Statement of Financial Accounting  Standards (SFAS) No. 69, Disclosures
about Oil and Gas producing  Activities. Disclosure of this value and related
reserves has been  prepared in accordance with SEC Regulation S-X Rule 4-10 and is
presented in  Note 23 of the Notes to Consolidated Financial Statements.

Market  risk

In  the event
of successful development of additional oil and gas reserves, the  marketing of Sunrises
production of oil and gas from such reserves may be  dependent on market fluctuations and
the availability of processing and refining  facilities and transportation
infrastructure, including access to shipping  facilities, pipelines and pipeline capacity
at economic tariff rates over which  Sunrise may have limited or no control. Pipelines
may be inadequately maintained  and subject to capacity constraints and economic tariff
rates may be increased  with little or no notice and without taking into account producer
concerns. In  addition, EPs ability to export oil and gas may depend on obtaining
licenses and quotas, the granting of which may be at the discretion of the  relevant
regulatory authorities. There may be delays in obtaining such export  licenses and quotas
leading to the income receivable by Sunrise from the export  of oil and gas being
adversely affected

We  may require
significant time to achieve positive cash flow from operations.  Until such time we will
rely almost exclusively on external equity and debt  financing to service our working
capital and capital expenditure requirements  including but not limited to approximately
$4 million that will need to be  raised in 2005 to meet the workover costs and new well
drilling.

Reliance  on
strategic relationships

In  conducting
its business, Sunrise will rely on continuing existing strategic  relationships and
forming new ones with other entities in the oil and gas  industry, such as joint venture
parties and certain regulatory and governmental  departments.There can be no
assurance that its existing relationships  will continue to be maintained or that new
ones will be successfully formed.  Sunrises existing assets in Ukraine are subject
to agreements with  Ukrnafta and the PSA for the Karaikozovsk field.

Well
Concentration

The  majority
of EPs production comes from its interests in a very small number  of oil and gas
producing wells. This situation is expected to continue during  2005. Under EPs
development plans for the Karaikozovsk field, well  concentration is expected to reduce
significantly in 2006 and thereafter. While  EPs production remains concentrated
from a relatively small number of  wells, the loss or long-term disabling of any one well
could have a material  adverse affect on Sunrises overall production.

Competition

A  number of
other oil and gas companies operate, and are allowed to bid for  exploration and
production licenses and other services, in Ukraine and other  countries in which Sunrise
may operate in the future, thereby providing  competition to EP. Larger companies, in
particular, may have access to greater  resources than Sunrise which may give them a
competitive advantage.

9

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Prices  for
oil and gas

The  demand
for, and price of, oil and gas is highly dependent on a variety of  factors, including
international supply and demand, the level of consumer  demand, weather conditions, the
price and availability of alternative fuels,  actions taken by governments and
international cartels, and global economic and  political developments. International oil
prices have fluctuated widely in  recent years and may continue to fluctuate
significantly in the future. In  addition, and although not foreseen, the Ukrainian
government may oblige  domestic producers to sell oil or gas to the state or domestic
purchasers at  prices well below international levels for indeterminate periods of time.

Currency
Exchange Risk

Domestic  sales
of oil and gas in Ukraine are made in local currency (Hryvnia) and then  converted to
US$. The US$: Hryvnia exchange rate may move adversely to affect  oil and gas prices. In
addition, there can be no assurance that the Ukrainian  authorities may not introduce
price stabilization mechanisms which adversely  affect oil and gas prices in US$ terms
for EP. While many of Sunrises  financial obligations are denominated in United
States dollars, a number of  foreign currency effects may arise from exchange rate
movements. Sunrise does  not engage in active speculative hedging to minimize exchange
rate risk.

Economic
and political risk

Sunrises
operations are in Ukraine where there may be a number of associated risks over  which it
will have no, or limited, control. These may include contract  renegotiation, contract
cancellation, economic, social, or political instability  or change, hyperinflation,
currency non-convertibility or instability and  changes of laws affecting foreign
ownership, government participation, taxation,  working conditions, rates of exchange,
exchange control, exploration licensing  and petroleum export licensing and export duties
as well as government control  over domestic oil and gas pricing.

Legal
systems

Ukraine  and
other jurisdictions in which Sunrise might operate in the future may have  less developed
legal systems than more established economies which could result  in risks such as (i)
effective legal redress in the courts of such  jurisdictions, whether in respect of a
breach of law or regulation, or in an  ownership dispute, being more difficult to obtain;
(ii) a higher degree of  discretion on the part of governmental authorities; (iii) the
lack of judicial  or administrative guidance on interpreting applicable rules and
regulations;  (iv) inconsistencies or conflicts between and within various laws,
regulations,  decrees, orders and resolutions; or (v) relative inexperience of the
judiciary  and courts in such matters. In certain jurisdictions the commitment of local
business people, government officials and agencies and the judicial system to  abide by
legal requirements and negotiated agreements may be more uncertain,  creating particular
concerns with respect to EPs licenses and agreements  for business. These may be
susceptible to revision or cancellation and legal  redress may be uncertain or delayed.
There can be no assurance that joint  ventures, licenses, license applications or other
legal arrangements will not be  adversely affected by the actions of government
authorities or others and the  effectiveness of and enforcement of such arrangements in
these jurisdictions  cannot be assured.

10

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Drilling
and operating risks

Exploration,
development and production activities may be delayed or adversely affected by  factors
outside the control of Sunrise. These include adverse climatic  conditions, the
performance of joint venture or farm-in partners on whom EP may  be or may become
reliant, compliance with governmental requirements, shortage or  delays in installing and
commissioning plant and equipment or import or customs  delays. Problems may also arise
due to the quality or failure of locally  obtained equipment or interruptions to services
(such as power, water, fuel or  transport or processing capacity) or technical support
which result in failure  to achieve expected target dates for exploration or production
and/or result in  a requirement for greater expenditure. Drilling may involve
unprofitable  efforts, not only with respect to dry holes and non-commercial wells, which
are  wells that, though yielding some oil or gas, are not sufficiently productive to
justify commercial development or cover operating and other costs. Completion of  a well
does not ensure a profit on the investment or recovery of drilling,  completion and
operating costs. Substantial operational risks are involved in  the drilling for,
development of and production from oil and gas fields,  including blow-outs, cratering,
explosions, pollution, seepage or leaks, fire,  earthquake activity, unusual or
unexpected geological conditions and other  hazards which may delay, or ultimately
prevent, the exploitation of such fields  or may result in cost overruns or substantial
losses to Sunrise due to  substantial environmental pollution or damage, personal injury
or loss of life,  clean up responsibilities, regulatory investigation and penalties or
suspension  of operations. Such hazards can also severely damage or destroy equipment,
surrounding areas or property of third parties. Damage or loss occurring as a  result of
such risks may give rise to claims against EP and/or Sunrise.

Environmental
Regulation

The  Government
of Ukraine, the Ministry of Natural Resources, and other competent  agencies establish
special rules, restrictions and standards for enterprises  conducting activities
affecting the Ukrainian environment. A principle of  Ukrainian environmental law is that
any environmental damage caused by an  unlawful activity (i.e. activity conducted in
violation of existing standards  and restrictions) must be fully compensated. As far as
Sunrise is aware, the  operations at the Karaikozovsk field have been conducted by
Ukrnaftas  subsidiary companies under the PSA, in compliance with all applicable
Ukrainian  environmental rules, regulations and legislation. Furthermore, Sunrise is not
aware of any claims, demands, proceedings or other actions against Sunrise or EP  in
respect of environmental matters.

Uninsured
Risks

There  may be
circumstances where Sunrises insurance or that of the operator of a  field will not
cover or be adequate to cover the consequences of certain events  or where the Company
may become liable for pollution or other operational  hazards against which it either
cannot insure or may have elected not to have  insured on account of high premium costs
or otherwise. Moreover, there can be no  assurance that Sunrise will be able to maintain
adequate insurance in the future  at rates the Board of Directors consider reasonable.
Thus, Sunrise may become  subject to liability for hazards which cannot be insured
against or against  which it may elect not to be insured because of high premium costs or
other  commercial reasons. There can be no assurance that Sunrise will be able to  obtain
insurance at reasonable rates (or at all), or that any coverage it  obtains will be
adequate and available to cover any such claims.

Dependence
on Key Personnel

Sunrise  is
dependent on the services of certain key executives and personnel for its  success. While
Sunrise may enter into employment contracts with those persons,  the retention of their
services cannot be guaranteed. In addition, EP may find  it difficult to recruit new
executives and employees. The business may suffer if  Sunrise fails to attract, hire or
retain the necessary personnel or to retain  existing employees.

11

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Risks
Associated with International Operations

We  are subject
to risks inherent to international operations, including adverse  governmental actions,
political risks and expropriation of assets, loss of  revenues and the risk of civil
unrest or war. Our primary oil and gas properties  are located in Ukraine, which until
1990 was part of the Soviet Union. Ukraine  retains many of the laws and customs from the
former Soviet Union, but has  developed and is continuing to develop its own legal,
regulatory and financial  systems. As the political and regulatory environment changes,
we may face  uncertainty with respect to the interpretation of our agreements and in the
event of dispute, may have limited recourse within the current or future legal  and
political system.

In  accordance
with Ukrainian Oil and Gas legislation, properties can be developed  and produced only in
a form of a Production Sharing Agreements with a division  of the Ukrainian state owned
company, Ukrnafta. EP develops the  Karaikozovsks property in accordance and
subject to the terms of its PSA  with Okhtyrkaneftegaz, which is the local subsidiary of
Ukrnafta.

Transferability
of our common shares

As  of the date
of this report our stock is not yet effectively publicly traded on  an exchange and is
not quoted on any quotation medium.  On or about  February 1, 2005 NevWest
Securities, a NASD member firm filed Form 15c211 with  the NASD to initiate quotation of
our post transaction stock on the OTCBB  quotation system. There is no certainty that
NASD will approve the application  of NevWest Securities to publish quotations of our
post transaction stock on the  OTCBB and there are no expectations as to when such
approval may be granted.  Until such approval is granted, bid/ask quotes and private
transactions  involving our stock may not be publicly reported. This significantly
restricts  the transferability of our common stock.

Control  by
our Offices and Directors

In  the
aggregate, our executive officers and directors control approximately 65% of  the
outstanding shares of our common stock.  These stockholders, acting  together, would
be able to significantly influence matters requiring stockholder  approval.

Unregistered
Sales of Equity Securities

Effective  upon
completion of the transaction described above, Sunrise will issue the  remaining
10,479,900 shares of our common stock to the previously controlling  shareholder of EP.
The sale of the shares will be exempt from registration under  Section 4(2) of the
Securities Act of 1933, as amended, as the purchaser had  full information concerning the
business and affairs of the Company and all  certificates issued bear appropriate
restrictive legends. No underwriter was  involved in the transaction.

Amendments
to Articles of Incorporation or Bylaws; Change in Name

As  described
in Companys Quarterly Report on Form 10-QSB for the quarter  ended September 30,
2004, the Company amended and restated its Certificate of  Incorporation effective
October 1, 2004. A copy of the Amended and Restated  Certificate of Incorporation was
filed as an exhibit to the Form 10-QSB.

The  Amended
and Restated Certificate of Incorporation increased the Companys  authorized
Capital from 10,000,000 shares of $1.00 par value common stock to  77,500,000 million
shares, par value $0.01, of which up to 2,500,000 shares may  be designated as preferred
shares, par value $0.001. In addition, the name of  the Company was changed from Sunrise
Energy Services, Inc. to Sunrise Energy  Resources, Inc.

12

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ITEM  2.
DESCRIPTION OF PROPERTY

Our  facilities
consist of offices in New York City and Kiev, Ukraine, as well as  some production
properties on the territory of Ukraine. Our executive office in  New York is located at
551 Fifth Avenue, Suite 601, New York, NY 10017, and  consists of office space obtained
under a sub-lease arrangement with Thor  Capital, LLC. We are in the process of locating
a long-term lease to accommodate  our offices and personnel in New York.

Companys
offices in Ukraine are located at 13/10 Novokonstantinovskaya Street Kiev,  Ukraine
(totaling over 3,000 square feet). In addition, the Companys  subsidiary owns two
operating wells, oil storage bunkers, workers accommodation  huts, motor vehicles and
supporting infrastructure and rents oil rigs.

Petroleum
industry in Ukraine

Domestic
Ukrainian extraction represents 21%  24% (or 18 billion cu m) of demand  for
natural gas and 10%  12% (or 4 million ton) of demand for crude oil.  The
supply-demand gap is addressed by imports. The imports mainly come from the  neighboring
Russia as well as from Kazakhstan and Turkmenistan which transship  their oil & gas
via Russia.

With  its
extensive network of oil and natural gas pipelines, Ukraine is a key transit  state for
Russian oil and natural gas exports bound for Europe. The continued  increase in oil and
natural gas production in Russia and in the Caspian Sea  region should enable Ukraine to
capture additional transit business from these  regions. Ukraine is also looking to
capture additional oil transit revenues by  constructing the Pivdenny oil terminal and
Odessa-Brody pipeline.

At  present,
Ukraines annual demand stands at around 70 billion cubic meters  of natural gas and
32-34 million tons of crude oil. Average annual oil and gas  extractions amount to 18
billion cubic meters of natural gas and 4 million tons  of crude oil. Therefore, Ukraines
extraction covers around 21-24% of the  domestic demand for natural gas and 10-12% of the
demand for crude oil. This  internal demand stimulates domestic production in an effort
to displace imports  that primarily come from Russia and Turkmenistan.

There  are
three petroliferous provinces in Ukraine. They are located in the West (the  Carpathian
region), in the east (the Dnipro-Donetsk region), and in the south  (the Black Sea and
the Crimea region). According to various estimates,  Ukraines hydrocarbon resources
amount to approximately 7-8 billion tons of  fuel equivalent. Ukraine counts at least 300
potentially economically viable oil  and gas fields, of which around 200 have been
developed.

Exploration
and Producing Licenses

During  2004
the Company received geological and exploration license agreements to  develop the
Karaikozovsks, Rogan and Rakitnyansk fields. Particular  information with respect
to each of these licenses is listed in the following  table:

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|No.    | Dateissued | Period    | Object | Location   | Activities
|------ | ---------- | --------- | ------ | ---------- | ----------
|# 2489 |            | dated 2   |        | Valid for: |           
|       |            | July 2004 |        | 5 (five)   |           
|       |            |           |        | years      |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|# 2581 |            | dated 18  |        | Valid for: |           
|       |            | October   |        | 5 (five)   |           
|       |            | 2004      |        | years      |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|# 2507 |            | dated 22  |        | Valid for: |           
|       |            | October   |        | 5 (five)   |           
|       |            | 2004      |        | years      |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           
|       |            |           |        |            |           

|#773076   |  | dated 28 |  | November 5  |  | Type of activity:                                                   | 
|--------- |  | -------- |  | ----------- |  | ------------------------------------------------------------------- | 
|Series AA |  | October  |  | 2004 -      |  | Prospecting (exploring) of natural resources                        | 
|          |  | 2004     |  | November 5  |  | Geological support of geo-exploration works                         | 
|          |  |          |  | 2009        |  | Drilling of wells for prospecting (exploration) purposes of oil and | 
|          |  |          |  |             |  | natural gas                                                         | 
|          |  |          |  |             |  | Assembly and disassembly of drilling equipment for purposes of      | 
|          |  |          |  |             |  | prospecting (exploring) of oil and gas.                             | 
|          |  |          |  |             |  | Investigative and commercial mining of oil and gas deposits         | 
|          |  |          |  |             |  | Cementing of stabilizing columns, major repairs, conservation and   | 
|          |  |          |  |             |  | plugging of oil and gas wells.                                      | 
|#775113   |  | dated 28 |  | October 28, |  | Building construction activities                                    | 
|Series AA |  | October  |  | 2004 -      | 
|          |  |          |  | 2004        |  | October 28,                                                         | 
|          |  |          |  |             |  | 2009                                                                | 
|# 867363  |  | dated 10 |  | 21 November |  | Supplying of natural gas on an unregulated fare basis               | 
|Series AA |  | November |  | 2004 20     | 
|          |  |          |  | 2004        |  | November 2009                                                       | 

14

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The  following
amounts of investments are required in accordance with the terms of  the main exploration
licenses agreements:

|                      | Periods | Amount   
|--------------------- | ------- | ---------
|Karaikozovsks  field |         | 2005-2009
|Rakitnyansk field     |         | 2005-2009
|Rogan field           |         | 2005-2009
|                      |         |          
|Total                 |         |          
|                      |         |          
|                      |         |          

Overview  of
Regional Geology

The  Companys
most explored and developed reserve is located in the  Karaikozovsks property. All
of Sunrises activities in 2003 were  concentrated in the first production sharing
agreement covering the development  and exploration of this filed and the license granted
to EP in relation to this  property. The Karaikozovsk field is located along the northern
border of the  Dniepr-Donetsk depression. The uplift was discovered in 1957-1958 and
involved  structural drilling and mapping of the area. Additional studying of the area
continued by conducting geophysical work in 1963 which reflected horizons of  Mesozoic,
Permian, Upper Carboniferous, and in 1971  by middle and Lower  Carboniferous.
Through the detailed seismic investigations conducted in  1972-1973, the uplift was
prepared for exploration drilling, which began in  1976. In 1981 Well #2 was tasted on
the Serpukhovian deposits (producing  horizons S-5, S-5a at depths 4981-5196 m). These
tasting resulted in a flow rate  of 75 cu.m/day, using 10mm choke. In 1982 the field was
registered on the state  balance.

The  total
number of wells drilled in the area included: 12 wildcats and prospecting  wells of which
two proved commercially viable. The rocks carbonate-terrigenous  thickness was uncovered
from Quaternary to Lower Carboniferous (Visean stage).

The tectonic
breakthrough divides the deposit into two parts: Lyubivskiy and Karaikozovsky.

Proved
reserves

The  proven
reserves reported by the Ukrainian State Reserves Committee were as  follows:

|Proven reserves byproductive layer | Well #2 | Well #3 | Total |       |  |      
|---------------------------------- | ------- | ------- | ----- | ----- |  | -----
|
|C-4                                |         | --      |       | --    |  | --   
|C-4a                               |         | --      |       | --    |  | 2,752
|C-5                                |         | 1,482   |       | 2,240 |  | 2,986
|C-5a                               |         | 423     |       | 630   |  | --   
|                                   |         |         |       |       |  |      
|                                   |         | 1,905   |       | 2,870 |  | 5,738
|                                   |         |         |       |       |  |      
|                                   |         |         |       |       |  |      

Source:
Ukrainian State Reserve Committee

The
Karaikozovsks deposit currently has 2 producing wells internally coded #2  and #3.
These wells exhibited the following flow rates:

15

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Well #2

Well  #2 had a
daily flow rate of around 70 tons of oil per day and 18 thousand tones  of natural gas
per day tested on 10mm choke.

Well #3

The  producing
horizon C-5 of Well #3 yielded daily flow rates of 183 tons of oil per  day and 47.1
thousand tones of by-product gas per day.

At  present,
Well #3 flows from the productive layer C4a. After 3 years of operation  it will be
transferred to productive layer C5. It is envisaged that the  condensate layers will be
accessed through a new well #21 the location of which  will be determined by seismic
tests.

ITEM  3.
LEGAL PROCEEDINGS

Other  than as
set forth below, there are no outstanding legal proceedings material to  the Company to
which Sunrise or any of Sunrises assets are subject, nor  are there any such
proceedings known to be contemplated. Management believes  that the resolution of all
business matters which would have a material impact  on the Companys financial
position or operating results have been  recorded.

JSC
Ukrneft, Okhtirkaneftegas

In  2003 the
Company initiated legal proceedings against JSC Ukrneft,  Okhtirkaneftegas, with respect
to certain advance payments made by EP in 2002,  which totaled $189,306. The payments
were made in order to complete certain  construction work under the terms of the PSA #
01-SD, dated April 26, 2000 (see:  Notes 4 and 7 of the Consolidated Financial
Statements). In April 2004 after the  conclusion of legal proceedings in courts of first
and appellate levels, the  Supreme Court of Ukraine ordered Okhtirkaneftegas to pay the
outstanding balance  without further delays. As of February 25, 2005 the balance had not
been paid.

Taxes

During  2004
the Company was examined by the State Tax Inspection of Podolsk region,  Kiev, and was
assessed additional VAT and Profit tax fines and penalties in the  aggregate amount of
$569,521, which was made in relation to the 2003 and 2002  tax years. The amounts were
accrued in the respective consolidated financial  statements in full (see: Note 14 of the
Consolidated Financial Statements). The  Company has filed an appeal against the State
Tax Inspection of Podolsk region,  Kiev, protesting the above sums. The Company believes
it has legal and factual  basis upon which to overcome the tax authoritys decision.

We  know of no
other material, active or pending legal proceedings against us, nor  are we involved as a
plaintiff in any material proceedings or pending  litigation. There are no proceedings in
which any of our directors, officers or  affiliates, or, to the best of our knowledge,
any registered or beneficial  shareholders are an adverse party or have a material
interest adverse to us in a  matter concerning Sunrise or our operations.

16

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ITEM  4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The  only
matter submitted to a vote of our security holders during the year ended  December 31,
2004, was a proposal for the Amendment and Restatement of the  Companys Certificate
of Incorporation, which was approved by a written  consent of holders holding a total of
more than 90% of the outstanding shares.  The Amended and Restated Certificate of
Incorporations became effective  September 30, 2004.

PART  II:

ITEM  5.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

As  of the date
of this report our stock is not publicly traded on an exchange and  is not quoted on any
quotation medium.  On or about Febraury 1, 2005  NevWest Securities, a NASD member
firm filed Form 15c211 with the NASD to  initiate quotation of our post transaction stock
on the OTCBB quotation system.

Computershare
Trust Company Inc.,  located at 350 Indiana Street Suite 800 Golden Colorado 80401 (Tel
303-262-0600  Fax 303-262-0700) is the registrar and transfer agent for our common shares.

As  of March
31, 2005, we had 17,000,000 shares of common stock outstanding or  committed for
issuance, and approximately 1,200 stockholders of record. This  number of stockholders
does not include stockholders who hold our securities in  street name.

Dividend
Policy

We  have not
declared or paid any cash dividends since inception. Although there are  no restrictions
that limit our ability to pay dividends on our common shares, we  intend to retain our
future earnings for use in our operations and expansion of  our business and do not
intend to pay any cash dividends in the foreseeable  future. We do not anticipate that
cash dividends will be issued in the  foreseeable future.

Changes  in
Securities

Effective  upon
completion of the acquisition of our operating subsidiary, we will issue  10,479,900
shares to the previously controlling shareholder of EP, in  consideration for the
transfer to Sunrise of all outstanding stock of EP. The  sale and subsequent transfer of
the shares is exempt from registration under  Section 4(2) of the Securities Act of 1933,
as amended, as the purchaser had  full information concerning the business and affairs of
Company and all  certificates issued bear appropriate restrictive legends. No underwriter
was  involved in the transaction.

The  Amended
and Restated Certificate of Incorporation became effective October 1,  2004 and increased
Companys authorized Capital from 10,000,000 shares of  $1.00 par value common stock
to 77,500,000 million shares, par value $0.01, of  which up to 2,500,000 shares may be
designated as preferred shares, par value  $0.001. In addition, the name of the Company
was changed from Sunrise Energy  Services, Inc. to Sunrise Energy Resources, Inc.

17

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ITEM  6.
MANAGEMENT DISCUSSION AND ANALYSIS OF PRINCIPAL CONDITIONS AND OPERATIONS

Risk
Factors

(SEE ALSO
DISCUSSION OFCERTAIN RISK FACTORS IN ITEM 1 OF THIS ANNUAL REPORT)

Much  of the
information included in this Annual Report includes or is based upon  estimates,
projections or other forward looking statements. Such  forward looking
statements include any projections or estimates made by us and  our management in
connection with our business operations. While these  forward-looking statements, and any
assumptions upon which they are based, are  made in good faith and reflect our current
judgment regarding the direction of  our business, actual results will almost always
vary, sometimes materially, from  any estimates, predictions, projections, assumptions or
other future performance  suggested herein.

Such
estimates, projections or other forward looking statements involve  various
risks and uncertainties as outlined below. We caution the reader that  important factors
in some cases have affected and, in the future, could  materially affect actual results
and cause actual results to differ materially  from the results expressed in any such
estimates, projections or other  forward looking statements.

Our  common
shares are considered speculative during our search for new and  additional business
opportunities. Prospective investors should consider  carefully the risk factors set out
below and elsewhere in this Report.

Exploration
and Development Risks

Our  success is
dependent on finding, developing and producing economic quantities of  oil and gas.  Our
future drilling operations may not be successful in  finding and producing economic
reserves.  We are also subject to other  operating risks normally associated with
the exploration, development and  production of oil and gas.  These risks include
high pressure or  irregularities in geological formations, blowouts, cratering, fires,
shortages  or delays in obtaining equipment and qualified personnel, equipment failure or
accidents, and adverse weather conditions, such as winter snowstorms.  These risks
can result in unfavorable events, or they may result in higher costs  and operating
delays.  We maintain very limited insurance coverage and such  coverage may not be
effective to fully compensate for these risks.  In many  cases, such coverage is
either not available or is not cost-effective in light  of our operations in Ukraine.

Oil  and Gas
reserve risks

Proved  oil and
gas reserves are the estimated quantities of natural gas, crude oil and  condensate that
geological and engineering data demonstrate with reasonable  certainty to be recoverable
in future years from known reservoirs under existing  economic and operating conditions.
Reserves are considered proved if economical  production is supported by either actual
production or conclusive formation  tests. Reserves that can be produced economically
through application of  improved recovery techniques are included in the proved classification
when successful testing by a pilot project or the operation of an  installed program in
the reservoir provides support for the engineering analysis  on which the project or
program is based. Proved developed oil and gas reserves  can be expected to be recovered
through existing wells with existing equipment  and operating methods.

18

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Sunrise
emphasizes that the volumes of reserves are estimates which, by their nature,  are
subject to revision. These estimates were made using available geological  and reservoir
data, as well as production performance data. These estimates are  reviewed annually and
revised, either upward or downward, as warranted by  additional performance data. In
addition, our reserves are contained in  carbonate reservoirs, and there is
substantial uncertainty with regard to  carbonate reservoirs as compared to sandstone
reservoirs.

We  are
currently in the process of engaging an independent petroleum engineering  firm to review
our estimates of proved reserves. The value under their review is  supposed to represents
estimated future net cash flows, and is based on prices  at year-end calculated in
accordance with Statement of Financial Accounting  Standards (SFAS) No. 69, Disclosures
about Oil and Gas producing  Activities. Disclosure of this value and related
reserves has been  prepared in accordance with SEC Regulation S-X Rule 4-10 and is
presented in  Note 23 of the Notes to Consolidated Financial Statements.

Marketing
and oil prices

Our  future
success is dependent on being able to transport and market our production  either within
Ukraine or preferably through export to international  markets.  Thus, our revenues
could be adversely affected by issues which  are outside of our control relating to the
crude oil transportation  infrastructure both within and outside Ukraine. The exportation
of oil from  Ukraine depends on access to transportation routes, primarily pipeline
systems,  which can have limited available capacity and are subject to other
restrictions.  Pipeline access is the preferred and most cost effective  method to
sell crude oil production to world export market, and thus the Company  is subject to the
risk that unless the Company obtains access to pipelines to  transfer crude oil out of
Ukraine, the price at which the Company sells its  crude oil may remain well below world
market prices.  We currently do not  have a long-term contract for the
transportation or sale of our crude oil.  We are producing our oil into the early
production facility where it is  temporarily stored until it transferred to particular
buyers. Our longer-term  plans include the shipment of oil by pipeline.  We would
expect the  implementation of these plans to result in higher realized prices than our
current marketing arrangements, but we cannot be assured that we will be  successful in
implementing these plans.

The  prices we
have received thus far for the sale of our crude oil are significantly  less than the
full world market price for crude oil. The Company believes the  primary reason we have
not received the full world market price is because we  have not yet been able to produce
crude oil in sufficient quantities to attract  customers that supply the world oil
markets.  Unless and until such time as  we are able to produce crude oil in
sufficient quantities to attract such  customers the price at which we are able to sell
our production may be  significantly lower than the full world market price, and the
Company will be at  a competitive disadvantage compared to other exploration and
production  companies that receive full world market price for their crude oil.

In  addition,
prices of oil and gas are subject to significant volatility in  response to changes in
supply, market uncertainty and a variety of other factors  beyond our control.  There
are currently no economic markets for our  natural gas production and our gas reserves
have been given no value in the  future net cash flow data presented in this Report.

19

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Limited
operating history; anticipated losses; uncertainly of future results

The  Group has
a limited operating history upon which an evaluation of its prospects  can be made. There
can be no assurance that the Group will effectively execute  its business plan or manage
any growth of the business, or that the Groups  future operating and financial
forecast will be met. Future development and  operating results will depend on many
factors, including access to adequate  capital, the demand for the Groups products,
the level of product and  price competition, the Groups success in setting up and
expanding  distribution channels, and whether the Group can control costs. Many of these
factors are beyond the control of the Group. In addition, the Groups  future
prospects must be considered in light of the risks, expenses, and  difficulties
frequently encountered in establishing a new business in the oil  and gas industry, which
is characterized by intense competition, rapid  technological change, highly litigious
competitors and significant regulation.

Political
Risks

The  market in
Ukraine is monitored by the government, which could impose taxes or  restrictions at any
time which would make operations unprofitable and infeasible  and cause a write-off of
capital investment in Ukrainian opportunities.

A  number of
factors, beyond the Groups control and the effect of which  cannot be accurately
predicted may affect the marketing of the Groups  operations. These factors include
political policy on foreign ownership,  political policy to open the doors to foreign
investors, and political policy on  oil and gas production and exports.

Risks
Associated with International Markets

The  Group
transactions have thus far been entirely within Ukraine. However, the  future success of
the Group will depend in part on its ability to generate sales  on international markets.
There can be no assurance, however, that the Group  will be successful in generating
these sales. In addition, these will be subject  to a number of risks, including: foreign
currency risk; the risks that  agreements may be difficult or impossible to enforce and
receivables difficult  to collect through a foreign countrys legal system; foreign
customers may  have longer payment cycles; or foreign countries could impose withholding
taxes  or otherwise tax the Groups foreign income, impose tariffs, embargoes, or
exchange controls, or adopt other restrictions on foreign trade. In addition,  the laws
of certain countries do not protect the Companys offerings to the  same extent as
the laws of the United States. The Group has taken steps to  mitigate these risks through
profit sharing agreements with domestic Ukrainian  companies, but there can be no
assurance in the adequacy of these protection  measures.

Although  not
all of our present officers or directors are key to our continuing  operations, we rely
upon the continued service and performance of these officers  and directors, and our
future success depends on the retention of these people,  whose knowledge of our business
and whose technical expertise would be difficult  to replace. At this time, none of our
officers or directors are bound by  employment agreements, and as a result, any of them
could leave with little or  no prior notice.

Competition
for qualified individuals is likely to be intense, and we may not be able to  attract,
assimilate, or retain additional highly qualified personnel in the  future. The failure
to attract, integrate, motivate and retain these employees  could harm our business.

20

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Regulation

Although  we
will be subject to regulation under the Securities Exchange Act of 1934,  management
believes that we will not be subject to regulation under the  Investment Company Act of
1940, insofar as we will not be engaged in the  business of investing or trading in
securities. In the event that we engage in  business combinations which result in us
holding passive investment interests in  a number of entities, we could be subject to
regulation under the Investment  Company Act of 1940, meaning that we would be required
to register as an  investment company and could be expected to incur significant
registration and  compliance costs. We have obtained no formal determination from the
Securities  and Exchange Commission as to the status of our company under the Investment
Company Act of 1940 and, consequently, any violation of such act would subject  us to
material adverse consequences.

Exposure  to
foreign exchange rate fluctuations

With  the
majority of our operations being located in Ukraine, the majority of our  revenues and
expenses are denominated in Ukrainian hrivnas. Some of our revenues  in 2005 may also be
denominated in Euro and the US dollars. We currently do not  and do not plan in the near
future to engage in hedging our exposure to changing  foreign exchange rates. Any
unfavorable changes in the relevant foreign exchange  rates may have a material effect on
our financials and performance.

Indemnification
of Directors, Officers and Others

Our  by-laws
contain provisions with respect to the indemnification of our officers  and directors
against all expenses (including, without limitation,  attorneys fees, judgments,
fines, settlements, and other amounts actually  and reasonably incurred in connection
with any proceeding arising by reason of  the fact that the person is one of our officers
or directors) incurred by an  officer or director in defending any such proceeding to the
maximum extent  permitted by Delaware law.

Insofar  as
indemnification for liabilities arising under the Securities Act of 1933 may  be
permitted to directors, officers and controlling persons of our company under  Delaware
law or otherwise, we have been advised that the opinion of the  Securities and Exchange
Commission is that such indemnification is against  public policy as expressed in the
Securities Act of 1933 and is, therefore,  unenforceable.

Future
Dilution

Our  statutory
documents authorize the issuance of 75,000,000 common shares, each  with a par value of
$0.001. In the event that we are required to issue any  additional shares or enter into
private placements to raise financing through  the sale of equity securities, investors interests
in our Group will be  diluted and investors may suffer dilution in their net book value
per share  depending on the price at which such securities are sold. If we issue any such
additional shares, such issuances also will cause a reduction in the  proportionate
ownership and voting power of all other shareholders. Further, any  such issuance may
result in a change in our control.

Anti-Takeover
Provisions

We  do not
currently have a shareholder rights plan or any anti-takeover provisions  in our By-laws
or corporate charter. Without any anti-takeover provisions, there  is no deterrent for a
take-over of the Company, which may result in a change in  our management and directors.

21

---

Reports  to
Security Holders

Under  the
securities laws of Delaware, we are not required to deliver an annual report  to our
shareholders but we intend to send an annual report to our shareholders.

Discussion
and Analysis of Financial Condition

Introduction

The  following
discussion and analysis addresses changes in our financial condition  and results of
operations during the two year period 2003 and 2004.

There  is
limited or no comparability for revenue and operating expense to the  comparable periods
in 2003 and 2004, as sales and production were suspended in  spring 2003 and were resumed
only in January 2005.

Managements
key objectives for 2004 were:

| | o
Conclude new production sharing agreement with the Companys primarily PSA partner,
Okhtirkaneftegas;
| | -------------------------------------------------------------------------------------------------------

| | o
Complete the workovers on Well #2 and Well#3 on the Karaikozovsks field;
| | ---------------------------------------------------------------------------

| | o
Commence the construction of separation units on Well #2 and Well#3 on the Karaikozovsks
field;
| | --------------------------------------------------------------------------------------------------

| | o
Obtain operating licenses for Rogan and Rakitnyansk fields;
| | -------------------------------------------------------------

We  believe
that these key objectives were achieved in 2004. Our 2005 strategy for  Karaikozovsks
field includes launching Wells #2 and #3 into commercial  production, completing
construction of the separation units on the wellsites,  and commencement of drilling of
Well #21. In addition, we will continue the  exploration activities on Rogan and
Rakitnyansk properties aiming to establish  the optimal reservoir development scenarios..

Current
Activities

During  2003,
our production was limited to Well #2 and Well#3 of Karaikozovsks  deposit.  The
production activities were suspended in spring of 2003 due to  the expiration of the
original operating license for Karaikozovsks  property. We have not produced any
commercial quantities from  Karaikozovsks deposit during the balance of 2003 and
2004. Following the  issuance of the new license in August 2004, we embarked on an
extensive testing  and well workover program in order to establish the most optimal
development  scenario and prepare the wells for commercial production in 2005. The
preparatory work included reservoir stimulation as well as partial replacement  of casing
in order to increase potential flow rates while maintaining the  optimal reservoir
pressure. The additional perforation and stimulation programs  for wells have been
completed. The production from Wells #2 and #3 was resumed  in January 2005.

Results of
Operations

Oil  and gas
production and revenue

During  the
year ended December 31, 2003, Esko Pivnich produced 28,368 barrels  (Bbls) of
crude oil and 117,740 thousands of cubic feet  (MCFs) of natural gas,
respectively. The reduction of production in  2003 was caused by scheduled repairs of
Well #3 since the beginning of 2003  until the expiration of the license during which
period the production was  limited to Well #2 of the property.

22

---

With  the
exception of testing flow runs, no commercial volumes were produced from  Karaikozovsks
property during the year ended December 31, 2004 pending the  issuance of the new
operating license and the conclusion of new production  sharing agreement (see above for
additional discussion). The crude extracted  under the test runs conducted during 2004
amounted to 2.5 Bbls of which  approximately 1.585 Bbls remained in the Companys
inventory at year end.

During  2003,
in addition to its proprietary production activities, Esko Pivnich engaged  in trading
operations, purchasing and reselling natural gas produced by Poltava  Petroleum Company
(Ukraine) in the aggregate volumes of 5,775,000 MCFs.

We  recognize
revenue from the sale of oil when the purchaser takes delivery of the  oil at the field.
During the year ended December 31, 2004, we sold (by physical  delivery to the purchaser)
8,782 Bbls of crude oil, kept by the Company in  inventory as of December 31, 2003.
Average price of crude oil sold in 2004 was  approximately $22.42 per Bbl which
translated into net revenues of $196,891.

During  the
year ended December 31, 2003 Esko Pivnich sold its internally produced  19,586 Bbls of
crude oil at the average prices of $19.65 per barrel translating  into net revenues from
sales of internally produced oil of $384,807. Also, in  2003 the Company sold 117,740
MCFs of internally produced gas at average prices  of $1.33 per MCF translating into net
revenues of $156,231. In addition, in  2003, the Company resold 5,775,000 MCFs of natural
gas produced by third  parties, at average prices of $1.22 translating into revenues of
$7,056,317.

All  sales
agreements were short-term in nature, with the extension option by mutual  agreement of
the parties. Our crude oil and natural gas sales are sold at the  pipeline measuring node
and are not subject to transportation costs.

Exploration

Exploration
expense, which includes geological and geophysical expense and the cost of  unsuccessful
exploratory wells, is recorded as an expense in the period incurred  under the successful
efforts method of accounting. During 2004 and 2003 we  incurred $26,986 and $227,799,
respectively in exploration expenses. The  decrease is primarily due to the fact that the
new license for  Karaikozovsks property was issued only in July 2004.

The  Company
expects significant exploration expense in 2005-2008 due to the new  operating licenses
obtained in 2005, including licenses for two new fields,  Rogan and Rakitnyansk, and
significant investment obligations attached to them,  based on the concluded license
agreement with the Ministry of Resources of  Ukraine (see above).

During  2004
and 2003, the Exploration and Resource taxes, levied per barrel of crude  oil produced by
the Company amounted to $49,216 and $26,557 respectively. For  the same periods the
exploration and resource taxes levied per thousand of cubic  feet of produced gas
amounted to $Nil and $15,795 respectively.

Depreciation,
depletion and amortization

Depreciation,
depletion and amortization (DD&A) of oil and gas properties is
calculated under units of production method, following the successful efforts  method of
accounting, as described in Note 1 of the Notes to Consolidated  Financial Statements.

23

---

Oil  and gas
production equipment and work over costs contributed the most into the  depreciation
expense for the year ended December 31, 2004 and 2003 in total  amounts of $249,083 and
$267,227. The main increase in the depreciation expense  in 2004 as compared to 2003 was
primarily due to the workover costs capitalized  in 2003, which were depreciated over 3
years due to the uncertain timing of  receiving the new license.

Sales,
general and administrative expenses

Sales,  general
and administrative expenses in 2004 increased to $126,406 from $87,526  in 2003 mainly
due to the increase in legal and professional services rendered  to the Company ($27,520
and $8,868, respectively), as well as office rent  ($22,851 and $13,217, respectively) as
a result of moving into new offices.

Interest
income (expense), net

Interest
expense, for the years ended December 31, 2004 and 2003, was $51,036 and  $76,766,
respectively.

Interest
expense for the year ended December 31, 2004 related to the credit line facility  and
short-term loan obtained from AB Clearing House in the amount and interest  of $51,036
and 26%.

Interest
expense for the year ended December 31, 2003 was related to the credit line  facility and
short-term loans obtained from Vabank and Misto Bank in the amounts  and interest of
$74,859 and $1,907, 16% and 20%, respectively.

Proceeds  of
the loans were used mainly for immediate working capital requirements. In  2004 the LZ
Group paid the Company $75,280 in interest related to the period  prior to the
reassignment of the short term loan from Vabank.

Liquidity
and Capital Resources

Since
inception, we have financed our operations from private sources. We anticipate
continuing losses in the near future while Esko Pivnich establishes steady  production of
oil and gas in Ukraine. As at December 31, 2004 the Company had  total current assets of
$1,524,288 and total current liabilities of $2,224,054.  As at December 31, 2004, the
Company had cash balances of $15,082 and a working  capital deficit of $699,766.

We  are
currently discussing various financing options with private investors that  include
Company shareholders however, no assurance can be provided as to if,  when and in what
amount such new financing may be received by the Company.  Failure to timely receive such
financing may cause us to significantly curtail  or altogether suspend our capital
expenditure program. This may, in turn, have  material adverse effect on our production
activities.

24

---

Cash  flow

Cash  (used) in
/ provided by operating activities for the years ended December 31,  2004 and 2003
amounted to $(262,819) and $292,660. Significant cash outflow in  2004, as compared to
2003, was primarily caused by the increase in other  accounts receivable and prepayments
of $439,482 and decrease in accounts payable  of $317,628, in spite of increase in taxes
payable and other accounts payable  and accruals in amounts of $260,893 and $287,230,
respectively. Main operating  activities were suspended in 2004 providing no base for
operating cashflows  comparison with 2003. The negative cashflow from operations was
serviced by the  increase in short-term loans received in an amount of $489,974.

During  2003,
the Company invested in workovers a total amount of $302,043, which was  financed by
shareholder loans. Significant decrease in capital expenditure in  2004 was caused by the
temporary suspension of the production due to the renewal  of the production sharing and
main operating license agreements.

Cash
Requirements

The  Group
anticipates it will require around $4,000,000 to implement its capital  expenditure
program for Karaikozovsks property including the completion of  separators and new
well drilling. The Group believes it will be able to raise  these funds through equity
and debt financing; however, there is no guarantee  that such funds will be raised and no
certainty as to when such funds may be  raised.

Income
Taxes, Net Operating Losses and Tax Credits

Currently,  the
Company is liable for Ukrainian income tax at a rate of 25% of the pre-tax  earnings as
defined by the Ukrainian income tax law. The taxation system in  Ukraine is evolving as
the central government transforms itself from a command  to a market-oriented economy.
Based on current tax law and the United States   Ukraine income tax treaty, the
income tax paid in Ukraine will be  creditable tax when determining the Companys US
income taxes payable, if  any.

Critical
Accounting Policies and Recent Accounting Pronouncements

We  have
identified the policies below as critical to our business operations and  the
understanding of our financial statements.  The impact of these  policies and
associated risks are discussed throughout Managements  Discussion and Analysis
where such policies affect our reported and expected  financial results.  A complete
discussion of our accounting policies is  included in Note 1 of the Notes to Consolidated
Financial Statements.

Functional
and Reporting Currency

The  reporting
currency of the accompanying consolidated financial statements is the  US dollars.
Ukrainian entities use Ukrainian Hrivna (UAH) as their functional  currency since their
most revenues and operating expenses are denominated in  Ukrainian Hrivnas. The Ukrainian
Hrivna is not a fully convertible currency  outside of the territory of the Ukraine. The
translation of Hrivna denominated  assets and liabilities into US dollars for the purpose
of these consolidated  financial statements does not indicate that the Company could or
will in the  future realize or settle in US dollars the translated values of these
assets and liabilities.

The  prevailing
exchange rate at December 31, 2004 was approximately 1 U.S.  dollar to 5.3054,
Ukrainian Hrivnas, respectively. For the December 31, 2004 and  2003, the average
exchange rate for 1U.S. dollar was 5.3064 and 5.333, Ukrainian  Hrivnas, respectively.

25

---

Principles
of Consolidation

The
consolidated financial statements incorporate the financial statements of  Sunrise Energy
Resources Inc. and other enterprises, where the Company, directly  or indirectly
exercises control. Control is achieved where the Company has the  power to govern the
financial and operating policies of an investee enterprise  so as to obtain benefits from
its activities.

All
significant intercompany transactions, balances and unrealized gains (losses) on
transactions are eliminated on consolidation.

Use  of
Estimates

The
preparation of financial statements in accordance with United States generally  accepted
accounting principles requires management to make estimates and  assumptions that affect
the reported amounts of assets and liabilities and  disclosures of contingent assets and
liabilities at the date of the financial  statements and the reported amounts of revenues
and expenses during the  reporting period. Actual results could materially differ from
these estimates.

Oil  and Gas
Reserve Information

The
information regarding our oil and gas reserves, the changes thereto and the  estimated
future net cash flows are dependent upon engineering, price and other  assumptions used
in preparing our annual reserve study.  The above  estimates were prepared by the
Company and have not been certified by a  qualified independent petroleum engineering
firm. The Company plans to engage  such appropriately qualified engineering firm to
certify the estimates of our  oil and gas reserves in accordance with applicable
engineering standards and in  accordance with Securities and Exchange Commission
guidelines.  Changes in  prices and cost levels, as well as the timing of future
development costs, may  cause actual results to vary significantly from the data
presented.  Our  oil and gas reserve data represent estimates only and are not
intended to be a  forecast or fair market value of our assets.

Our  oil and
gas reserve data and estimated future net cash flows have been prepared  assuming we are
successful in timely renewal of operating license agreements and  negotiating production
sharing terms which will allow constant production rates  for the expected 10 year period.  In
accordance with the effective PSA, the  profit sharing rate payable by the Company after
the initial investment has been  recovered equals 20%. (See above detailed description of
the main terms of the  standardized production sharing agreements concluded with the
State of Ukraine).  Also in 2005 the Company expects the completion of construction of
own gas  separation facilities that will allow significantly reduce the cost of services
currently purchased under the production sharing agreement (PSA) from the  state-owned
entity with which we are a contract partner, Okhtirkaneftegas.

Production
sharing agreements are customarily awarded upon determination that the field is  capable
of commercial rates of production and that the applicant has complied  with the other
terms of its license and exploration contract.  However, we  are not guaranteed the
right to a license renewal and production sharing  agreements in the future.  If we
are not successful in negotiating  operating license renewal and a production sharing
agreements on acceptable  terms, it will materially change our oil and gas reserve data
and estimated  future net cash flows.

26

---

Successful
Efforts Method of Accounting

We  follow the
successful efforts method of accounting for our investments in oil  and gas properties,
as more fully described in Note 1 of the Notes to  Consolidated Financial Statements.  This
accounting method has a pervasive  effect on our reported financial position and results
of operations.

Revenue
Recognition

For  revenue
from product sales, the Group recognizes revenue in accordance with SEC  Staff Accounting
Bulletin No. 104, Revenue Recognition in Financial  Statements (SAB 104).
SAB 104 requires that four basic  criteria must be met before revenue can be recognized:
(1) persuasive evidence  of an arrangement exists; (2) delivery has occurred; (3) the
selling price is  fixed and determinable; and (4) collectibility is reasonably assured.

Criterion  (1)
is met as every delivery is covered by a separate contract and the title  passes to the
customer only upon customers acceptance at point of  destination, which is in
compliance with criterion (2). Determination of  criteria (3) and (4) are based on
managements judgments regarding the  fixed nature of the selling prices of the
products delivered and the  collectibility of those amounts. Provisions for discounts and
rebates to  customers, and other adjustments are provided for in the same period the
related  sales are recorded. The Company defers any revenue for which the product has not
been delivered and accepted by its customers. In accordance with the  Companys
standard contract terms, once delivered and accepted the product  cannot be returned and
no claims can be presented to the Company. The Company  recognizes revenue on gross basis.

Recent
Accounting Pronouncements

In  December
2004, the Financial Accounting Standards Board (FASB)  issued Statement of
Financial Accounting Standards No. 123 (R), Share-Based  Payment (SFAS No. 123 (R))
that requires compensation costs related  to share-based payment transactions to be
recognized in the financial  statements. With limited exceptions, the amount of
compensation cost will be  measured based on the grant date fair value of the equity or
liability  instruments issued. In addition, liability awards will be remeasured each
reporting period. Compensation cost will be recognized over the period that an  employee
provides service in exchange for the award. This Statement replaces  SFAS No. 123 and is
effective as of the first interim or annual reporting period  that begins after June 15,
2005. The cumulative effect of applying this  Statement, if any, is not expected to be
material.

In  November
2004, the FASB issued Statement of Financial Accounting Standards No.  151, Inventory
Costs (SFAS No. 151) to clarify the accounting for  abnormal amounts of idle
facility expense, freight, handling costs, and  spoilage. The Statement requires that
abnormal expenses be recognized in the  period in which they were incurred. The Statement
is effective for inventory  costs incurred during fiscal years beginning after June 15,
2005. SFAS No. 151  is not expected to effect our consolidated financial statements.

In December
2004, the FASB issued  Statement of Financial  Accounting  Standards No. 153,  Exchanges
of Nonmonetary  Assets  (SFAS  No.  153) to  eliminate  an  exception  from
fair  value  measurement  in APB  Opinion  No. 29, for  nonmonetary  exchanges of similar
productive  assets.  SFAS No. 153 replaces this exception with a general exception  from
fair  value  measurement  for  exchanges  of  nonmonetary  assets  that do not have
commercial  substance.  A  nonmonetary  exchange  has  commercial  substance  if the
future  cash flows of the  entity are  expected  to change  significantly  as a result of
the  exchange.  SFAS No.  153 is not  expected  to effect our  consolidated  financial
statements.

27

---

Going
Concern

The  Companys
consolidated financial statements have been presented on the  basis that it is a going
concern, which contemplates the realization of assets  and satisfaction of liabilities in
the normal course of business. As shown in  the consolidated financial statements, the
Company incurred a net loss of  $592,481 and $487,045 during the years ended December 31,
2004 and December 31,  2003, respectively, and, as of December 31, 2004, the Companys
current  liabilities exceeded its current assets by $699,766. Additionally, to fully
develop the area covered by the Licenses, the Company needs substantial  additional
funding.

In  view of the
matters described in the preceding paragraph, recoverability of a  major portion of the
recorded asset amounts shown in the accompanying balance  sheet is dependent upon
continued operations of the Company, which in turn is  dependent upon the Companys
ability to meet its financing requirements on  a continuing basis, primarily by the
Companys ability to raise additional  funds in equity markets, and to succeed in
its future operations. The  consolidated financial statements do not include any
adjustments relating to the  recoverability and classification of recorded asset amounts
or amounts and  classification of liabilities that might be necessary should the Company
be  unable to continue its existence.

Management  has
taken the following steps to revise its operating and financial  requirements, which it
believes are sufficient to provide the Company with the  ability to continue in existence.

|o |  | The Company plans to continue to raise additional capital in the equity markets
as significant source of funding the development of the Licenses.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Based
on its expected production capabilities from the expenditures that will be  made as a
result of equity and debt financing, the Company believes that it  could generate
adequate cash flow. Additional funding requirements may also be  necessary before the
Company is able to rely solely on the production from the  licensed properties for the
cash flow of the Company.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Accordingly,
our independent auditors included an explanatory paragraph in their report on  the
December 31, 2004 financial statements regarding concerns about our ability  to continue
as a going concern. Our financial statements contain additional note  disclosures
describing the circumstances that lead to this disclosure by our  independent auditors.

28

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ITEM  7.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our
consolidated financial statements are stated in United States dollars and are  prepared
in accordance with United States generally accepted accounting  principles. The Report of
Independent Registered Public Accounting Firm, John A.  Braden & Co.P.C., of the
consolidated financial statements of Sunrise Energy  Resources, Inc., and its subsidiary
(the Group) for the year ended  December 31, 2004 is included herein
immediately preceding the audited  consolidated financial statements for the respective
periods.

*Former
name of Sunrise Energy Resources, Inc. as filed in information statement on From  14f-1
on January 3, 2005, pursuant to Section 14fc of the Act reporting  the Companys
plan to complete the acquisition and modify the control of the Company and the
make up of the Board of Directors.

SUNRISE
ENERGY RESOURCES, INC.CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2004, AND 2003

|Index                                                                               |  |          | 
|----------------------------------------------------------------------------------- |  | -------- | 
|Report of Independent Registered Public Accounting Firm - John A. Braden & Co., P.C |  | F-1      | 
|Consolidated Balance Sheets                                                         |  | F-2      | 
|Consolidated Statement of Operations and Comprehensive Loss                         |  | F-3      | 
|Consolidated Statements of Changes in Stockholders Equity (Capital Deficit)        |  | F-4      | 
|Consolidated Statements of Cash Flows                                               |  | F-5      | 
|Notes to the Consolidated Financial Statements                                      |  | F-6-F-24 | 

29

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REPORT
OF INDEPENDENT AUDITORS

TO  THE
DIRECTORS AND STOCKHOLDERS OF SUNRISE ENERGY RESOURCES, INC AND  SUBSIDIARIES:

We  have
audited the accompanying consolidated balance sheet of Sunrise Energy  Resources, Inc.
and Subsidiaries (the Company) as of December 31,  2004, and the related
consolidated statements of operations and comprehensive  loss, changes in stockholders equity
and cash flows for the years ended  December 31, 2004 and December 31, 2003. These
financial statements are the  responsibility of the Companys management. Our
responsibility is to  express an opinion on these financial statements based on our audit.

We  conducted
our audits in accordance with the standards of the Public Company  Accounting Oversight
Board (United States). Those standards require that we plan  and perform an audit to
obtain reasonable assurance whether the financial  statements are free of material
misstatement. The Company is not required to  have, nor were we engaged to perform, an
audit of its internal control over  financial reporting. Our audit included consideration
of internal control over  financial reporting as a basis for designing audit procedures
that are  appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over  financial
reporting. Accordingly, we express no such opinion. An audit includes  examining, on a
test basis, evidence supporting the amounts and disclosures in  the financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates made by management, as well as  evaluating the overall financial statement
presentation. We believe that our  audits provides a reasonable basis for our opinion.

In  our
opinion, the financial statements referred to above present fairly, in all  material
respects, the financial position of Sunrise Energy Resources, Inc and  Subsidiaries at
December 31, 2004, and the related consolidated results of their  operations and cash
flows for the years ended December 31, 2004 and December 31,  2003, in conformity with
accounting principles generally accepted in the United  States of America.

The
accompanying consolidated financial statements have been prepared assuming that  the
Company will continue as a going concern. As shown in the financial  statements, the
Company incurred a net loss of $592,481, and $487,045 during the  years ended December
31, 2004 and December 31, 2003, respectively, and, as of  December 31, 2004, the Companys
current liabilities exceeded its current  assets by $699,766. These factors, among
others, including the Companys  ability to develop the properties for which the
Company has licenses, as  discussed in Note 1 to the financial statements, raise
substantial doubt about  the Companys ability to continue as a going concern.
Managements  plans in regard to these matters are also described in Note 1. The
financial  statements do not include any adjustments that might result from the outcome
of  this uncertainty.

John A. Braden & Company,
PCHouston, Texas
February 25, 2005

F-1

---

SUNRISE
ENERGY RESOURCES INC.CONSOLIDATED BALANCE SHEETS(Expressed in US Dollars)

---

|                                                      | December 31,2004
|----------------------------------------------------- | ----------------
|ASSETS                                                |                 
|CURRENT ASSETS                                        |                 
|Cash and cash equivalents                             |                 
|Accounts receivable (Note 5)                          |                 
|Accounts receivable - related party (Note 5)          |                 
|Other accounts receivable and prepayments (Note 6)    |                 
|Other accounts receivable - related party (Note 6)    |                 
|Inventories (Note 7)                                  |                 
|Taxes receivable (Note 8)                             |                 
|                                                      |                 
|Total current assets                                  |                 
|NONCURRENT ASSETS                                     |                 
|Property, plant and equipment, net (Note 9)           |                 
|Long-term financial investments (Note 10)             |                 
|Deferred tax asset (Note 11)                          |                 
|                                                      |                 
|TOTAL ASSETS                                          |                 
|                                                      |                 
|                                                      |                 
|                                                      |                 
|LIABILITIES AND STOCKHOLDERS' EQUITY                  |                 
|CURRENT LIABILITIES                                   |                 
|Accounts payable (Note 12)                            |                 
|Accounts payable - related party (Note 12)            |                 
|Taxes payable (Note 13)                               |                 
|Short term bank loans  (Note 14)                      |                 
|Other accounts payable and accruals (Note 15)         |                 
|Profit interest payable (Note 16)                     |                 
|                                                      |                 
|Total current liabilities                             |                 
|Long-term payable related party (Note 17)             |                 
|Deferred tax liability (Note 11)                      |                 
|Commitments and Contingencies (Note 20)               |                 
|STOCKHOLDERS EQUITY                                  |                 
|Common Stock, $.001 par value, 75,000,000 authorized, |                 
|17,000,000 issued and outstanding (Note 18)           |                 
|Additional Paid in Capital                            |                 
|Retained earnings (Accumulated deficit)               |                 
|                                                      |                 
|Total stockholders equity (deficit)                  |                 
|                                                      |                 
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY            |                 
|                                                      |                 
|                                                      |                 

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

F-2

---

SUNRISE
ENERGY RESOURCES INC.  CONSOLIDATED STATEMENTS OF OPERATIONS AND  COMPREHENSIVE LOSS
(Expressed in US Dollars except share amounts)

---

|                                           | For the years endedDecember 31 |               
|------------------------------------------ | ------------------------------ | --------------
|
|REVENUES                                   |                                |               
|Produced oil & gas                         |                                | $      196,891
|Purchased oil & gas                        |                                | --            
|                                           |                                |               
|                                           |                                | 196,891       
|COST OF SALES                              |                                | --            
|                                           |                                |               
|                                           |                                | 196,891       
|Operating expenses                         |                                | (182,870      
|Depreciation expense                       |                                | (256,528      
|Other operating expenses                   |                                | (310,643      
|Sales, general and administrative expenses |                                | (126,406      
|                                           |                                |               
|OPERATING LOSS                             |                                | (679,556      
|OTHER INCOME (EXPENSE)                     |                               
|Interest income (expense), net             |                                | 29,292        
|Foreign exchange loss                      |                                | 321           
|Other income (expense), net                |                                | (94           
|                                           |                                |               
|(LOSS) INCOME BEFORE TAX                   |                                | (650,037      
|INCOME TAX (Note 11)                       |                                | 57,556        
|                                           |                                |               
|NET (LOSS) INCOME AND                      |                               
|COMPREHENSIVE INCOME (LOSS)                |                                | $    (592,481 
|                                           |                                |               
|                                           |                                |               
|                                           |                                |               
|BASIC DILUTED LOSS (EARNINGS)  PER SHARE   |                                | $       (0.035
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |                                | 17,000,000    

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

F-3

---

SUNRISE
ENERGY RESOURCES INC.CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
(CAPITAL DEFICIT)(Expressed in US Dollars except share amounts)

---

|                                 | Common Stock | RetainedEarningsEarnings(Accumulated | AdditionalPaid-in | TotalStockholdersEquity(Capital |  
|-------------------------------- | ------------ | ------------------------------------ | ----------------- | -------------------------------- | -
|
|BALANCE,                         |              |                                      |                   |                                  |  
|DECEMBER 31, 2002                |              | 137,700                              |                   | $   1,377                        |  
|Net (loss) for the year          |              | --                                   |                   | --                               |  
|                                 |              |                                      |                   |                                  |  
|BALANCE,                         |             
|DECEMBER 31, 2003                |              | 137,700                              |                   | 1,377                            |  
|Common Stock, $.001 par          |             
|value, 75,000,000                |             
|authorized, 17,000,000           |             
|issued and outstanding           |             
|(Note 18)                        |              | 17,000,000                           |                   | 17,000                           |  
|To give effect to the            |             
|acquisition of EP as of          |             
|December 31, 2004 (Note 18)      |              | (137,000                             | )                 | (1,377                           | )
|Pre acquisition (deficit)        |             
|of Sunrise Energy Resources Inc. |              | --                                   |                   | --                               |  
|Net (loss) for the year          |              | --                                   |                   | --                               |  
|                                 |              |                                      |                   |                                  |  
|BALANCE,                         |             
|DECEMBER 31, 2004                |              | 17,000,000                           |                   | $ 17,000                         |  
|                                 |              |                                      |                   |                                  |  
|                                 |              |                                      |                   |                                  |  

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

F-4

---

SUNRISE
ENERGY RESOURCES INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in US Dollars)

---

|                                                          | For the years endedDecember 31 |             
|--------------------------------------------------------- | ------------------------------ | ------------
|
|CASH USED IN OPERATING ACTIVITIES:                        |                                |             
|Net (loss) income from continuing operations for the      |                               
|period                                                    |                                | $(592,481   
|Adjustments to reconcile net loss from continuing         |                               
|operations to net cash in operating activities:           |                               
|Depreciation expense                                      |                                | 256,528     
|Loss on disposal of fixed assets                          |                                | 18,541      
|Provision for doubtful accounts                           |                                | 4,910       
|Deferred tax (gain) expense                               |                                | (57,669     
|Net accrued interest                                      |                                | (5,022      
|Changes in assets and liabilities:                        |                               
|Decrease (increase) in accounts receivable                |                                | 251,744     
|(Increase) decrease in other accounts receivable and      |                               
|prepayments                                               |                                | (439,482    
|Decrease (increase) in inventories                        |                                | 22,569      
|Decrease in taxes receivable                              |                                | 47,048      
|(Decrease) increase in accounts payable                   |                                | (317,628    
|Increase in taxes payable                                 |                                | 260,893     
|Increase (decrease)in other accounts payable and          |                               
|accruals                                                  |                                | 287,230     
|(Decrease) in profit interest payable                     |                                | --          
|                                                          |                                |             
|                                                          |                                | (262,819    
|CASH PROVIDED BY FINANCING ACTIVITIES:                    |                               
|Short term loans received                                 |                                | 489,974     
|Cash inflow on the acquisition of Sunrise Energy          |                               
|Resources Inc. (Note 18)                                  |                                | 1,942       
|Short term loans paid                                     |                                | --          
|                                                          |                                |             
|                                                          |                                | 491,916     
|CASH USED IN INVESTING ACTIVITY:                          |                               
|Purchase of property, plant and equipment                 |                                | (163,489    
|Preacquisition (deficit) of Sunrise Energy Resources Inc. |                               
|(Note 18)                                                 |                                | (52,828     
|Long term investment purchased                            |                                | --          
|Effect of exchange rate changes                           |                                | 343         
|                                                          |                                |             
|INCREASE (DECREASE) IN CASH:                              |                                | 13,123      
|CASH, at the beginning of the period                      |                                | 1,959       
|                                                          |                                |             
|CASH, at the end of the period                            |                                | $   15,082  
|                                                          |                                |             
|                                                          |                                |             
|INCOME TAX PAID                                           |                                | $        113
|                                                          |                                |             
|                                                          |                                |             
|INTEREST PAID                                             |                                | $   51,046  
|                                                          |                                |             
|                                                          |                                |             

|(1) |  | Non-cash
operating and financing activities  Fair value of promissory notes issued in exchange for
accounts payable - $442,861 in 2004
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------

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

F-5

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

---

1.  NATURE
OF BUSINESS

All  of the
operating activities of Sunrise Energy Resources Inc. are conducted  through its wholly
owned subsidiary, TOV Energy-Servicing Company Esko Pivnich  (Esko Pivnich),
a Ukrainian Closed Joint Stock Company (CJSC)  established on January 20, 2000 under the
laws of Ukraine. The primary business  activities of Esko Pivnich are oil and gas
exploration, production and  distribution in the country of Ukraine.

The  current
principal activities of Esko Pivnich are conducted in the form of  production sharing
agreements (PSA), which as of December 31, 2004  included the following:

|Operating Entity        | Principal Activity | Country ofincorporation | CapitalContribution,% | ProfitSharing,%
|----------------------- | ------------------ | ----------------------- | --------------------- | ---------------
|Esko Pivnich            |                    | Marketing and           |                       | Ukraine        
|ZZZ                     |                    | distribution of crude   |                      
|ZZZ                     |                    | oil and natural gas     |                      
|PSA # 01-SD dated April |                    | Extraction of crude     |                       | Ukraine        
|26, 2000                |                    | oil and natural gas     |                      
|PSA # 35/970-SD dated   |                    | Extraction of crude     |                       | Ukraine        
|August 19, 2004         |                    | oil and natural gas     |                      

In  addition,
during the periods presented, the Company purchased and resold oil and  gas as a trading
company.

Sunrise Energy
Resources Inc. is currently  registered at the following  address:  551 Fifth Avenue,
Suite 601, New  York, New York 10017.  Former office  address of the Company was at 5353
Memorial  Drive,  Suite 4012 Houston,  Texas  77007.

Esko Pivnich is
registered at the following address: 10a Rileeva St., Kiev, Ukraine.

The principal
operating office of the Company is situated at: 13/10 Novokonstantinovskaya St., Kiev,
Ukraine.

The  number of
employees of the Company at December 31, 2004 and 2003 was 20 and 19,  respectively.

2.  PRESENTATION
OF CONSOLIDATED FINANCIAL STATEMENTS

Basis  of
Presentation  These consolidated  financial
statements have been prepared by the Company in accordance with  accounting principles
generally accepted in the United States of America  (US GAAP).

Going
concern The Companys consolidated financial  statements have
been presented on the basis that it is a going concern, which  contemplates the
realization of assets and satisfaction of liabilities in the  normal course of business.
As shown in the consolidated financial statements,  the Company incurred a net loss of
$592,481 and $487,045 during the years ended  December 31, 2004 and December 31, 2003,
respectively, and, as of December 31,  2004, the Companys current liabilities
exceeded its current assets by  $699,766. Additionally, to fully develop the area covered
by the Licenses, the  Company needs substantial additional funding.

F-6

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

In  view of the
matters described in the preceding paragraph, recoverability of a  major portion of the
recorded asset amounts shown in the accompanying balance  sheet is dependent upon
continued operations of the Company, which in turn is  dependent upon the Companys
ability to meet its financing requirements on  a continuing basis, primarily by the
Companys ability to raise additional  funds in equity markets, to maintain present
financing, and to succeed in its  future operations. The consolidated financial
statements do not include any  adjustments relating to the recoverability and
classification of recorded asset  amounts or amounts and classification of liabilities
that might be necessary  should the Company be unable to continue in existence.

Management  has
taken the following steps to revise its operating and financial  requirements, which it
believes are sufficient to provide the Company with the  ability to continue in existence.

|o |  | The
Company  plans to continue to raise additional capital in the equity markets  as
significant  source of funding the development of the Licenses.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Based
on its  expected production capabilities from the expenditures that will be  made as a
result of  equity and debt financing, the Company believes that it  could generate
adequate cash  flow. Additional funding requirements may also be  necessary before the
Company is able  to rely solely on the production from the  licensed properties for the
cash flow of the  Company.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Use  of
Estimates and Assumptions  The  preparation of
consolidated financial statements in conformity with US GAAP  requires management to make
estimates and assumptions that affect the reported  amounts of assets and liabilities,
revenues and expenses and the disclosure of  contingent assets and liabilities. Due to
the inherent uncertainty in making  those estimates, actual results reported in future
periods could differ from  such estimates.

Functional
and Reporting Currency The reporting currency of the  accompanying
consolidated financial statements is the US dollars. Ukrainian  entities use Ukrainian
Hrivna (UAH) as their functional currency since their  most revenues and operating
expenses are denominated in Ukrainian Hrivnas. The  Ukrainian Hrivna is not a fully
convertible currency outside of the territory of  the Ukraine. The translation of Hrivna
denominated assets and liabilities into  US dollars for the purpose of these consolidated
financial statements does not  indicate that the Company could or will in the future
realize or settle in  US dollars the translated values of these assets and
liabilities.

The  prevailing
exchange rates at December 31, 2004 was approximately 1 U.S.  dollar to 5.3054
Ukrainian Hrivnas. For the December 31, 2004 and 2003, the  average exchange rate for
1U.S. dollar was 5.3064 and 5.333, Ukrainian Hrivnas,  respectively.

3.  SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES

Basis  of
Consolidation The consolidated financial statements  incorporate
the financial statements of Sunrise Energy Resources Inc. and other  enterprises, where
the Company, directly or indirectly exercises control.  Control is achieved where the
Company has the power to govern the financial and  operating policies of an investee
enterprise so as to obtain benefits from its  activities. All significant intercompany
transactions, balances and unrealized  gains (losses) on transactions are eliminated on
consolidation.

F-7

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

Revenue
Recognition For revenue from product sales, the Company  recognizes
revenue in accordance with SEC Staff Accounting Bulletin No. 104,  Revenue
Recognition in Financial Statements (SAB 104).  SAB 104 requires that
four basic criteria must be met before revenue can be  recognized: (1) persuasive
evidence of an arrangement exists; (2) delivery has  occurred; (3) the selling price is
fixed and determinable; and (4)  collectibility is reasonably assured.

Criterion  (1)
is met as every delivery is covered by a separate contract and the title  passes to the
customer only upon customers acceptance at point of  destination, which is in
compliance with criterion (2). Determination of  criteria (3) and (4) are based on
managements judgments regarding the  fixed nature of the selling prices of the
products delivered and the  collectibility of those amounts. Provisions for discounts and
rebates to  customers, estimated returns and allowances, and other adjustments are
provided  for in the same period the related sales are recorded. The Company defers any
revenue for which the product has not been delivered and accepted by its  customers. In
accordance with the Companys standard contract terms, once  delivered and accepted
the product cannot be returned and no claims can be  presented to the Company. The
Company recognizes revenue on gross basis.

Property,
Plant and Equipment  Oil and gas properties are accounted  for using
the successful efforts method of accounting whereby property  acquisitions, successful
exploratory wells, all development costs, and support  equipment and facilities are
capitalized. Unsuccessful exploratory wells are  expensed when a well is determined to be
non-productive. Other exploratory  expenditures, including geological and geophysical
costs are expensed as  incurred. Depreciation, depletion and amortization of capitalized
costs of oil  and gas properties is calculated using the unit-of-production method based
upon  proved reserves for the cost of property acquisitions and proved developed
reserves for exploration and development costs. As of the date of these  consolidated
financial statements no such costs were incurred.

Production  and
related overhead costs are expensed as incurred. Depreciation of assets not  directly
associated with oil production and certain workover costs on properties  subject to time
limited licenses has been calculated on a straight-line basis  over the economic lives of
such assets, estimated to be in the following ranges:

|Oil and Gas Facilities |  | 3 years     | 
|---------------------- |  | ----------- | 
|Improvements and       | 
|Workover Costs         | 
|Office Improvements    |  | 4 - 5 years | 
|Computer Equipment     |  | 3 years     | 

The  gain or
loss arising on the disposal or retirement of an asset is determined as  the difference
between the sales proceeds and the carrying amount of the asset  and is recognized in the
income statement.

Leasing  Leases
are classified as finance leases whenever the  terms of the lease transfer substantially
all the risk and rewards of ownership  to the lessee. All other leases are classified as
operating leases.

There  were no
assets held under financial leases. Operating leases are expensed in the  period in which
they are incurred.

F-8

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

Inventories  Inventories
are stated at the lower of cost or net  realizable value. Cost comprises direct cost of
extracted oil and gas, its  transportation and handling physically in the pipelines or
storages prior to the  delivery for sale. Inventory also includes various supplies and
spare parts.

Cost  is
calculated using weighted average method. Net realizable value represents the  estimated
selling price less all estimated costs to completion and costs to be  incurred in
marketing, selling and distribution.

Accounts
Receivable  Accounts receivable are stated at their net  realizable
value after deducting provisions for uncollectible amounts.

Cash  and
Cash Equivalents  Cash include petty cash and cash held  on current
bank accounts. Cash equivalents include short-term investments with  an original maturity
of three months or less that are readily convertible to  known amount of cash which are
subject to insignificant risk of changes in  value. Cash and cash equivalents as of
December 31, 2004 consisted mainly of the  UAH and USD denominated current accounts.

Loans
and Other Borrowings  All loans and  borrowings
are recorded at the proceeds received, net of direct issue costs.

Borrowing
Costs  Borrowing costs are recognized  as an
expense in the period in which they are incurred.

Trade
and Other Payables  Liabilities for  trade and
other amounts payable are stated at their nominal value.

Value
added tax on purchases and sales Value added taxes (VAT)  related
to sales is payable to tax authorities upon collection of receivables  from customers.
VAT on purchases is offset against VAT collected from sales. The  tax authorities permit
the settlement of VAT on a net basis. VAT related to  sales and purchases which have not
been settled at the balance sheet date, (VAT  deferred) is recognized in the balance
sheet on a gross basis and disclosed  separately as a current asset and liability. Where
provision has been made  against debtors deemed to be uncollectible bad debt expense is
recorded for the  gross amount of the debtor, including VAT. The related VAT deferred
liability is  maintained until the debtor is settled or until the debtor is written off
for  statutory accounting purposes.

Income
Taxes  Income tax has been computed  based on
the results for the year as adjusted for items that are non-assessable  or non-tax
deductible.

The  Company
has adopted Financial Accounting Standards No. 109 (SFAS  109), under which
the deferred tax is accounted for using the balance  sheet liability method in respect of
temporary differences arising from  differences between the carrying amount of assets and
liabilities in the  consolidated financial statements and the corresponding tax basis
used in the  computation of taxable profit. Deferred tax liabilities are generally
recognized  for all taxable temporary differences and deferred tax assets are recognized
to  the extent that it is probable that taxable profits will be available against  which
deductible temporary differences can be utilized. Deferred tax assets and  liabilities
are offset when they relate to income taxes levied by the same  taxation authority and
the Company intends to settle its tax assets and  liabilities on a net basis.

F-9

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

Deferred  tax
is calculated at rates that are expected to apply to the period when the  asset is
realized or the liability is settled. It is charged or credited to the  income statement,
except when it relates to items credited or charged directly  to equity, in which case
the deferred tax is also dealt with in equity.

Fair
value of Financial Instruments The Companys  financial
instruments consist of cash, accounts receivable, accounts payable and  accrued
liabilities. Unless otherwise noted, it is managements opinion  that the Company is
not exposed to significant interest, currency or credit  risks arising from these
financial instruments. The fair value of financial  instruments approximate their
carrying values due to the immediate or short term  maturity of these financial
instruments.

Earnings
(Loss) per Share  Earnings (loss) per share are computed in
accordance with SFAS No. 128, Earnings Per Share. Basic earnings  (loss) per
share are calculated by dividing the net income (loss) available to  common stockholders
by the weighted average number of shares outstanding during  the year. Diluted earnings
per share reflect the potential dilution of  securities that could share in earnings of
an entity. In a loss year, dilutive  common equivalent shares are excluded from the loss
per share calculation as the  effect would be anti-dilutive.

Because  the
reverse merger was effective December 31, 2004 the 2004 earnings (loss) per  share is
calculated as if the total shares as of the end of the year were  outstanding during the
entire year. Prior period earnings (loss) per share are  not presented.

Comprehensive
Income Statement of SFAS 130, Reporting  Comprehensive Income, establishes
standards for reporting and displaying  of comprehensive income, its components and
accumulated balances. Comprehensive  income is defined to include all changes in equity
except those resulting from  investments by owners and distributions to owners. Among
other disclosures, SFAS  130 requires that all items that are required to be recognized
under current  accounting standards as components of comprehensive income be reported in
a  financial statement that is displayed with the same prominence as other  financial
statements. Foreign exchange measurement gains and losses of the  Company are not
significant and are reflected in the net income and loss.

Retirement
Benefit Costs  The operating divisions  of the
Company situated in Ukraine contribute to the state pension, medical and  social
insurance and employment funds on behalf of all its current employees.  Any related
expenses are recognized in the income statement as incurred.

Segment
Reporting  The Companys business
operations are located in Ukraine and relate primarily to marketing and  distribution of
crude oil and natural gas products. Therefore, business  activities are subject to the
same risks and returns and addressed in the  consolidated financial statements of the
Company as one reportable segment.

Reclassifications
 Certain reclassifications were done to the 2003  consolidated
financial statements in order to present comparative figures in  line with 2004
consolidated financial statements.

F-10

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

New
accounting pronouncementsIn December 2003, FASB  issued a
revision to Interpretation No. 46, Consolidation of Variable  Interest
Entities, an Interpretation of ARB No. 51 (FIN 46R or the
Interpretation). FIN 46R  clarifies the application of ARB No. 51,
Financial statements, to certain entities in which equity investors do not
have the characteristics of  a controlling financial interest or do not have sufficient
equity at risk for  the entity to finance its activities without additional subordinated
financial  support. FIN 46R requires the consolidation of these entities, known as
variable  interest entities (VIEs), by the primary beneficiary of the entity.
The primary beneficiary is the entity, if any, that will absorb a majority of  the entitys
expected losses, receive a majority of the entitys  expected residual returns, or
both.

Among  other
changes, the revisions of FIN 46R (a) clarified some requirements of  the original
FIN 46, which had been issued in January 2003, (b) eased  some implementation
problems, and (c) added new scope exceptions. FIN 46R  deferred the effective date
of the Interpretation for public companies, to the  end of the first reporting period
ending after March 15, 2004, except that  all public companies must at a minimum
apply the provisions of the  Interpretation to entities that were previously considered
special-purpose  entities under the FASB literature prior to the issuance of
FIN 46R  by the end of the first reporting period ending after December 15,
2003.

The  Company
did not have any transactions within the scope of FIN 46R.

In  December 2003,
the Securities Exchange Commission (SEC) issued Staff  Accounting Bulletin (SAB) No. 104,
Revenue Recognition. SAB 104 updates  portions of the interpretive guidance included in
Topic 13 of the codification  of Staff Accounting Bulletins in order to make this
interpretive guidance  consistent with current authoritative accounting and auditing
guidance and SEC  rules and regulations. The Company believes it is following the
guidance of SAB  104.

4.  PRODUCTION
SHARING AGREEMENTS

PSA  #
01-SD dated April 26, 2000

In  August 2000
the Company together with the state owned geological enterprise  Poltavaneftegasgeologiya
executed a production sharing agreement  (PSA) to start exploration and
development of Karaikozovsks  field located in Krasnokutsk area of Kharkov region.
Under the terms of PSA  Poltavaneftegasgeologiya acted as the holder of the main
geological and  exploration licenses to develop Karaikozovsks field and the Company
was a  major investor, having contributed into the establishment of PSA approximately
$596,188.

In  November
2000 a subsidiary of JSC Ukrneft, Okhtirkaneftegas, joined the PSA.  Okhtirkaneftegas
owned two wells in Karaikozovsk area, the operational usage of  which were contributed
into the PSA. Also, Okhtirkaneftegas was to provide PSA  with certain exploration and
capital repair services to be paid at external  market rates.

In  May 2003,
due to the expiration of main geological and exploration licenses held  by
Poltavaneftegasgeologiya, all exploration and development activities on  Karaikozovsks
field were temporarily suspended.

PSA  #
35/970-SD dated August 19, 2004

The  Company
filed an application with the Ukrainian State Committee of Mineral  Resources to continue
the exploration and development of Karaikozovsks  field and in July 2004 the
Company obtained the main geological and exploration  license for the period of 5 years.

In  August 2004
the Company together with Okhtirkaneftegas, contributed  approximately $1,503 and $376
into the establishment of new PSA to continue  exploration and development of Karaikozovsks
field.

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

5.  ACCOUNTS
RECEIVABLE

Accounts
receivable as of December 31, 2004 consisted of the following:

|                          | 2004
|------------------------- | ----
|Angronafta                |     
|                          |     
|Total                     |     
|                          |     
|                          |     
|CJSC Infox, related party |     
|                          |     
|Total                     |     
|                          |     
|                          |     

Accounts
receivable as of December 31, 2004 consisted of the accounts receivable from  Agronafta
and CJSC Infox, related party, in amounts of $9,352 and $699,292,  respectively. Account
receivable from Agronafta is due for crude oil sold in  2004, whereas the receivable from
CJSC Infox, related party, comprised from  several crude oil shipments which took place
back in 2004, 2003 and 2002. No  provision for these accounts was accrued; management of
the Company assesses  both amounts as recoverable during 2005.

6.  OTHER
ACCOUNTS RECEIVABLE AND PREPAYMENTS

Other  accounts
receivable and prepaids as of December 31, 2004 consisted of the  following:

|                                     | 2004
|------------------------------------ | ----
|Vixen JLM                            |     
|Okhtirkaneftegas (Note 20)           |     
|Bukros                               |     
|Vector NDI                           |     
|KAM                                  |     
|Bobrovsky K.U                        |     
|Chernigovneftegasgeology             |     
|Valmi                                |     
|Institut Zemleustroystva             |     
|Vasilenkov O.S                       |     
|Dvornichenko V.I                     |     
|Burdeiny T.O                         |     
|OIK TOV                              |     
|Other                                |     
|Less provision for doubtful accounts |     
|                                     |     
|Total                                |     
|                                     |     
|                                     |     
|Pari, related party                  |     
|                                     |     
|Total                                |     
|                                     |     
|                                     |     

F-12

---

Other  accounts
receivable and prepayments as at December 31, 2004 comprised mostly of  advances paid to
Vixen JLM and Okhtirkaneftegas in amounts of $364,515 and  $189,306 paid by the Company
in 2004 and in 2002, respectively. Advance paid to  Vixen JLM relates to well casings to
be delivered in the first part of 2005.  Amount paid to Okhtirkaneftegas is currently
pending litigation (Note 20),  though no provision was accrued on it based on the
management estimates of the  possibility to offset such amount against services to be
purchased from  Okhtirkaneftegas during 2005.

Other  accounts
receivables represent prepayments relating to office repairs and office  rent, Vector
NDI, KAM, Valmi  in amounts of $27,666, $17,904 and $5,333,  respectively.

7.  INVENTORIES

Inventories  as
of December 31, 2004 consisted of the following:

|                    | 2004
|------------------- | ----
|Crude oil - at cost |     
|                    |     
|Total               |     
|                    |     
|                    |     

Inventories  as
of December 31, 2004 were represented by the technical crude oil balance  produced at the
end of December 2004 and valued at full cost of its production.  The above balances were
liquidated at a discount in the beginning of 2005.

8.  TAXES
RECEIVABLE

Taxes
receivable as of December 31, 2004 consisted of the following:

|                  | 2004
|----------------- | ----
|VAT receivable    |     
|Other tax prepaid |     
|                  |     
|Total             |     
|                  |     
|                  |     

Taxes
receivable balance as of December 31, 2004 represented by VAT receivable and  other
advance tax payments in amounts of $124,012 and $24, respectively. VAT  receivable was
discounted at 15% annual rate based on average six months  turnover period.

9.  PROPERTY,
PLANT AND EQUIPMENT, net

Property,
plant and equipment as of December 31, 2004 consisted of the following:

|                                           | 2004
|------------------------------------------ | ----
|Oil & gas facilities improvements and work |     
|over costs                                 |     
|Office equipment                           |     
|Construction in progress                   |     
|                                           |     
|                                           |     
|Accumulated Depreciation                   |     
|                                           |     
|Net Book Value                             |     
|                                           |     
|                                           |     

F-13

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

In  May 2003
the Companys operations in Karaikozovsks field were  temporarily suspended
because of the expiration of the operating license (Note  4). In July 2004 a new license
agreement was executed and work and production  was resumed in December 2004. The related
assets have not been reclassified as  impaired because the assets are now being used with
no loss in value.

10.  LONG-TERM
FINANCIAL INVESTMENT

Long-term
investment as of December 31, 2004 represented 10 common shares of JSC  Ukrneft at
par value of 0.25 UAH accounted for at cost, which  approximates their fair market value.

11.  INCOME
TAX

The  Companys
provision for income tax for the years ended December 31, 2004 is  as follows:

|                                   | 2004
|---------------------------------- | ----
|Current tax                        |     
|Deferred tax gain                  |     
|                                   |     
|Total income tax (benefit) expense |     
|                                   |     
|                                   |     

Deferred  taxes
reflect the net tax effects of temporary differences between the carrying  amounts of
assets and liabilities for financial reporting purposes and the  amounts used for tax
purposes.

The  change for
the year in the Companys deferred tax position is as follows:

|                                           | 2004
|------------------------------------------ | ----
|Net liability at the beginning of the year |     
|Charged to income for the year             |     
|                                           |     
|Net asset at the end of the year           |     
|                                           |     
|                                           |     

The  tax effect
on the major temporary differences that give rise to the deferred tax  assets as at
December 31, 2004 is presented below:

|                                        | 2004
|--------------------------------------- | ----
|Temporary differences that give rise to |     
|deferred tax assets                     |     
|Provision for doubtful receivables      |     
|Valuation of VAT receivable             |     
|Low value items written off             |     
|Difference in depreciable value of      |     
|property, plant and equipment           |     
|                                        |     
|Total                                   |     
|                                        |     
|                                        |     

F-14

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

The  deferred
tax assets as at December 31, 2004, calculated at effective Ukrainian  income tax rate of
25%, is consisted of the following:

|                                   | 2004
|---------------------------------- | ----
|Deferred tax assets                |     
|Provision for doubtful receivables |     
|Valuation of VAT receivable        |     
|Low value items written off        |     
|Difference in depreciable value of |     
|property, plant and equipment      |     
|                                   |     
|Total                              |     
|                                   |     
|                                   |     

The  taxation
charge for the year is different from that which would be obtained by  applying the
Ukrainian statutory income tax rate to the net loss before income  tax. Below is a
reconciliation of theoretical income tax at 25% to the actual  benefit recorded in the
Companys income statement:

|                                         | 2004
|---------------------------------------- | ----
|(Loss) before income tax and minority    |     
|interest                                 |     
|Theoretical income tax benefit at        |     
|statutory rate of 25%                    |     
|Adjustments due to:                      |     
|Tax effect of (expenses) that are not    |     
|deductible in determining taxable profit |     
|                                         |     
|Income tax (benefit)                     |     
|                                         |     
|                                         |     

As  of December
31, 2004 the Company had no loss carry forward for Ukrainian  statutory income tax
purposes.

12.  ACCOUNTS
PAYABLE

Accounts
payable as of December 31, 2004 consisted of the following:

|                          | 2004
|------------------------- | ----
|Okhtirkaneftegas          |     
|Kachanozovsky GPZ         |     
|Other                     |     
|                          |     
|                          |     
|                          |     
|                          |     
|CJSC Infox, related party |     
|                          |     
|Total                     |     
|                          |     
|                          |     

F-15

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

Third  parties
accounts payable balances as of December 31, 2004 were comprised mostly  of payable to
Okhtirkaneftegas and Kachanozovsky GPZ for services in amounts of  $196,875 and $20,995,
respectively.

The  amount
payable to the related party, CJSC Infox, in the amount of $376,165 arose  in 2003 and
2002 was mostly related to wells reconstruction and repair  services, provided by
third party service companies and paid by CJSC Infox on  behalf of the Company.

13.  TAXES
PAYABLE

Taxes  payable
as of December 31, 2004 consisted of the following:

|                    | 2004
|------------------- | ----
|VAT                 |     
|Fines and penalties |     
|Social insurance    |     
|Personal Income Tax |     
|Profit Tax          |     
|Exploration Tax     |     
|Resource Tax        |     
|                    |     
|Total               |     
|                    |     
|                    |     

Taxes  payable
as of December 31, 2004 represent fines and penalties accrued in  connection with
litigation described in Note 24, and VAT payable in amounts of  $569,521 and $171,082,
respectively. VAT payable relates mostly to sales made in  2004 and 2003. Based on the
current Ukrainian law VAT payable may not be set off  against VAT receivable.

14.  SHORT-TERM
BANK LOANS

Short-term
bank loans as of December 31, 2004 consisted of the following:

|                          | %, currency | 2004        
|------------------------- | ----------- | ------------
|                          |             | 26%Ukrainian
|AB Clearing House         |             | Hrivnas     
|                          |             |             
|Total  dated  Sept. 17,zz |            
|2004 due April 18, 2005   |             |             
|                          |             |             
|                          |             |             

The  loan from
AB Clearing House outstanding as at December 31, 2004 is secured by  the Companys
title to well casings purchased under an agreement dated July  20, 2004.

In  February
2003 the Company obtained a short-term loan from Vabank in the total  amount of
$3,518,534 bearing interest at 16% per annum. In April 2003 the  Company, Vabank and LZ
Group executed a tri-party reassignment agreement under  which the obligation to repay
the loan was reassigned to LZ Group for a  consideration of $3,518,534, a related party,
with no recourse to the Company.

F-16

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

Interest
expense for the year ended December 31, 2004 was incurred in respect of the  credit line
facility and short-term loan obtained from AB Clearing House in the  amount of $51,036
which represented the interest rate of 26% per annum.

Interest
expense for the year ended December 31, 2003 was paid in relation to the credit  line
facility and short-term loans obtained from Vabank and Misto Bank in the  amount of
$74,859 and $1,907 representing the interest rates of 16% and 20%,  respectively.
Proceeds of the loans were used mainly for immediate working  capital requirements. In
2004 the LZ Group paid the Company $75,280 in interest  related to the period prior to
the reassignment of the short term loan from  Vabank.

15.  OTHER
ACCOUNTS PAYABLE AND ACCRUALS

Other  accounts
payable and accruals as of December 31, 2004 consisted of the  following:

|                                   |  | 2004        
|---------------------------------- |  | ------------
|Advances from former shareholders  |  |             
|                                   |  | Research    
|Chernigovneftegasgeology           |  | and Geology 
|                                   |  | Research    
|Atlantis Techno, LLC               |  | and Geology 
|                                   |  | Prepaid for 
|Bukros                             |  | oil & gas   
|                                   |  | Advance to  
|Mr. Golovko O.I                    |  | Employee    
|                                   |  | Prepaid for 
|RosAnt                             |  | oil & gas   
|                                   |  | Prepaid for 
|                                   |  | repair and  
|Kiirahbud                          |  | construction
|                                   |  | Research    
|Poltavneftegasgeology              |  | and Geology 
|                                   |  | Advance to  
|Mrs. Vasilishina T.V               |  | Employee    
|                                   |  | Research    
|ICR Engineering                    |  | and Geology 
|                                   |  | Prepaid for 
|Naftoimpex                         |  | oil & gas   
|                                   |  | Research    
|State Comitee on Mineral Resources |  | and Geology 
|                                   |  | Other       
|Strim TOV                          |  | prepayments 
|Payroll and other settlements with | 
|employees                          |  |             
|Other                              |  |             
|                                   |  |             
|Total                              |  |             
|                                   |  |             
|                                   |  |             

Other  accounts
payable and accruals as of December 31, 2004 mostly consisted of  advances from former
shareholders and other non-recurring research and  development, geological and
exploration works, as well as payroll, short term  advances to employees and other
prepayments for repair and constructions  services.

F-17

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

16.  PROFIT
INTEREST PAYABLE

Profit
interest payable as of December 31, 2004 consisted of the following:

|                         | 2004
|------------------------ | ----
|Poltavaneftegasgeologiya |     
|                         |     
|Total                    |     
|                         |     
|                         |     

Profit
interest payable was accrued and partially paid by the Company in respect to  profits
earned for 2002 year in accordance with PSA # 01-SD dated April 26,  2000.

17.  LONG-TERM
PAYABLE Primarily related party

Long  term
payable as of December 31, 2004 consisted of the following:

|           | Issuedate | Duenot earlierthan | 2004
|---------- | --------- | ------------------ | ----
|Fort Trade |           | Nov-               |     
|           |           |                    |     
|           |           | Nov-               |     
|Astark     |           | 2002               |     
|           |           | Nov-               |     
|Sipay      |           | 2002               |     
|           |           |                    |     
|Total      |           |                    |     
|           |           |                    |     
|           |           |                    |     

Long-term
payable to Astark and Sipay as of December 31, 2004 are represented by  promissory notes
issued in November 2002 at no interest and payable not earlier  than November 5, 2005.
Any valuation adjustment due to the lack of interest has  not been calculated. Fort Trade
is a related party and the Company is not  required to recognize any deferred interest on
this interest free note.

18.  SHAREHOLDERS EQUITY

On  or about
October 4, 2004 the Company entered into a Stock Purchase Agreement and  Plan of
Reorganization for the acquisition of Esko Pivnich, the Companys  operating
subsidiary. The transaction was entered into by Sunrise Energy  Services, Inc., the
Companys predecessor, and EP and its shareholders.  Under the terms of the
Agreement, the shareholders of Esko Pivnich gained the  right to acquire a total of
approximately 91% of Sunrises shares.

The  current
consolidated financial statements account for the transaction in  accordance with SFAS
141 Business Combinations under the  reverse acquisition treatment,
whereby Esko Pivnich is considered to  be the actual acquirer, and Sunrise Energy
Services Inc., the dormant shell  entity or the nominal acquirer. Since no fair market
value can be determined for  the issuers stock, no goodwill is recognized on the
reverse acquisition.

F-18

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

Net assets of
the acquired entity, Sunrise Energy Resources,  Inc. (formerly known as Sunrise Energy
Services, Inc.)  as at December 31, 2004, were as follows:

|                                                | 2004
|----------------------------------------------- | ----
|Cash                                            |     
|Accounts Payable                                |     
|Advances from former shareholders               |     
|Other accounts payable                          |     
|                                                |     
|100% of Net Assets                              |     
|                                                |     
|                                                |     
|                                                |     
|Less cash balances held as at December 31, 2004 |     
|                                                |     
|Preacquisition deficit                          |     
|                                                |     
|                                                |     
|                                                |     
|Cash inflow on reverse acquisition              |     
|                                                |     
|                                                |     

No  dividends
were declared or paid by the Company during the year ended December  31, 2004.

19.  RELATED
PARTIES

Related
parties include shareholders and entities under common ownership. Transactions  with
related parties are performed on terms that are comparable to those  available to
unrelated parties. For details of related party balances  outstanding as of December 31,
2004 see Notes 5, 10 and 12.

Included  in
the income statement for the years ended December 31, 2004 and 2003, and  otherwise not
disclosed anywhere in the current consolidated financial  statements, are the following
transactions with related parties:

|                           | 2004 | 2003  
|-------------------------- | ---- | ------
|Interest income from Infox |      | $1,922
|                           |      |       
|                           |      |       

20.  COMMITMENTS
AND CONTINGENCIES

Licenses commitments
During 2004 the Company received geological  and exploration
license agreements to develop Karaikozovsks, Rogan and  Rakitnyansk fields. The
following amounts of investments are to be incurred  under the terms of those agreements
during the periods indicated in the table  below:

|                      | Period | Amount   
|--------------------- | ------ | ---------
|Rogan field           |        | 2005-2009
|Rakitnyansk field     |        | 2005-2009
|Karaikozovsk's  field |        | 2005-2009
|                      |        |          
|Total                 |        |          
|                      |        |          
|                      |        |          

F-19

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

Environmental
remediation Under the laws of Ukraine the Company is  obligated to
conform to certain environmental remediation obligations related to  the oil and gas
production activities. This amount can not be estimated but is  considered to not be
material.

Lease
commitments The Company leases office space and the rent  is
disclosed in other notes. The Companys future lease commitments as of  December 31,
2004 are as follows:

|     | 2004
|---- | ----
|2005 |     
|     |     
|     |     

Litigation  The
Company has been and continues to be the subject  of legal proceedings and adjudications
from time to time. Management believes  that the resolution of all business matters which
will have a material impact on  the Companys financial position or operating
results have been recorded.

JSC
Ukrneft, Okhtirkaneftegas In 2003 the Company filed a  claim
against JSC Ukrneft, Okhtirkaneftegas, in respect to the advance paid by  the Company in
2002 in amount of $189,306 to complete certain capital  construction works under the
terms of PSA # 01-SD dated April 26, 2000 (Notes 4  and 6). In April 2004 after the
number of hearings by the courts of different  levels, the Supreme Court of Ukraine
ordered Okhtirkaneftegas to pay outstanding  balance without further delays. As of March
31, 2005 the balance had not been  paid.

Taxes  During
2004 the Company was examined by the State Tax Inspection of  Podolsk region, Kiev, and
was assessed additional VAT and Profit tax fines and  penalties in the aggregate amount
of $569,521 related to 2003 and 2002 years.  The amounts were accrued in the respective
consolidated financial statements in  full. The Company has filed an appeal against the
State Tax Inspection of  Podolsk region, Kiev, protesting and the Company believes it
will prevail.

Ukrainian
Tax and Regulatory Environment  The  government
of Ukraine continues to reform the business and commercial  infrastructure in its
transition to a market economy. As a result laws and  regulations affecting businesses
continue to change rapidly. These changes are  characterized by poor drafting, different
interpretations and arbitrary  application by the authorities. In particular taxes are
subject to review and  investigation by a number of authorities enabled by law to impose
fines and  penalties. While the Company believes it has provided adequately for all tax
liabilities based on its understanding of the tax legislation, the above facts  may
create tax risks for the Company.

21.  RISK
MANAGEMENT POLICIES

Management  of
risk is an essential element of the Companys operations. The main risks  inherent
to the Companys operations are those related to credit risk  exposures, market
movements in foreign exchange rates and in interest rates. A  description of the Companys
risk management policies in relation to those  risks follows.

Credit
risk The Company is exposed to credit risk which is the  risk that
one party to a financial instrument will fail to discharge an  obligation and cause the
other party to incur a financial loss.

F-20

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

The  Company
structures the levels of credit risk it undertakes by placing limits on  the amount of
risk accepted in relation to one customer, or groups of customers.  Limits on the level
of credit risk by customer are approved quarterly by the  Credit Committee.

Sales  to major
customers were:

|                 | 2004 | 2003       
|---------------- | ---- | -----------
|Energia          |      | --         
|RosAnt TOV       |      | --         
|Poligonal        |      | --         
|Prominvestgazbud |      | --         
|Infox            |      | --         
|Romnaftaproduct  |      | --         
|CJSC Ukrnafta    |      | $   170,037
|Agronafta        |      | 26,854     
|                 |      |            
|                 |      | $   196,891
|                 |      |            
|                 |      |            

Currency
risk  Currency risk is defined as the risk that the value  of a
financial instrument will fluctuate due to changes in foreign exchange  rates.

The  Credit
Committee sets limits on the level of exposure by currencies (primarily  Ukrainian Hrivna
and US Dollar), by entities and in total.

Interest
rate risk Interest rate risk arises from the possibility  that
changes in interest rates will affect the value of the financial  instruments.

Currently,  the
Company management approach to the interest risk limitation is borrowing at  fixed rates
and for short periods.

22.  CONCENTRATION
OF BUSINESS RISK

The  Companys
operating activities are limited to Ukraine. Laws and regulations  affecting businesses
operating in Ukraine are subject to rapid changes and the  Companys assets and
operations could be at risk due to negative changes in  the political and business
environment.

23.  OIL
AND GAS DISCLOSURES (UNAUDITED)

The following
information is presented in accordance with the Statement of Financial  Accounting
Standards No. 69,  Disclosure about Oil and Gas Producing Activities (SFAS No. 69).

(A)  Costs
Incurred in Oil and Gas Exploration and Development Activities. The  following costs
were incurred in oil and gas exploration and development  activities during the years
ended December 31, 2004 and 2003 have been included  in cost of sales.

|                  | For the years endedDecember 31, |        
|----------------- | ------------------------------- | -------
|
|Exploration costs |                                 | $26,986
|                  |                                 |        
|Total             |                                 | $26,986
|                  |                                 |        
|                  |                                 |        

F-21

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

The  above
costs were expensed as incurred.

(B)  Results
of operations from Producing Activities. Results of operations from  producing
activities for the years ended December 31, 2004 and 2003 are  presented below.

|                               | For the years endedDecember 31, |          
|------------------------------ | ------------------------------- | ---------
|
|Sales of Oil and Gas produced  |                                 | $ 196,891
|Production expenses (including |                                
|depreciation expense)          |                                 | (412,412 
|Exploration costs              |                                 | (26,986  
|Income tax expense             |                                 | --       
|                               |                                 |          
|Total expenses                 |                                 | (439,398 
|                               |                                 |          
|Total                          |                                 | $(242,507
|                               |                                 |          
|                               |                                 |          

(C)Estimated
Proved Oil and Gas Reserves. The Companys estimate of its net proved  and
proved developed oil and gas reserves as at December 31, 2004 is as follows.  Proved oil
and gas reserves are the estimated quantities of crude oil, natural  gas and natural gas
liquids which geological and engineering data demonstrate  with reasonable certainty to
be recoverable in future years from known  reservoirs under existing economic and
operating conditions; i.e. prices and  costs as of the date the estimate is made.

Prices  include
consideration of changes in the existing prices provided only by  contractual
arrangement, but not on escalation based on future conditions.  Proved developed reserves
are reserves that can expected to be recovered through  existing wells with existing
equipment and operating methods. Additional oil and  gas expected to be obtained through
the application of fluid injection or other  improved mechanisms of primary recovery are
included as proved developed  reserves only after testing by a pilot project or after the
operation of an  installed program has confirmed through production response that
increased  recovery will be achieved.

At  December
31, 2004 and 2003 the Companys proved reserves were as follows:

|                             | Liquids(MBBLS) | Gas(MMCF)
|---------------------------- | -------------- | ---------
|Balance at December 31, 2002 |                | 7,869    
|Production                   |                | (27      
|                             |                |          
|Balance at December 31, 2003 |                | 7,842    
|Production                   |                | --       
|                             |                |          
|Balance at December 31, 2004 |                | 7,842    
|                             |                |          
|                             |                |          

F-22

---

SUNRISE
ENERGY RESOURCES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

---

(D)Standardized
measure of Discounted Future Net Cashflows. Future oil and gas sales,  production and
development costs have been estimated using prices and costs in  effect at the end of the
years indicated, except in those instances where the  sale of oil and natural gas is
covered by contracts, in which case, the  applicable contract prices, including fixed and
determinable escalations, were  used for the duration of the contract. Thereafter, the
current spot price was  used. All cash flow amounts net to the Company, including income
taxes, are  discounted at 10%.

Future  income
tax expenses are estimated using an estimated combined federal and local  income tax rate
of 25% in Ukraine was used. Future general and administrative  expenses were estimated by
the management based on the level of such expenses  for similar fields.

Changes  in
demand for oil and natural gas, inflation and other factors make such  estimates
inherently imprecise and subject to substantial revision. This table  should not be
construed to be an estimate of the current market value of the  Companys proved
reserves. Management does not rely upon the information  that follows in making
investment decisions.

|                                   | December 31,2004(Inthousands)
|---------------------------------- | -----------------------------
|Future oil and gas sales           |                              
|Future production cash costs       |                              
|Future administrative expenses     |                              
|Future development costs           |                              
|Future income taxes                |                              
|Future profit interest payable     |                              
|                                   |                              
|Future net cash flows              |                              
|Future net cash flows              |                              
|10% annual discount for estimated  |                              
|Timing of cash flows               |                              
|Standardized measure of discounted |                              
|future net cash flows              |                              
|                                   |                              
|                                   |                              
|                                   |                              
|                                   |                              

The
computation of the standardized measure of discounted future net cash flows  relating to
proved oil and gas reserves at December 31, 2004 was based on the  average gas prices of
approximately $2 per MCF and on average liquids prices of  approximately $35 per barrel.

F-23

---

ITEM  8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL  DISCLOSURE

Our Board of
Directors  approved the engagement of Independent  Registered Public Accounting Firm -
John A. Braden & Company,  PC,  of  Houston,  Texas  (John  A.  Braden & Co.,
P.C.) as our  independent  accountants.  The  Company  Corporation  has  appointed
John A.  Braden & Co.,  P.C..  on  November  1, 2004 to audit the  Company's
financial  statements for the year ending December 31, 2004.

John  A. Braden
& Co., P.C.s report on the financial statements of the  Company for the year
ended December 31, 2004 did not contain an adverse opinion  or disclaimer of opinion, and
were not qualified or modified as to uncertainty,  audit scope, or accounting principles,
except in respect to an explanatory  paragraph concerning the Companys ability to
continue as a going concern.

During  the
most recent fiscal year and any subsequent interim periods preceding the  date of this
report there were no:

| | (a)
disagreements  between the Company and John A. Braden & Co., P.C. on any matter of
accounting  principles or  practices,  financial  statement  disclosure,  or  auditing
scope  or  procedure  which,  if not  resolved  to the  satisfaction  of John A. Braden
& Co, P.C.  would have caused them to make  reference to the subject  matter of the
disagreement or disagreements in their report on the financial statements for such year;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)
reportable  events  involving  John A. Braden & Co.,  P.C.  that would have  required
disclosure  under Item  304(a)(iv)(A) of Regulation S-B; or
| | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)
written or oral  consultations  between  the  Company and John A.  Braden & Co.,
P.C.  regarding  either the  specific  application  of accounting  principles or the type
of audit opinion that might be rendered on the Company  's financial  statements  that
was  considered  an important  factor by the Company in reaching a decision as to an
accounting,  auditing or  financial  reporting  issue,  or any matter that was the
subject of a  disagreement  or a  reportable event, that would have required disclosure
under Item 304 (a)(2) of Regulation S-B.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM  8a.
CONTROLS AND PROCEDURES

The  Companys
Principal executive officers and principal financial officer,  based on their evaluation
of the Companys disclosure controls and  procedures (as defined in Rules 13a-14 ( c
) of the Securities Exchange Act of  1934) as of December 31, 2004 have concluded that
the Companys disclosure  controls and procedures are adequate and effective to
ensure that material  information relating to the Companys and their consolidated
subsidiary is  recorded, processed , summarized and reported within the time periods
specified  by the SEC s rules and forms, particularly during the period in which
this  annual report has been prepared.

The  Companys
principal executive officers and principal financial officer have  concluded that there
were no significant changes in the Companys internal  controls or in other factors
that could significantly affect these controls as  of the end of the period covered by
this report based on such evaluation, and  that there was no significant deficiencies or
material weaknesses in the  Companys internal controls.

30

---

PART  III

ITEM  9.
DIRECTORS AND EXECUTIVE OFFICERS OF COMPANY

Directors
and Executive Officers

All  directors
of our company hold office until the next annual meeting of the  shareholders or until
their successors have been elected and qualified. The  officers of our company are
appointed by our board of directors and hold office  until their death, resignation or
removal from office.

|Name                     | Position | Age                           | Date elected orappointed
|------------------------ | -------- | ----------------------------- | ------------------------
|Konstantin Tsirulnikov   |          | CEO, CFO, Sunrise Energy      |                         
|                         |          | Resources, Inc.               |                         
|David A. Melman          |          | Independent Director of       |                         
|                         |          | Sunrise Energy Resources Inc  |                         
|Leon Golden              |          | Independent Director, Sunrise |                         
|                         |          | Energy Resources, Inc.        |                         
|Abraham Bennun           |          | Independent Director of       |                         
|                         |          | Sunrise Energy Resources Inc  |                         
|Vyacheslav Chuchminov    |          | CEO, Esko Pivnich             |                         
|Taras Burdeniy           |          | CFO, Esko Pivnich             |                         
|Mrs. Raissa Volodarskaya |          | Chief Accountant              |                         

Directors
and Key Personnel

Mr. Konstantin
Tsirulnikov,CEO, CFO of Sunrise Energy Resources (Age 26). Mr. Tsiryulnikov is
president of Odessa Consulting (Canada), and has extensive experience in
international business relating to the former Soviet Union countries, concentrating
in the Oil and Gas industry. Mr. Tsiryulnikov also serves as the manager of
international relations for the L.Z. Group (Canada). Mr. Tsiryulnikov holds an
International Business Certificate from the Kyiv Financial Institute and a B.S. degree
from the University of Toronto.

Mr.
Tsiryulnikov is the son of Eduard Tsiryulnikov, Halton Impex Corp.s sole
shareholder. As provided below, Halton Impex is a privately owned company, which  will
own 65% of the issued shares of the Company as part of the Transaction.

31

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Mr. David A.
Melman,Director of Sunrise Energy Resources and former CEO and CFO. Mr. Melman,
age 62, has been President and sole director of the Company since 1997. Since May
2000, Mr. Melman has been the Chief Executive Officer and director of XCL Ltd (OTC
Pink Sheets), an oil and gas company headquartered in Lafayette, Louisiana,
presently being restructured. Since June 2001, Mr. Melman has served as Chief
Executive Officer and director of Republic Resources, Inc. (OTC Pink Sheets), a
company engaged in the containment and remediation of contaminated groundwater. Since
February 2004, Mr. Melman has been a director of Omni Energy Services, Inc. (Nasdaq), a
company providing an array of services to the oil and gas industry. Mr. Melman holds a
B.S. degree in economics, and J.D. and LLM law degrees.

Mr. Leon
Golden,Independent director of Sunrise Energy Resources (Age 43). Mr. Golden is a
certified public accountant with over 17 years of experience. For the past two years,
Mr. Golden has had his own CPA practice in New York City, and prior to that he worked as
a public accountant for another New York City CPA Firm for fifteen years. Mr. Golden
serves on the board of directors of ABDC (OTCBB--ABDV). Mr. Golden holds a B.S.
degree in Accounting from Brooklyn College.

Mr. Abraham
Bennun,Independent director - of Sunrise Energy Resources Inc. (Age 33). Mr. Bennun
has financial and legal background relating to several industries, one of which is
the Oil and Gas industry. Earlier this year Mr. Bennun joined Thor Capital Group, Inc.
(Moscow Office) and serves as a Senior Vice President of the firm. Prior to joining Thor
Capital, Mr. Bennun worked as an associate at Kronish Lieb Weiner & Hellman, LLP
(New York). From February 1997 to March 1999, Mr. Bennun worked as an advisor with
the Official Receiver, Justice Department of Israel.

Mr.  Bennun
holds a LLB degree from Cardiff University School of Law (UK), and a LLM  degree in
Banking, Finance and Corporate Law from Fordham University (N.Y.).

Mr.
Chuchminov Vyacheslav,CEO, Esko Pivnich - (Age 46). Mr. Chuchminov has been serving
as the Chief Executive Officer of Esko-Pivnich since May 2002. Prior to that, he
served in senior management positions of Alchevsk Coking Plant and Communar Coking
Plant. Mr. Chuchminov graduated from the Dnepropetrovsk Metallurgy Institute in 1979
with a Master's degree of Chemical Engineer. Mr. Chuchminov brings over 20 years
experience of running various Ukrainian enterprises in the commodities sector.

Mr.
Taras Burdeniy, CFO, Esko Pivnich  (Age 26). Prior to his
nomination as CFO of Esko Pivnich Mr Burdeniy has been serving as the Cost  Accountant of
the Company since June 2002. Immediately prior to that he  graduated from Kiev National
Economics University.

Mrs. Raissa
Volodarskaya,Chief Accountant, Esko Pivnich - (Age 56). Mrs. Volodarskaya has been
serving as the Chief Accountant of Esko-Pivnich since April 2002. Prior to that she
worked as the Chief Accounting Officer of Bivex Ltd. Mrs Volodarskay has extensive
experience in industrial tax and financial accounting in Ukraine having been worked as
Chief Accountant for last 20 years in the number of medium size companies.

Mr. Anatoliy
Dyagterev,Operations Director - Esko Pivnich (Age 38). Mr. Dyagterev serves as the
Operations Director in Esko Pivnich from June 2002. Prior to than he worked as Chief
Engineer, Technical and Productions Director in a number of Ukrainian oil & gas
companies, including the subsidiary of Ukrnafta, Poltavagasdobicha. Mr. Dyagterev
graduated from Moscow Gubkin Institute of Oil & Gas in 1984 with a Master's
degree of Well - drilling Engineer.

32

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Mr.
Vladimir Moroz, Chief Engineer, Esko Pivnich (Age 38). Mr. Moroz  joined
the Company as Chief Engineer of Esko-Pivnich in October 2004. In  2002-2004 he worked as
Chief Engineer in the State Emergency Service of Ukraine.  Prior to that, in 1995  2002
he was the Deputy Director on Science in the  NTP Burovaya Tekhnika Mr. Moroz
graduated from Ivano-Frankovsk  Institute of the Oil&Gas in 1992 with a Masters
degree of Well  drilling Engineer. Also, in 2001 he got the Masters Degree in
Poltava  Technical University on the Accounting and Audit Department.

Mr. Viktor
Dvornichenko,Chief Technologist, Esko Pivnich - (Age 52). Mr. Dvornichenko has been
serving as the Chief Technologist of Esko-Pivnich since June 2002. Prior to that, since
1998 he served in Technical and Commercial Director in a number of medium size
oil & gas production companies in Ukraine, including ZAO Ukrainian
neftepromislovaya company and OOO Ukragroneft. In 1995-1998 he
served as Deputy Manager of the Export-Import department of Ukrnafta. Mr.
Dvornichenko graduated from Ivano-Frankovsk Institute of the Oil & Gas in 1978
with a Master's degree of Well - drilling Engineer.

Mr. I.V.
Ivanets(Age 46) joined the Company in December 2002 as an Oil & Gas extraction
engineer. Prior to that he worked as a geology engineer for
Khantymansiyskneftegazgeologiya, a geological survey and drilling contractor in the
oil rich Khanty-Mansiysk region of neighbouring Russian Federation.

COMMITTEES
OF THE BOARD OF DIRECTORS

The Board of
Directors has a Compensation  Committee and an Audit Committee.  The Audit Committee
currently consists  of two directors Leon Golden and David Melman.  The Compensation
Committee is made up of Mr. Golden and Mr. Bennun.

The  purpose of
the Compensation Committee is to review the Companys  compensation of its
executives, to make determinations relative thereto and to  submit recommendations to the
board of Directors with respect thereto in order  to ensure such officers and directors
receive adequate and fair compensation.

During  the
fiscal year ending 2004, the Audit Committee was responsible for the general  oversight
of audit, legal compliance and potential conflict of interest matters,  including (a)
recommending the engagement and termination of the independent  public accountants to
audit the financial statements of the Company, (b)  overseeing the scope of the external
audit services, (c) reviewing adjustments  recommended by the independent public
accountant and addressing disagreements  between the independent public accountants and
management, (d) reviewing the  adequacy of internal controls and managements
handling of identified  material inadequacies and reportable conditions in the internal
controls over  financial reporting and compliance with laws and regulations, and (e)
supervising the internal audit function, which may include approving the  selection,
compensation and termination of internal auditors.

For  the fiscal
year ended 2004, the Board of Directors conducted discussions with  management and the
independent auditor regarding the acceptability and the  quality of the accounting
principles used in the reports in accordance with  Statements on Accounting Standards
(SAS) No. 61. These discussions included the  clarity of the disclosures made therein,
the underlying estimates and  assumptions used in the financial reporting and the
reasonableness of the  significant judgments and management decisions made in developing
the financial  statements. The Audit Committee also discussed the other items with the
auditors  required by SAS No. 61 as amended. In addition, the Board of Directors
discussed  with the independent auditor the matters in the written disclosures required
by  Independence Standards Board Standard No. 1.

For  the fiscal
year ended 2004, the Board of Directors have also discussed with  management and its
independent auditors issues related to the overall scope and  objectives of the audits
conducted, the internal controls used by the Company,  and the selection of the Companys
independent auditor.

33

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Pursuant  to
the reviews and discussions described above, the Board of Directors  recommended that the
audited financial statements be included in the Annual  Report on Form 10-KSB for the
fiscal year ended December 31, 2004, and 2003 for  filing with the Securities and
Exchange Commission.

Audit
Committee Financial Expert

Our  Board of
Directors has determined that Mr. Leon Golden is an audit  committee financial
expert. Members of our Audit Committee are independent  under SEC Rule 10A-3.

Code  of
Ethics

The  Company
has adopted its Code of Ethics and Business Conduct for Officers,  Directors and
Employees that applies to all of the officers, directors and  employees of the Company.

Compliance
with Section 16(b) of the Exchange Act

Based  solely
on our review of Forms 3, 4, and 5, and amendments thereto which have  been furnished to
us, we believe that during the year ended December 31, 2004  all of our officers,
directors, and beneficial owners of more than 10% of any  class of equity securities,
timely filed, reports required by Section 16(a) of  the Exchange Act of 1934, as amended.

ITEM  10.
EXECUTIVE COMPENSATION

During  2004,
the Company paid subsidiarys senior management nominal rates which  are comparable
with the basic salaries in Ukraine. No salaries were paid for the  newly nominated
management of Sunrise Energy Resources Inc. The Company  estimates the fair value of the
management compensation for 2004 to be not  materially different from these accrued ones:

|Name and principal position                          | Actual salary
|---------------------------------------------------- | -------------
|Konstantin Tsirulnikov                               |              
|CEO, CFO of Sunrise Energy Resources Inc             |              
|Leon Golden                                          |              
|Independent Director, Sunrise Energy Resources, Inc. |              
|Abraham Bennun                                       |              
|Independent Director, Sunrise Energy Resources, Inc. |              
|David A. Melman                                      |              
|Independent Director of Sunrise Energy Resources Inc |              
|Vyacheslav Chuchminov                                |              
|CEO, Esko Pivnich                                    |              
|Taras Burdeniy                                       |              
|CFO, Esko Pivnich                                    |              
|Raissa Volodarskaya                                  |              
|Chief Accountant                                     |              
|                                                     |              
|Total                                                |              
|                                                     |              
|                                                     |              

34

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The  Company
has not entered into any definitive compensation agreements with its  senior management.
There were no stock options outstanding as at December 31,  2004.

ITEM  11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following
tables sets forth, as of March 31, 2005, the number of and percent of  our common stock
beneficially owned by (a) all directors and nominees, naming  them, (b) our executive
officers, (c) our directors and executive officers as a  group, without naming them, and
(d) persons or groups known by us to own  beneficially 5% or more of our common stock.
Each person has sole voting and  investment power with respect to the shares of common
stock, except as otherwise  indicated. Beneficial ownership consists of a direct interest
in the shares of  common stock, except as otherwise indicated.

The  following
table sets forth for the fiscal year ended December 31, 2004, the  individuals or
entities known to the Company to beneficially own 5% or more of  the Companys
outstanding shares of voting securities.

|Name Of Beneficial Owner | Titleof Class | Numberof Shares | Percent ofClass
|------------------------ | ------------- | --------------- | ---------------
|Halton Impex Corp.       |               | Common          |                
|627 Lyons Lane,          |              
|Oakville,                |              
|Ontario L6J 5Z7          |              
|Canada                   |              
|Mr. David A. Melman      |              
|5353 Memorial Drive      |              
|Suite 4012               |              
|Houston Texas 77007      |               | Common          |                

(1)  Includes
10,479,900 shares to be transferred to Halton Impex Corp. under the  terms of the Merger
Agreement, in consideration of Halton Impex Corp.s  shares in Esko Pivnich. The
sale of the shares will be exempt from registration  under Section 4(2) of the Securities
Act of 1933, as amended, as the purchasers  had full information concerning the business
and affairs of Company and all  certificates issued bear appropriate restrictive legends.
No underwriter is  involved in the transaction.

(2) Does not
include the shares held by Midland Trust Company,  Ltd. for which Mr. Melman held an
irrevocable  proxy  to vote on certain matters.  Mr. Melman disclaims any beneficial
ownership of such shares.

Security
Ownership of Management

The  following
table sets forth information concerning the beneficial ownership of  the Companys
New Common Stock for the fiscal year ended December 31, 2004  by Mr. Konstantin
Tsirulnikov, CEO and CFO of the Company, and Mr. Melman,  Independent Director.

35

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|Name and Address ofBeneficial Owner | Amount of Beneficial Interest | Percent ofClass
|----------------------------------- | ----------------------------- | ---------------
|Mr. Konstantin Tsirulnikov          |                               | 65             
|Mr David A. Melman                  |                               | 1              

|(1) |  | Mr.
Konstantin Tsirulnikov is the son of Mr. Eduard Tsirulnikov the sole shareholder of
Halton Impex Corp.
|--- |  | ----------------------------------------------------------------------------------------------------------

ITEM  12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except  as
discussed below and elsewhere in this Report, there have been no  transactions, or
proposed transactions, which have materially affected or will  materially affect the
Company in which any director, executive officer or  beneficial holder of more than 10%
of the outstanding common stock, or any of  their respective relatives, spouses,
associates or affiliates, has had or will  have any direct or material indirect interest.

As  at the date
of this annual report, we do not have any policies in place with  respect to whether we
will enter into agreements with related parties in the  future.

ITEM  14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES

During 2004
professional  services  were mostly  rendered for the Company by John Braden and Co.,
P.C.  accounting  firm.

Total
professional fees incurred by the Company for the years ended December 31, 2004  and 2003
consisted of the following:

|               | 2004John Bradenand Co. | 2003John Bradenand Co.
|-------------- | ---------------------- | ----------------------
|Audit          |                        | 45,000                
|Audit related  |                        | --                    
|Tax            |                        | --                    
|All other fees |                        | --                    
|               |                        |                       
|Total          |                        | 45,000                
|               |                        |                       
|               |                        |                       

Audit  Fees

The  Audit Fees
for 2004 were for services associated with the consolidated U.S. GAAP  audits, and
offering memoranda.

Audit-Related
Fees

During  2004
and 2003 we have not paid any Audit-Related Fees.

36

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Tax  Fees

During  2004
and 2003 we have not paid any Tax-Fees.

All  Other
Fees

During  2004
and 2003 we have not paid any other fees.

Audit
Committee Pre-Approval Policies and Procedures

The
Sarbanes-Oxley Act of 2002 required us to implement a pre-approval process for  all
engagements with our independent public accountants. In compliance with  Sarbanes-Oxley
requirements pertaining to auditor independence, our Audit  Committee pre-approves the
engagement terms and fees of John Braden and Co, P.C.  for all audit and non-audit
services, including tax services. Our Audit  Committee pre-approved the engagement terms
and fees of John Braden and Co.,  P.C. for all services performed for the fiscal years
ended December 31,  2004.

PART
IV

ITEM  13.
EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES AND REPORTS ON FORM 8-K

Reports
on Form 8-K

A  Current
Report on Form 8-K filed by the Company on January 3, 2005, and Schedule  14F-1 filed by
the Company on January 6, 2005.

The  following
Consolidated Financial Statements pertaining to Sunrise Energy  Resources are filed as
part of this annual report:

Report of
Independent  Registered Public Accounting Firm - John Braden and Co., P.C. for the year
ended December 31,  2004

Consolidated
Balance Sheet as of December 31, 2004

Consolidated
Statements of Changes in Stockholders Equity (Capital Deficit) for the  years ended
December 31, 2004 and 2003

Consolidated
Statement of Operations and Comprehensive Loss for the years ended December 31, 2004 and
2003

Consolidated
Statements of Cash Flows for the years ended December 31, 2004 and 2003

Notes to the
Consolidated Financial Statements for the year ended December 31, 2004

---

|ExhibitNumber | Description | Incorporation by Reference                             
|------------- | ----------- | -------------------------------------------------------
|3             | .1          | Amended and Restated Certificate of Incorporation of   
|              |             | the Company                                            
|              |             |                                                        
|3             | .2          | Bylaws of the Company                                  
|              |             |                                                        
|              |             |                                                        
|10            | .1          | Shareholders Agreement.                                
|              |             |                                                        
|              |             |                                                        
|14            |             | Code of Ethics                                         
|21            | .1          | List of Subsidiaries                                   
|31            | .1          | Rule 13a-14(a) Certification of Chief Executive Officer
|31            | .2          | Rule 13a-14(a) Certification of Chief Financial Officer
|32            | .1          | Section 1350 Certification of Chief Executive Officer  
|32            | .2          | Section 1350 Certification of Chief Financial Officer  

38

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SIGNATURES

Pursuant  to
the requirements of Section 13 or 15(d) of the Securities Exchange Act of  1934, the
Registrant has duly caused this annual report to be signed on its  behalf by the
undersigned, thereunto duly authorized.

| | Sunrise
Energy Resources, Inc./s/ Konstantin TsirulnikovKonstantin Tsirulnikov
President and Chief Executive Officer
| | --------------------------------------------------------------------------------------------------------------------

Pursuant  to
the requirements of the Securities Exchange Act of 1934, this report has been  signed
below by the following persons on behalf of the Registrant and in the  capacities and on
the dates indicated.

|Date          | Signature | Title                     
|------------- | --------- | --------------------------
|April 5, 2005 |           | /s/ Konstantin Tsirulnikov
|              |           | Konstantin Tsirulnikov -  

39

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