SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


Form
10-K


þANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For
the fiscal year ended December 31, 2008





o TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For
the transition period from ________to _________





Commission
File Number 001-16173




Sunrise
Solar Corporation


(Exact
name of small business issuer as specified in its charter)





Nevada
            88-0460457(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)4703
      Shavano Oak, Suite 104San
      Antonio, Texas
            78249(Address
      of principalexecutive
      offices)
            (Zip
      Code)Registrant’s
      telephone number, including area code:  (210)
      541-9100









Securities
registered pursuant to Section 12(b) of the Act: None





Securities
registered pursuant to Section 12(g) of the Act:





Title
            
            Name of each exchange
      on which registeredCommon
      stock, $.0001 par value
            
            NASDAQ
      OTC





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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 þNo o





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B 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.




Yes oNo
þ





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act:





Large
      accelerated filer
            o
            
            Accelerated
      filer
            oNon-accelerated
      filer
            o
            
            Smaller
      reporting company
            þ





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).




Yes oNo
þ





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant, based on the average of the bid and ask prices
on December 31, 2008, as reported by the Over the Counter Bulletin Board
was approximately $230,470.  Shares of common stock held by each
officer and director and by each person who owns 5%or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates.  This determination of affiliate status is not
necessarily a conclusive determination for other purposes.





There
were 9,612,744 shares of the registrant’s common stock issued and outstanding as
of February 28, 2009.













SUNRISE
SOLAR CORPORATION


TABLE OF
CONTENTS




PagePART
      IItem
      1
              Description
      of Business
              
              2Item
      1A
              Risk
      Factors
              
              3Item
      1B
              Unresolved
      Staff Comments
              
              4Item
      2
              Description
      of Properties
              
              4Item
      3
              Legal
      Proceedings
              
              4Item
      4
              Submission
      of Matters to a Vote of Security Holders
              
              5PART
      IIItem
      5
              Market
      for Common Equity, Related Stockholder Mattersand
      Issuer Purchases of Equity Securities
              
              6Item
      6
              Selected
      Financial Data
              
              7Item
      7
              Management’s
      Discussion and Analysis of Financial Conditionand
      Results of Operations
              
              8Item
      7A
              Quantitative
      and Qualitative Disclosures About Market Risk
              
              10Item
      8
              Financial
      Statements and Supplementary Data
              
              10Item
      9
              Changes
      In and Disagreements with Accountants on Accountingand
      Financial Disclosure
              
              11Item
      9A
              Controls
      and Procedures
              
              11Item
      9B
              Other
      Information
              
              12PART
      IIIItem
      10
              Directors,
      Executive Officers and Corporate Governance
              
              13Item
      11
              Executive
      Compensation
              
              15Item
      12
              Security
      Ownership of Certain Beneficial Owners and Managementand
      Related Stockholder Matters
              
              16Item
      13
              Certain
      Relationships and Related Transactionsand
      Director Independence
              
              16Item
      14
              Principal
      Accountant Fees and Services
              
              17PART
      IVItem
      15
              Exhibits
      and Financial Statement Schedules
              
              18Signatures
              
              19











Special
Note Regarding Forward Looking Information




Sunrise Solar Corporation (referred to
in this Annual Report on Form 10-K as “we” or the “Company”) desires to take
advantage of the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995.  This report contains a number of forward-looking
statements that reflect management’s current views and expectations with respect
to our business, strategies, future results and events and financial
performance.  All statements made in this annual report other than
statements of historical fact, including statements that address operating
performance, events or developments that management expects or anticipates will
or may occur in the future, including statements related to future cash flows,
revenues, profitability, adequacy of funds from operations, statements
expressing general optimism about future operating results and non-historical
information, are forward-looking statements.  In particular, the words
“believe,” “expect,” “intend,” “ anticipate,” “estimate,” “may,” “will,” and
variations of such words and similar expressions identify forward-looking
statements, but are not the exclusive means of identifying such statements and
their absence does not mean that a statement is not
forward-looking.  These forward-looking statements are subject to
certain risks and uncertainties, including those discussed below.  Our
actual results, performance or achievements could differ materially from
historical results as well as those expressed in, anticipated, or implied by the
forward-looking statements contained herein.  We do not undertake any
obligation to revise these forward-looking statements to reflect any future
events or circumstances.




Readers should not place undue reliance
on forward-looking statements, which are based on management’s current
expectations and projections about future events, are not guarantees of future
performance, are subject to risks, uncertainties and assumptions (including
those described below) and apply only as of the date of this
report.  Our actual results, performance or achievements could differ
materially from the results expressed in, or implied by, the forward-looking
statements contained herein.  Factors that could cause or contribute
to such differences include, but are not limited to, those discussed in “Risk
Factors” below as well as those discussed elsewhere in this report, and the
risks discussed in our press releases and other communications to shareholders
issued by us from time to time, which attempt to advise interested parties of
the risks and factors that may affect our business.  We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.




1




PART
I




ITEM 1 - BUSINESS





Unless
the context otherwise requires, “SSC”, “Company”, “we”, “us” and “our” refer to
Sunrise Solar Corporation and its subsidiaries combined.





Sunrise
Solar Corporation intends to develop and commercialize leading edge solar power
technologies.  We will bring solar power products to the consumer
market primarily by utilizing our Internet presence.  We also intend
to distribute products to large public and commercial purchasers through
wholesale channels.





In our
early history, our revenue was derived principally from software services and
BioFuel production.  Both of these prior businesses are now considered
discontinued operations.  Currently, significant resources have been
used in the establishment of our corporate structure for finance, reporting, and
governance, and we would anticipate that such expenses will decrease, as a
percentage of revenue, as our business increases.





On May 5,
2008, we changed our name from Systems Management Solutions, Inc. to Sunrise
Solar Corporation, and effected a one-for-five reverse stock split. For purposes
of discussion and disclosure, we refer to the organization, both pre and post
name change as Sunrise Solar Corporation.





Management
is considering the impact of the following industry trends as they impact the
manufacturing of complete photovoltaic systems and planned business
model:





•
            Solar
      cell pricing trends around the world: Recently, the key material in the
      production of solar cells (silicon) has been in limited supply.
      Consequently, prices and availability of solar modules have been limited.
      Solar cells are the major component cost in a photovoltaic module. The
      Company has responded by seeking long-term supply agreements for solar
      cells where pricing is adjusted quarterly to market rates. To date, the
      Company has not entered into any long-term supply agreements for solar
      cells. Our intent is to secure ample solar cell supply to meet our growth
      needs and to avoid the risk of long-term contract pricings with suppliers
      whose products are expected to see a decline in the average selling price.
      Industry experts believe that additional planned expansion of silicon
      processing factories coming on line over the next 18 months will produce
      enough raw materials to create an oversupply on projected demand. Failure
      to effectively manage our supply will hinder our expected growth and our
      component costs may have an adverse affect on the Company’s profitability;
      and





•
            Government
      subsidies: Federal and State subsidies relating directly to solar
      installations are an important factor in the planned growth of the solar
      industry. These subsidies are very important to growing the market for
      photovoltaic systems because they provide a significant economic incentive
      to all buyers. Without these incentives, industry growth would likely
      stall. These regulations are constantly being amended and will have a
      direct effect on our rollout of our planned franchise network among those
      states that offer superior incentives to the solar
    industry.





2





ITEM
1A – RISK FACTORS





You
should consider the following discussion of risks as well as other information
regarding our common stock. The risks and uncertainties described below are not
the only ones. Additional risks and uncertainties not presently known to us or
that we currently deem immaterial also may impair our business operations. If
any of the following risks actually occur, our business could be
harmed.





Competition




SSC’s
business strategy is to be a leading supplier of solar products and
technologies, both domestically and internationally.  SSC believes the
following to be the keys and risks to its success:  marketing of solar
technologies through aggressive promotional campaigns to both commercial and
consumer users, achieving economies of scale, research and development of solar
and other alternative energy technologies, and establishing a rapport with
distributors and installers interested in alternative energy
systems.  The alternative energy industry is relatively new, and a
suitable customer base is not currently adequately defined.  Given
that the customer base may be narrow, it is possible that other solar technology
providers may provide significant competition for these markets.





Reliance on Key
Personnel




While
certain of SSC’s officers and employees have extensive experience in business
management, none of them have any prior experience in advising or managing an
enterprise such as SSC.





Sales
Channels




Sales
channels for the distribution of solar technologies historically have been
non-existent as solar systems have not been marketed on a state, regional or
national level until just recently.  There can be no assurance that
SSC will create distribution channels large enough and financially strong enough
to distribute its product at sufficient levels to attain
profitability.





Limited Operating History:
Operating Losses




Despite
factors that indicate an increasing acceptance and desire to use solar power
technologies in certain segments of the industry and government, SSC cannot be
assured of their continued demand.  While SSC believes that demand for
such alternative energy sources exists, SSC cannot assure that it will have
success in marketing its products to its customer groups.  The
inability of SSC to successfully market and sell its products to these customer
groups would have an adverse effect on SSC’s profitability.





Going
Concern




The
Company’s ability to continue as a going concern is an issue raised as a result
of the significant operating losses incurred during the years ended December 31,
2008 and 2007 and its negative working capital. The Company continues to
experience net operating losses. The ability to continue as a going concern is
subject to the Company’s ability to obtain necessary funding from outside
sources, including obtaining additional funding from the sale of securities,
increasing sales, or obtaining loans and grants from various financial
institutions where possible.





3




Additional
Financing




Additional
financing is required to continue operations. Although actively searching for
available capital, the Company does not have any current arrangements for
additional outside sources of financing and cannot provide any assurance that
such financing will be available.





Limited Trading
Market




Currently,
only a very limited trading market exists for SSC common stock. The common stock
trades on the OTCBB under the symbol “SSLR.” The OTCBB is a limited market and
subject to substantial restrictions and limitations in comparison to the NASDAQ
system. Any broker/dealer that makes a market in the Company stock or other
person that buys or sells the stock could have a significant influence over its
price at any given time. The Company cannot assure its shareholders that a
market for its stock will be sustained. There is no assurance that its shares
will have any greater liquidity than shares that do not trade on a public
market.




ITEM
1B – UNRESOLVED STAFF COMMENTS





None.





ITEM
2 - PROPERTIES





The
Company’s offices are located at 4703 Shavano Oak, Suite 104, San Antonio, Texas
78249.  This rental space is approximately 1,500 square feet; the
average monthly rent is $2,300 and is sub-leased on a month to month
basis.  The Company and the original bound tenant share a common
shareholder.





ITEM 3 - LEGAL
PROCEEDINGS





In early 2005, the landlord for the offices occupied by YCO Holdings,
Inc. and its subsidiaries filed suit in the 295th District Court of Harris
County, Texas, Cause No. 2005-04423, captioned WKB Value Partners, LP vs.
Systems Management Solutions, Inc., alleging that the Company was obligated on
the lease even though no authorized officer of the Company had signed the
same.  This lawsuit was dismissed in February, 2006 pursuant to a
Comprehensive Settlement Agreement which required the Company to make payments
to WKB Value Partners, LP in the amount of $470,000.  The payment
schedule called for a $20,000 initial payment, followed by monthly payments of
$7,500 for 60 months.  The Company is currently in default under the
terms of the settlement agreement.  As of December 31, 2008, the
liability to WKB was approximately $307,500.





4


In
December of 2006, Cargill Incorporated (“Cargill”), a Delaware corporation,
filed suit in the Judicial District Court of Bexar County, Texas, Cause No.
2006-CI-19096, against subsidiary SMS Envirofuels, Inc., and certain related and
unrelated companies and individuals, claiming non payment for amounts due
Cargill by SMSE.  The SMSE payable to Cargill as of October 5, 2006
was $608,387, which included $528,387 for material received and $80,000 for the
hedge loss incurred by cancellation of the open physical
contracts.  On that same date, SMSE entered into an agreement to sell
certain assets located at its production plant in Poteet, Texas.  The
purchaser, Earth Biofuels, Inc. (“EBOF”), as part of the agreement, expressly
agreed to assume this debt to Cargill and provide additional working capital to
SMSE.  In return, SMSE signed a promissory note to EBOF for a line of
credit not to exceed $788,000. Cargill agreed to this arrangement with EBOF but
reserved the right to pursue any and all claims against SMSE upon failure of
EBOF to adhere to the terms outlined in the agreement between EBOF and
Cargill.  EBOF subsequently made partial payments totaling $250,000 to
Cargill, leaving a balance of $358,387.  As of this filing, the
purchase of the certain assets by EBOF has not occurred and there is not an
expectation that a sale will occur in the future.  Cargill was awarded
a declaratory judgment in its favor. In July of 2007, Cargill reached a payout
agreement with SMSE and certain related individuals. The balance, which includes
interest and legal fees, totaled $380,000. The agreement required one payment of
$75,000 due July 27, 2007, and monthly payments of $25,000 due the 1st of every
month until the balance is paid in full, beginning with September 1, 2007. If in
the event that SMSE or its certain related individual defaults on this
agreement, Cargill will file and execute its judgment as it was
awarded.  During 2007, SMSE and its affiliates made net payments of
$128,000 towards the Cargill obligation.  This liability was assumed
by the new owners of SMSE when it was sold on August 20, 2008.





On May
14, 2008, the former CEO of the Company was served with a lawsuit, on behalf of
the Company, relating to an unpaid Promissory Note between the Company and a
shareholder.  Current management has received a copy of this lawsuit
and has begun discussions with the note holder’s representatives as to a
potential settlement and can therefore make no statement as to the potential
liability related thereto.





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





There
were no matters brought to a vote of the security holders.





5




PART
II





ITEM 5 -
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF
EQUITY SECURITIES





Market
Information




Our
common stock began trading on the “OTC Bulletin Board” of the National
Association of Securities Dealers, Inc. (“NASD”) on February 1, 2002, under the
symbol “SUHO.” On July 25, 2008, we changed our name to Sunrise Solar
Corporation and effected a 1 for 5 reverse stock split.  As a result
of these events our ticker symbol was changed to “SSLR.”  The
following table sets forth, for the respective periods indicated, the prices of
the common stock in the over-the-counter market, as reported and summarized by
the OTC Bulletin Board.





High
            
            
            LowFiscal
      Year 2008First
      Quarter
            
            $
            0.15
            
            
            $
            0.04Second
      Quarter
            
            $
            0.20
            
            
            $
            0.05Third
      Quarter
            
            $
            3.50
            
            
            $
            0.26Fourth
      Quarter
            
            $
            0.66
            
            
            $
            0.26Fiscal
      Year 2007First
      Quarter
            
            $
            0.30
            
            
            $
            0.18Second
      Quarter
            
            $
            0.23
            
            
            $
            0.12Third
      Quarter
            
            $
            0.30
            
            
            $
            0.07Fourth
      Quarter
            
            $
            0.10
            
            
            $
            0.04





Common
Stock




The
closing price of our common stock on December 31, 2008, as quoted by the NASD’s
OTC Bulletin Board was $.30.





Record
Holders




As of
February 28, 2009, there were approximately 675 holders of record of our common
stock.





Dividends on Common
Stock




Since
inception, no dividends have been paid on our common stock. We intend to retain
any earnings for use in our business activities, so it is not expected that any
dividends on our common stock will be declared and paid in the foreseeable
future.





Any
future dividends will be at the discretion of the Board of Directors, after
taking into account various factors, including among others, operations, current
and anticipated cash needs and expansion plans, the income tax laws then in
effect, the requirements of Nevada law, and any restrictions that may be imposed
by our future credit arrangements.





6


Preferred
Stock




Our
authorized preferred stock consists of 5,000,000 shares of $0.0001 par value
preferred stock, 60,000 shares of $100.00 par value Series A Cumulative
Convertible Preferred Stock (the “Series A Preferred Stock”) and 50,000 shares
of $100.00 par value Series B Cumulative Convertible Preferred Stock (the
“Series B Preferred Stock”).  As of the date of this report, there are
no shares of preferred stock outstanding.  The Company’s preferred
stock ranks senior to all other equity securities, including common
stock.  Dividends, when, as and if declared by the Board of Directors,
shall be paid out of funds at the time legally available for such
purpose.





SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS





The
following table shows the number of shares of common stock that could be issued
upon exercise of outstanding options and warrants, the weighted average exercise
price of the outstanding options and warrants, and the remaining shares
available for future issuance as of December 31, 2008.





Plan
      category
            
            Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
            
            
            Weighted
      average exercise price of outstanding options, warrants and
      rights
            
            
            Number
      of securities remaining available for future issuanceEquity
      compensation plans approved by security holders
            
            
            —
            
            
            
            —
            
            
            
            —Equity
      compensation plans not approved by security holders
            
            
            —
            
            
            
            —
            
            
            
            —Total
            
            
            —
            
            
            
            —
            
            
            
            —




Item 6 - SELECTED FINANCIAL DATA





Not
Applicable.




7




ITEM
7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





FORWARD LOOKING
STATEMENTS


Certain
statements contained in this Annual Report on Form 10-K, including, without
limitation, statements using words such as “believe”, “expect”, “anticipate”,
“intend”, “estimate”, “plan”, and words and expressions of similar import,
constitute “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements involve risks and uncertainties, and our actual
results could differ from those anticipated in such statements as a result of
these risks and uncertainties. In addition to the uncertainties stated elsewhere
in this report, the factors which could affect these forward-looking statements
include, but are not limited to, adverse changes in general economic conditions,
including adverse changes in the specific markets for our products, adverse
business conditions, increased competition, pricing pressures, lack of success
in marketing our products and services, and other factors. These forward-looking
statements speak only as of the date of this report and readers are cautioned
not to place undue reliance upon such statements.





The
following discussion and analysis should be read in connection with the
Company’s consolidated financial statements and related notes thereto, as
included in this report.





Overview





Sunrise
Solar Corporation intends to develop and commercialize leading edge solar power
technologies.  We will bring solar power products to the consumer
market primarily by utilizing our Internet presence.  We also intend
to distribute products to large public and commercial purchasers through
wholesale channels.





In our
early history, our revenue was derived principally from software services and
BioFuel production.  Both of these prior businesses are now considered
discontinued operations.  Currently, significant resources have been
used in the establishment of our corporate structure for finance, reporting, and
governance, and we would anticipate that such expenses will decrease, as a
percentage of revenue, as our business increases.





On May 5,
2008, we changed our name from Systems Management Solutions, Inc. to Sunrise
Solar Corporation, and effected a one-for-five reverse stock split. For purposes
of discussion and disclosure, we refer to the organization, both pre and post
name change as Sunrise Solar Corporation.





Management
is considering the impact of the following industry trends as they impact the
manufacturing of complete photovoltaic systems and planned business
model:





•
            Solar
      cell pricing trends around the world: Recently, the key material in the
      production of solar cells (silicon) has been in limited supply.
      Consequently, prices and availability of solar modules have been limited.
      Solar cells are the major component cost in a photovoltaic module. The
      Company has responded by seeking long-term supply agreements for solar
      cells where pricing is adjusted quarterly to market rates. To date, the
      Company has not entered into any long-term supply agreements for solar
      cells. Our intent is to secure ample solar cell supply to meet our growth
      needs and to avoid the risk of long-term contract pricings with suppliers
      whose products are expected to see a decline in the average selling price.
      Industry experts believe that additional planned expansion of silicon
      processing factories coming on line over the next 18 months will produce
      enough raw materials to create an oversupply on projected demand. Failure
      to effectively manage our supply will hinder our expected growth and our
      component costs may have an adverse affect on the Company’s profitability;
      and




8




•
            Government
      subsidies: Federal and State subsidies relating directly to solar
      installations are an important factor in the planned growth of the solar
      industry. These subsidies are very important to growing the market for
      photovoltaic systems because they provide a significant economic incentive
      to all buyers. Without these incentives, industry growth would likely
      stall. These regulations are constantly being amended and will have a
      direct effect on our rollout of our planned franchise network among those
      states that offer superior incentives to the solar
    industry.





Results of
Operation





SSC
incurred a net loss of approximately $1,030,000 for the twelve months ended
December 31 2008, and had a working capital deficit of approximately $961,000 as
of December 31, 2008.  These conditions create an uncertainty as to
SSC’s ability to continue as a going concern.





Cash
provided by continuing operations and investing activities was approximately
$9,000 and $11,000, respectively, for the year ended December 31, 2008. 
Cash used by discontinued operations was approximately $181,000 for the same
period.  The funds to cover these uses of cash were received against an
advance agreement the company maintains with a related party
lender.





SSC
continues to rely on advances to fund operating shortfalls and does not foresee
a change in this situation in the immediate future. There can be no assurance
that SSC will continue to have such advances available. SSC will not be able to
continue operations without them. SSC is pursuing alternate sources of
financing.





Results of Operations for
the years ended December 31, 2008 and 2007




Total Revenue and
Gross Profit. The comparative statements of operations for the years
ended  December 31, 2008 and 2007, reflect no revenue as all revenue
was generated by the Company’s discontinued operations and has therefore been
reclassified as “Loss from Discontinued Operations” on the attached Financial
Statements.





Expenses.
Total expenses decreased by 30% when comparing the years ended December 31, 2008
and 2007. The reduction is attributed mainly due to reductions in personnel,
sales and marketing, a result of discounting the Company’s legacy business
operations.





Critical Accounting
Policies




The
financial reports for the period contain one additional critical accounting
policy which was also an initial adoption of accounting policy that had a
material impact.  Below is a brief discussion of events that
materially affected our financial statements and the basis in which the
transactions were recorded.





9


Development
Stage Enterprise - As a result of the Company’s sale of ASPECT and SMSE, the
Company is now considered a development stage enterprise pursuant to FASB
Statement 7, which focuses on development stage companies. Users of the
financial statements should be familiar with this statement and its effect on
the financial statements.





Internal Revenue Service Tax
Lien




During
the second and third quarters of 2005, ASPECT, one of the Company’s former
subsidiaries, did not have the funds necessary to cover all the payroll taxes.
In January 2006, the Internal Revenue Service (“IRS”) placed a lien on ASPECT
assets. A third party accounting firm which represented ASPECT, in the due
process hearing, negotiated an installment plan to settle the outstanding
liability. Payments were tendered from this third party firm on behalf of the
Company’s largest shareholder and holder of a line of credit with ASPECT. The
balance due at December 31, 2008 is approximately $38,000.





Liquidity and Capital
Resources




Cash
provided by operating activities was approximately $9,000 for the year ended
December 31, 2008.  During the year ended December 31, 2008, the
Company borrowed an additional approximately $71,000 under a finance agreement
from a related-party lender.





Going
Concern




The
Company’s ability to continue as a going concern is an issue raised as a result
of the significant operating losses incurred during the years ended December 31,
2008 and 2007 and its negative working capital. The Company continues to
experience net operating losses. The ability to continue as a going concern is
subject to the Company’s ability to obtain necessary funding from outside
sources, including obtaining additional funding from the sale of securities,
increasing sales, or obtaining loans and grants from various financial
institutions where possible.





Additional
Financing




Additional
financing is required to continue operations. Although actively searching for
available capital, the Company does not have any current arrangements for
additional outside sources of financing and cannot provide any assurance that
such financing will be available.





ITEM
7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK





As of
December 31, 2008, we were not exposed to market risks due to changes in
interest rates or foreign currency rates and, therefore, we do not use
derivative financial instruments to address risk management issues in connection
with changes in interest rates and foreign currency rates.





ITEM
8 - FINANCIAL STATEMENTS AND SUPLEMENTARY DATA





The
information required by this Item is submitted as a separate section of this
Form 10-K. See Item 15.





10





ITEM
9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





None.





ITEM
9-A - CONTROLS AND PROCEDURES





Evaluation of Disclosure
Controls and Procedures




We
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive officer and principal
financial officer, of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)).  Based upon that evaluation, our principal executive
officer and principal financial officer concluded that, as of the end of the
period covered in this report, our disclosure controls and procedures were not
effective to ensure that information required to be disclosed in reports filed
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the required time periods and is accumulated and communicated to
our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure.




Our
management, including our principal executive officer and principal financial
officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error or fraud.  A control system,
no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are
met.  Further, the design of a control system must reflect the fact
that there are resource constraints and the benefits of controls must be
considered relative to their costs.  Due to the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, have been detected. To
address the material weaknesses, we performed additional analysis and other
post-closing procedures in an effort to ensure our consolidated financial
statements included in this annual report have been prepared in accordance with
generally accepted accounting principles. Accordingly, management believes that
the financial statements included in this report fairly present in all material
respects our financial condition, results of operations and cash flows for the
periods presented.




11




Management’s Report on
Internal Control Over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act, as amended.  Our management assessed the
effectiveness of our internal control over financial reporting as of December
31, 2008. In making this assessment, our management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)
in Internal Control-Integrated Framework.  A material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of the company’s annual or interim financial statements will not be
prevented or detected on a timely basis.  We have identified the
following material weaknesses.





1.
            As
      of December 31, 2008, we did not maintain effective controls over the
      control environment.  Specifically, we have not formally adopted
      a written code of business conduct and ethics that governs to the
      Company’s employees, officers and directors.  Additionally, we
      have not developed and effectively communicated to our employees its
      accounting policies and procedures.  This has resulted in
      inconsistent practices.  Further, the Board of Directors does
      not currently have any independent members and no director qualifies as an
      audit committee financial expert as defined in Item 407(d)(5)(ii) of
      Regulation S-B.  Since these entity level programs have a
      pervasive effect across the organization, management has determined that
      these circumstances constitute a material
  weakness.





2.
            As
      of December 31, 2008, we did not maintain effective controls over
      financial statement disclosure.  Specifically, controls were not
      designed and in place to ensure that all disclosures required were
      originally addressed in our financial statements.   Accordingly,
      management has determined that this control deficiency constitutes a
      material weakness.





Because
of these material weaknesses, management has concluded that the Company did not
maintain effective internal control over financial reporting as of December 31,
2008, based on the criteria established in “Internal Control-Integrated
Framework” issued by the COSO.





Changes in Internal Control
Over Financial Reporting




No change
in the Company’s internal control over financial reporting occurred during the
quarter ended December 31, 2008, that materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.





This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.





Corrective
Action




None.





ITEM
9-B - OTHER INFORMATION





None.




12




PART III


ITEM
10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY





The
Directors and Executive Officers of the Company and certain information
concerning them are set forth below as of February 28, 2009:





Name
            
            Position
            
            AgeEddie
      Austin, Jr.
            
            Chairman/CEO
            
            57Principal
      Financial OfficerJames
      T Kesaris
            
            Director
            
            59





Mr. Eddie
Austin, Jr. has served as Chairman and CEO of Sunrise Solar Corporation since
January 18, 2008.  Mr. Austin joined the Board of Directors in January
2008, for a term of one year or until such time as a successor is elected by our
shareholders. For the past 15 years, Mr. Austin has managed a successful,
multi-dimensional law practice in Lake Charles, La.  Additionally, Mr.
Austin has been involved in various private and public business
ventures.  Mr. Austin received his undergraduate degree from
McNeese State University in 1975 and juris doctorate from
Louisiana State University in 1989.





Mr. James
T Kesaris has served as a Director of Sunrise Solar Corporation since November
12, 2008, for a term of one year or until such time as a successor is elected by
our shareholders.  From May 2005 to June 2008, Mr. Kesaris held the
position of SVP-CFO at USE Bank, an $850 million middle-market financial
institution that provided a wide range of consumer-based financial products and
services.  As CFO, Mr. Kesaris had full balance sheet and P&L
responsibility, which included the A/L management of the loan and investment
portfolios, as well as customer deposits, and short and long-term credit lines
from various financial institutions.





Prior to
his position at USE, Mr. Kesaris held various financial and operational roles at
companies such at Peninsula Holdings Group, Next Nutrition, and Chromalloy Gas
Turbine in addition to serving as the CFO of the San Diego
Chargers.  Mr. Kesaris holds an M.B.A. and B.A. in Electrical
Engineering, both from the University of Illinois and is a registered
CPA.





COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT




Based
solely upon review of Forms 3, 4, and 5 furnished to us during the most recent
fiscal year, we believe that all persons required to file reports pursuant to
Section 16(a) of the Exchange Act have done so in a timely manner.





Section
16(a) of the Securities Exchange Act of 1934 requires our Directors and
Executive Officers, and persons who own beneficially more than ten percent of
our common stock, to file reports of their stock ownership and changes of their
stock ownership with the Securities and Exchange Commission. Based solely on the
reports we have received and on written representations from certain reporting
persons, we believe that the directors, executive officers, and our greater than
ten percent beneficial owners have complied with all applicable filing
requirements for the fiscal year ended December 31, 2008.





13


CODE
OF ETHICS




Our Board
of Directors has discussed the adoption of a code of business conduct and ethics
for directors, officers and employees but has not yet adopted a Code of
Ethics.  It is anticipated that the Board of Directors will adopt a
Code of Ethics in the near future.  Upon adoption of a Code of Ethics,
we will comply with all SEC reporting requirements.





STOCKHOLDER COMMUNICATIONS
WITH THE BOARD OF DIRECTORS




Stockholders
may communicate with the full Board, or any individual directors, by sending
such written communication to the following address:





Sunrise
Solar Corporation


Attn:
Corporate Secretary


4703
Shavano Oak, Suite 104


San
Antonio, Texas 78249





14


ITEM
11 - EXECUTIVE COMPENSATION





The
following table sets forth, for the years ended December 31, 2008, 2007 and 2006
all compensation awarded to, earned by or paid to all individuals serving as the
Company’s Chief Executive Officer and President or acting in a similar capacity
and all Officers of the Company who earned more than $100,000
annually.





SUMMARY
COMPENSATION TABLE





Name
      and
              Principal
      Position
            
            Year
            
            Salary
            
            
            Other
              Compensation
            
            
            Securities
      Underlying OptionsEddie Austin, Jr.(1)
            
            2008
            
            
            —
            
            
            $
            100,000
            
            
            
            —Chairman/CEOJames Karlak(2)
            
            2008
            
            
            —
            
            
            
            —
            
            
            
            —Former
            
            2007
            
            $
            213,333
            
            
            
            —
            
            
            
            —CEO
            
            2006
            
            $
            260,000
            
            
            
            —
            
            
            
            —Morris Kunofsky(3)
            
            2008
            
            
            —
            
            
            
            —
            
            
            
            —Former
            
            2007
            
            $
            120,750
            
            
            
            —
            
            
            
            —CFO
            
            2006
            
            $
            126,000
            
            
            
            —
            
            
            
            —Jenelle Stehle(4)
            
            2008
            
            
            —
            
            
            
            —
            
            
            
            —Former
            
            2007
            
            $
            80,367
            
            
            
            —
            
            
            
            —Corp.
      Secretary
            
            2006
            
            $
            85,200
            
            
            $
            127,500
            
            
            
            —





(1)
            Mr.
      Austin became the Company’s Chairman and CEO effective January 18,
      2008.


(2)
            Mr.
      Karlak became the Company’s CEO and President effective on November 13,
      2007.  Mr. Karlak resigned from the Company effective January
      18, 2008.


(3)
            Mr.
      Kunoksky became the Company’s CFO in October 2004.  Mr. Kunofsky
      resigned from the Company effective January 18, 2008.


(4)
            Ms.
      Stehle became the Company’s Secretary and Treasurer in October
      2004.  Mr. Stehle resigned from the Company effective January
      18, 2008.





In
accordance with the rules of the SEC, other compensation in the form of
perquisites and other personal benefits has been omitted for the named executive
officers because the aggregate amount of these perquisites and other personal
benefits was less than the lesser of $50,000 or 10% of annual salary and bonuses
for the named executive officers.





EMPLOYMENT
AGREEMENTS





We do not
currently have any employment agreements.





DIRECTOR
COMPENSATION





We do not
currently pay any cash directors’ fees.





15





ITEM
12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The
following table sets forth certain information as of February 28, 2009, with
respect to the beneficial ownership of shares of the Company’s common stock by
(i) each person known to us who owns beneficially more than 5% of the
outstanding shares of the Company’s common stock, (ii) each of our Directors,
(iii) each of our Executive Officers, and (iv) all of our Executive Officers and
Directors as a group. Unless otherwise indicated, each stockholder has sole
voting and investment power with respect to the shares shown.  As of
February 28, 2009, there were 9,613,667 shares of the Company’s common stock
issued and outstanding.





Name
      and address of beneficial owner
            
            Relationship
      to Registrant
            
            Number
      of Shares of Common Stock
            
            Percentage
      of Common Stock (1)Eddie
      Austin, Jr.
              4703
      Shavano Oak, Ste 104
              San
      Antonio, TX 78249
            
            Chairman/CEO
            
            500,000
            
            0.52%All
      Officers and Directors as a group (total of 1)
            
            
            
            500,000
            
            0.52%





(1)
            Under
      Rule 13d-3 promulgated under the Exchange Act, a beneficial owner of a
      security includes any person who, directly or indirectly, through any
      contract, arrangement, understanding, relationship, or otherwise has or
      shares: (i) voting power, which includes the power to vote, or to direct
      the voting of shares; and (ii) investment power, which includes the power
      to dispose or direct the disposition of shares.  Certain shares
      may be deemed to be beneficially owned by more than one person (if, for
      example, persons share the power to vote or the power to dispose of the
      shares).  In addition, shares are deemed to be beneficially
      owned by a person if the person has the right to acquire the shares (for
      example, upon exercise of an option) within 60 days of the date as of
      which the information is provided.  In computing the percentage
      ownership of any person, the amount of shares is deemed to include the
      amount of shares beneficially owned by such person (and only such person)
      by reason of these acquisition rights.  As a result, the
      percentage of outstanding shares of any person as shown in this table does
      not necessarily reflect the person’s actual ownership or voting power with
      respect to the number of shares of common stock actually outstanding on
      February 28, 2009.





ITEM
13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





None of
the following persons has any direct or indirect material interest in any
transaction to which we were or are a party during the past two years, or in any
proposed transaction to which we propose to be a party:





(A)
            any
      of our directors or executive
officers;





(B)
            any
      nominee for election as one of our
directors;





(C)
              any
      person who is known by us to beneficially own, directly or indirectly,
      shares carrying more than 5% of the voting rights attached to our common
      stock; or





(D)
              any
      member of the immediate family (including spouse, parents, children,
      siblings and in-laws) of any of the persons named in paragraph (A), (B) or
      (C)  above.





16





ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND
SERVICES





The
following is a summary of the fees billed to the Company by its independent
accountants for the years ended December 31, 2008 and 2007:





Fee
      Category
            
            M&K
      CPAS, PLLC
              FY2008
            
            
            M&K
      CPAS, PLLC
              FY2007Audit
      Fees
            
            $
            27,250
            
            
            $
            13,000Audit-Related
      Fees(1)
            
            
            —
            
            
            
            —Tax
      Fees(2)
            
            
            —
            
            
            
            —All
      Other Fees(3)
            
            
            —
            
            
            
            —Total
      Fees
            
            $
            27,250
            
            
            $
            13,000





Notes to
the Accountants Fees Table:





(1)
            Consists
      of fees for assurance and related services by our principal accountants
      that are reasonably related to the performance of the audit or review of
      the Company’s financial statements and are not reported under “Audit
      Fees.”





(2)
            Consists
      of fees for professional services rendered by our principal accountants
      for tax related services.





(3)
            Consists
      of fees for products and services provided by our principal accountants,
      other than the services reported under “Audit Fees,” “Audit-Related Fees”
      and “Tax Fees” above.





AUDITOR’S
TIME ON TASK





All of
the work expended by M&K CPAS, PLLC on our December 31, 2008 audit was
attributed to work performed by M&K CPAS, PLLC’s full-time, permanent
employees.





17





ITEM
15 – EXHIBITS





The
following documents are included or incorporated by reference as exhibits to
this report:




3.1
              Amended
      and Restated Articles of Incorporation (incorporated by reference from the
      Company’s S-8 Registration Statement filed with the Commission on February
      27, 2009).3.2
              Amended
      and Restated Bylaws (incorporated by reference from the Company’s S-8
      Registration Statement filed with the Commission on February 27,
      2009).31.1
              Certification
      of Mr. Austin as required by Rule 13a - 14(1) or Rule 15d - 14(a) of the
      Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.*32.1
              Certification
      of Mr. Austin pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      and Section 1350 of 18 U.S.C.
63.*







*           Filed
herewith.




AVAILABLE
INFORMATION





We are a
reporting company and file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
You may inspect and copy these materials at the Public Reference Room maintained
by the Commission at Room 100 F Street, N.W., Washington, D.C. 20549.
Please call the Commission at 1-800-SEC-0330 for more information on the Public
Reference Room. You can also find our Commission filings at the Commission’s
website at www.sec.gov. We intend to furnish our stockholders with annual
reports containing audited financial statements and such other periodic reports
as we may determine to be appropriate or as may be required by law.





Our
primary Internet address is www.sunrisesolarcorp.com. Corporate information can
be located by clicking on the “Investor Relations” link in the top-middle of the
page.  We make our periodic Commission Reports (Forms 10-Q and Forms
10-K) and current reports (Form 8-K) available free of charge through our Web
site as soon as reasonably practicable after they are filed electronically with
the Commission. We may from time to time provide important disclosures to
investors by posting them in the Investor Relations section of our Web site, as
allowed by Commission’s rules. The information on the website listed above is
not and should not be considered part of this Annual Report on Form 10-K and is
intended to be an inactive textual reference only.




18




SIGNATURES





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




Sunrise
      Solar CorporationDate:  April
      15, 2009
              By:
              /s/  Eddie
      D. Austin, Jr.Eddie
      D.  Austin, Jr.Chairman
      & CEO(Principal
      Executive Officer andPrincipal Accounting Officer)





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




SIGNATURE
              
              TITLE
              
              DATE/s/  Eddie D. Austin,
      Jr.
              
              Chairman
      & CEO
              
              April
      15, 2009Eddie
      D.  Austin, Jr.
              
              (Principal
      Executive Officer and Principal Accounting Officer)/s/  James T Kesaris
              
              Director
              
              April
      15, 2009James
      T Kesaris




19




SUNRISE
SOLAR CORPORATION
 (A
DEVELOPMENT STAGE ENTERPRISE)
 CONTENTS
 PageREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              
              
              F-1CONSOLIDATED
      FINANCIAL STATEMENTSConsolidated
      Balance Sheets as of December 31, 2008 and 2007
              
              
              F-2–
      F-3Consolidated
      Statements of Operations for the years ended December 31, 2008 and 2007,
      and the period from Re-entering the Development Stage to December 31,
      2008
              
              
              F-4Consolidated
      Statements of Changes in Stockholders’ Deficit  for the years
      ended December 31, 2008 and 2007
              
              
              F-5Consolidated
      Statements of Cash Flows for the years ended December 31, 2008 and 2007,
      and the period from Re-entering the Development Stage to December 31,
      2008
              
              
              F-6NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
              
              
              F-7
      – F-21
  
  REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and Stockholders
 Sunrise
Solar Corporation
 San
Antonio, Texas
  We have
audited the accompanying consolidated balance sheets of Sunrise Solar
Corporation as of December 31, 2008 and 2007 and the related consolidated
statements of operations, stockholders' deficit and cash flows for the years
then ended and for the period from re-entering the development stage through
December 31, 2008. 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 audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about 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 audit 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 Solar Corporation as of
December 31, 2008 and 2007 and the results of its operations and cash flows for
the periods described above in conformity with accounting principles generally
accepted in the United States of America.
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses from operations which
raises substantial doubt about its ability to continue as a going concern.
Management's plans regarding those matters also are described in Note 2. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
   /s/
M&K CPAS, PLLC
  www.mkacpas.com
 Houston,
Texas
  March 31,
2009
  F-1
 
  SUNRISE
SOLAR CORPORATION
 (A
DEVELOPMENT STAGE ENTERPRISE)
 CONSOLIDATED
BALANCE SHEETS
 December
      31, 2008
                
                
                December
      31, 2007ASSETSCURRENTASSETSCash
                
                $
                -
                
                
                $
                19,776Prepaid
      Expenses
                
                
                -
                
                
                
                11,310Total
      Current Assets
                
                
                -
                
                
                
                31,086ASSETS OF DISCONTINUED
      OPERATIONS, Net
                
                
                -
                
                
                
                577,438OTHER
      ASSETSDeposits
                
                
                -
                
                
                
                85,000Total
      Other Assets
                
                
                -
                
                
                
                85,000TOTAL
      ASSETS
                
                $
                -
                
                
                $
                693,524
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-2
 
  SUNRISE
SOLAR CORPORATION
 (A
DEVELOPMENT STAGE ENTERPRISE)
 CONSOLIDATED
BALANCE SHEETS
 December
      31, 2008
                  
                  
                  December
      31, 2007LIABILITIES AND
      STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESBank
      Overdraft
                  
                  $
                  5,456
                  
                  
                  $
                  -Accounts
      Payable
                  
                  
                  3,506
                  
                  
                  
                  4,035Deferred
      Liability
                  
                  
                  70,000
                  
                  
                  
                  70,000Litigation
      Settlement Liability
                  
                  
                  307,500
                  
                  
                  
                  307,500Notes
      Payable and Accrued Interest
                  
                  
                  450,125
                  
                  
                  
                  394,228Notes
      Payable to Stockholders and Accrued Interest
                  
                  
                  -
                  
                  
                  
                  687,548Related
      Party Advances
                  
                  
                  86,450
                  
                  
                  
                  -Other
      Current Liabilities
                  
                  
                  38,086
                  
                  
                  
                  43,594Liabilities
      of Discontinued Operations
                  
                  
                  -
                  
                  
                  
                  5,980,221Total
      Current Liabilities
                  
                  
                  961,123
                  
                  
                  
                  7,487,126TOTAL
      LIABILITIES
                  
                  
                  961,123
                  
                  
                  
                  7,487,126COMMITMENTS
      AND CONTINGENCIES
                  
                  
                  -
                  
                  
                  
                  -STOCKHOLDERS'  DEFICITPreferred
      Stock, $.0001 par value, 5 million sharesauthorized;
      no shares issued and outstanding
                  
                  
                  -
                  
                  
                  
                  -Common
      Stock, $.0001 par value, 100 million shares authorized;6,282,077
      and 4,138,077 shares issued and outstanding,
                  
                  
                  628
                  
                  
                  
                  414respectivelyAdditional
      Paid-in Capital
                  
                  
                  26,677,290
                  
                  
                  
                  19,815,491Accumulated
      Deficit from Prior Operations
                  
                  
                  (26,663,674
                  )
                  
                  
                  (26,609,507
                  )Accumulated
      Deficit from the Development Stage
                  
                  
                  (975,367
                  )
                  
                  
                  -TOTAL
      STOCKHOLDERS' DEFICIT
                  
                  
                  (961,123
                  )
                  
                  
                  (6,793,602
                  )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                  
                  $
                  -
                  
                  
                  $
                  693,524
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-3
 SUNRISE
SOLAR CORPORATION
  (A
DEVELOPMENT STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
  Re-enteringDevelopment
      Stage,Year
      Ended
                  
                  
                  Year
      Ended
                  
                  
                  January
      15, 2008, toDecember
      31, 2008
                  
                  
                  December
      31, 2007
                  
                  
                  December
      31, 2008REVENUES
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -COST OF
      REVENUES
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -GROSS
      PROFIT
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -EXPENSESPayroll,
      contract labor and consultants
                  
                  
                  523,955
                  
                  
                  
                  377,917
                  
                  
                  
                  454,182Selling,
      general and administrative expenses
                  
                  
                  61,495
                  
                  
                  
                  26,191
                  
                  
                  
                  59,072OPERATING
      LOSS FROM CONTINUING OPERATIONS
                  
                  
                  (585,450
                  )
                  
                  
                  (404,108
                  )
                  
                  
                  (513,254
                  )Gain
      on disposal of assets
                  
                  
                  7,984
                  
                  
                  
                  -
                  
                  
                  
                  (67,171
                  )Interest
      expense
                  
                  
                  (55,897
                  )
                  
                  
                  (121,498
                  )
                  
                  
                  (37,403
                  )NET
      LOSS FROM CONTINUING OPERATIONS
                  
                  
                  (633,363
                  )
                  
                  
                  (525,606
                  )
                  
                  
                  (617,828
                  )DISCONTINUED
      OPERATIONS (Note 12)Loss
      from discontinued operations
                  
                  
                  (396,171
                  )
                  
                  
                  (920,681
                  )
                  
                  
                  (357,539
                  )NET
      LOSS
                  
                  $
                  (1,029,534
                  )
                  
                  $
                  (1,446,287
                  )
                  
                  $
                  (975,367
                  )NET LOSS PER
      SHARE:Common
      Stock:Basic
      and Diluted Net Loss Per Share
                  
                  $
                  (0.10
                  )
                  
                  $
                  (0.13
                  )Basic
      and Diluted Net Loss Per Sharefor
      Discontinued Operations
                  
                  $
                  (0.07
                  )
                  
                  $
                  (0.22
                  )Total
      Basic and Diluted Net Loss Per Share
                  
                  $
                  (0.17
                  )
                  
                  $
                  (0.35
                  )Denominator
      for Basic and Diluted Net Loss Per ShareWeighted
      Average Number ofCommon
      Shares Outstanding
                  
                  
                  6,107,000
                  
                  
                  
                  4,138,000
 The
accompanying notes are an integral part of these consolidated financial
statements.
   F-4
 SUNRISE
SOLAR CORPORATION
  (A
DEVELOPMENT STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
 Additional
                  
                  
                  Accumulated Defecit
                  
                  
                  TotalCommon Stock
                  
                  
                  Paid-In
                  
                  
                  Prior
                  
                  
                  Development
                  
                  
                  Stockholders'Shares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Operations
                  
                  
                  Stage
                  
                  
                  DeficitBALANCE
      -- December 31, 2006
                  
                  
                  4,138,077
                  
                  
                  
                  414
                  
                  
                  
                  19,604,623
                  
                  
                  
                  (25,163,220
                  )
                  
                  
                  -
                  
                  
                  
                  (5,558,183
                  )Interest
      Imputed on Non-Interest Bearing Notes Payable
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  210,868
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  210,868Net
      loss
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  (1,446,287
                  )
                  
                  
                  --
                  
                  
                  
                  (1,446,287
                  ).BALANCE
      -- December 31, 2007
                  
                  
                  4,138,077
                  
                  
                  
                  414
                  
                  
                  
                  19,815,491
                  
                  
                  
                  (26,609,507
                  )
                  
                  
                  -
                  
                  
                  
                  (6,793,602
                  )Compensatory
      Element of Stock Issuance
                  
                  
                  500,000
                  
                  
                  
                  50
                  
                  
                  
                  99,950
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  100,000Stock
      Issued for Consulting Services
                  
                  
                  1,644,000
                  
                  
                  
                  164
                  
                  
                  
                  372,237
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  372,401Interest
      Imputed on Non-Interest Bearing Notes Payable
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  149,606
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  149,606Debt
      & Interest Forgiven by Related Parties
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  6,240,006
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  6,240,006Net
      loss
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  --
                  
                  
                  
                  (54,167
                  )
                  
                  
                  (975,367
                  )
                  
                  
                  (1,029,534
                  ).BALANCE
      -- December 31, 2008
                  
                  
                  6,282,077
                  
                  
                  $
                  628
                  
                  
                  $
                  26,677,290
                  
                  
                  $
                  (26,663,674
                  )
                  
                  $
                  (975,367
                  )
                  
                  $
                  (961,123
                  )
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-5
 
  SUNRISE
SOLAR CORPORATION
 (A
DEVELOPMENT STAGE ENTERPRISE)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 Re-enteringDevelopment
      Stage,Year
      Ended
                  
                  
                  Year
      Ended
                  
                  
                  January
      15, 2008, toCASH FLOWS FROM
      OPERATING ACTIVITIES
                  
                  December
      31, 2008
                  
                  
                  December
      31, 2007
                  
                  
                  December
      31, 2008Net
      Loss
                  
                  $
                  (1,029,534
                  )
                  
                  $
                  (1,446,287
                  )
                  
                  $
                  (975,367
                  )Loss
      from Discontinued Operations
                  
                  
                  396,171
                  
                  
                  
                  920,681
                  
                  
                  
                  357,539Loss
      from Continuing Operations
                  
                  
                  (633,363
                  )
                  
                  
                  (525,606
                  )
                  
                  
                  (617,828
                  )Adjustments
      to reconcile net loss to netcash
      provided by (used in) operating activities:Gain
      on Disposal of Assets
                  
                  
                  (7,984
                  )
                  
                  
                  (3,215
                  )
                  
                  
                  -Issuance
      of Common Stock for Services
                  
                  
                  472,401
                  
                  
                  
                  -
                  
                  
                  
                  472,401Interest
      Imputed on Non-Interest Bearing Notes Payable
                  
                  
                  149,606
                  
                  
                  
                  210,868
                  
                  
                  
                  130,089Changes
      in operating assets and liabilities:Accounts
      Receivable
                  
                  
                  -
                  
                  
                  
                  (194,935
                  )
                  
                  
                  -Other
      Current Assets
                  
                  
                  -
                  
                  
                  
                  111
                  
                  
                  
                  -Accounts
      Payable
                  
                  
                  -
                  
                  
                  
                  (135,869
                  )
                  
                  
                  -Accrued
      Expenses
                  
                  
                  17,067
                  
                  
                  
                  369,361
                  
                  
                  
                  17,067Prepaid
      Expenses
                  
                  
                  11,310
                  
                  
                  
                  -
                  
                  
                  
                  11,310Litigation
      Settlement
                  
                  
                  -
                  
                  
                  
                  (75,000
                  )
                  
                  
                  -NET
      CASH PROVIDED  BY (USED IN) OPERATING ACTIVITIES
                  
                  
                  9,037
                  
                  
                  
                  (354,285
                  )
                  
                  
                  13,039CASH FLOWS FROM
      INVESTING ACTIVITIESPrincipal
      Payments on Notes Receivable
                  
                  
                  10,833
                  
                  
                  
                  -
                  
                  
                  
                  9,024Purchases
      of Fixed Assets
                  
                  
                  -
                  
                  
                  
                  (1,729
                  )
                  
                  
                  -Proceeds
      from Sale of Equipment
                  
                  
                  -
                  
                  
                  
                  3,600
                  
                  
                  
                  -NET
      CASH PROVIDED BY INVESTING ACTIVITIES
                  
                  
                  10,833
                  
                  
                  
                  1,871
                  
                  
                  
                  9,024CASH FLOWS FROM
      FINANCING ACTIVITIESNote
      Proceeds from Stockholders
                  
                  
                  141,500
                  
                  
                  
                  931,568
                  
                  
                  
                  132,307NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                  
                  
                  141,500
                  
                  
                  
                  931,568
                  
                  
                  
                  132,307DISCONTINUED
      OPERATIONSDiscontinued
      Operating Activities
                  
                  
                  (181,146
                  )
                  
                  
                  (592,455
                  )
                  
                  
                  (144,847
                  )NET
      CASH USED IN DISCONTINUED OPERATIONS
                  
                  
                  (181,146
                  )
                  
                  
                  (592,455
                  )
                  
                  
                  (144,847
                  )NET
      DECREASE IN CASH
                  
                  
                  (19,776
                  )
                  
                  
                  (13,301
                  )
                  
                  
                  9,523CASH –
      Beginning
                  
                  
                  19,776
                  
                  
                  
                  33,077
                  
                  
                  
                  (9,523
                  )CASH –
      Ending
                  
                  $
                  -
                  
                  
                  $
                  19,776
                  
                  
                  $
                  -SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATIONCash
      paid for:Interest
                  
                  $
                  -
                  
                  
                  $
                  304
                  
                  
                  $
                  -Income
      Taxes
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Non-cash
      investing and financing activities:Sale
      of ASPECT Business Segment for Note Receivable
                  
                  $
                  65,000
                  
                  
                  $
                  -
                  
                  
                  $
                  65,000Debt
      Converted to Contributed Capital by Related Parties
                  
                  $
                  6,240,006
                  
                  
                  $
                  -
                  
                  
                  $
                  -Transfer
      of Deposit Rights to Note Holder
                  
                  $
                  -
                  
                  
                  $
                  170,000
                  
                  
                  $
                  -
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-6
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 1 –
DESCRIPTION OF
COMPANY
 
 Supreme
Hospitality ("Supreme"), was incorporated in Nevada on November 10, 1997. On
September 8, 2002, Supreme changed its total authorized common stock and
preferred stock to 100,000,000 and 5,000,000, respectively, both with par values
of $.0001. On November 6, 2002, Supreme changed its name from Supreme
Hospitality, Inc. to Supreme Holdings, Inc. ("SUHO"). On July 14, 2004, the name
was changed from Supreme Holdings, Inc. to Systems Management Solutions,
Inc.("SMS").  On July 25, 2008, the name was changed from Systems
Management Solutions, Inc. to Sunrise Solar Corporation (“SSC” or
“SSLR”).
 
 The
accompanying consolidated financial statements include the accounts of SSC and
its wholly-owned subsidiaries.  All significant intercompany accounts
and transactions have been eliminated.
 
 The
accompanying financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classifications of liabilities that may result from the possible
inability of the Company to continue as a going concern.
 
 NOTE
2 – MANAGEMENT PLANS AND GOING
CONCERN
 
 The
Company sustained a substantial operating loss of approximately $1,030,000
during the year ended December 31, 2008, and as of December 31, 2008, had an
accumulated deficit of approximately $27,640,000.
 
 These
factors raise a substantial doubt about the Company’s ability to continue as a
going concern.  The accompanying financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
 
 The
Company does not have the resources at this time to repay its credit and debt
obligations, make any payments in the form of dividends to its shareholders or
fully implement its business plan. Without additional capital, the Company will
not be able to remain in business.
  F-7
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 In
addition to operational expenses, as the Company executes its business plan, it
is incurring expenses related to complying with its public reporting
requirements.  In order to finance these expenditures, the Company has
raised capital in the form of debt which will have to be repaid, as discussed in
detail below.  The Company has depended on shareholder loans for much of
its operating capital.  The Company will need to raise capital in the next
twelve months in order to remain in business.
 
 Management
anticipates that significant dilution will occur as the result of any future
sales of the Company’s common stock and this will reduce the value of its
outstanding shares. The Company cannot project the future level of dilution that
will be experienced by investors as a result of its future financings, but it
will significantly affect the value of its shares.
 
 Management
has plans to address the Company’s financial situation as follows:
 
 In the
near term, management plans to continue to focus on raising the funds necessary
to fully implement the Company’s business plan.  Management believes
that certain shareholders will continue to advance the capital required to meet
the Company’s financial obligations.  There is no assurance, however,
that these shareholders will continue to advance capital to the Company or that
the new business operations will be profitable.  The possibility of
failure in obtaining additional funding and the potential inability to achieve
profitability raise doubts about the Company’s ability to continue as a going
concern.
 
 In the
long term, management believes that the Company’s previously announced projects
and initiatives will be successful and will provide significant profit to the
Company which will be used to finance the Company’s future
growth.  However, there can be no assurances that the Company’s
planned activities will be successful, or that the Company will ultimately
attain profitability.  The Company’s long term viability depends on its
ability to obtain adequate sources of debt or equity funding to meet current
commitments and fund the continuation of its business operations and the ability
of the Company to ultimately achieve adequate profitability and cash flows from
operations to sustain its operations.
 
 
 NOTE 3 –
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
 
 PRINCIPLES
OF CONSOLIDATION – The accompanying consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries, Aspect Business
Solutions, Inc. and SMS Envirofuels, Inc.; both subsidiaries are Texas
corporations.  All intercompany transactions and balances have been
eliminated upon consolidation.  As of December 31, 2008, the Company
had sold or transferred both of its subsidiaries.  Additional
information can be found in Notes 5 & 6.
 
 F-8
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 
 CASH
EQUIVALENTS – Highly liquid investments with original maturities of three months
or less are considered cash equivalents.  There were no cash
equivalents as of December 31, 2008 or 2007.
 
 REVENUE
RECOGNITION – ASPECT recognizes revenue from sales of hardware and software when
the earning process is complete and the risks and rewards of ownership have
transferred to the customer.  Service revenues are recognized as
services are provided. SMSE recognizes sales at point of delivery, which is FOB
Poteet, Texas.
 
 ALLOWANCE
FOR DOUBTFUL ACCOUNTS – SMS analyzes current accounts receivable for an
allowance for doubtful accounts based on historical bad debt, customer
credit-worthiness, the current business environment and historical experience
with the customer.  The allowance includes specific reserves for
accounts where collection is deemed to be no longer probable.  At
December 31, 2008 there is an allowance for doubtful accounts totaling
$0.  At December 31, 2007 there was an allowance for doubtful accounts
totaling $59,925.
 
 INVENTORY
– SSC does not currently carry any inventory.  SSC’s business model
calls for product to be manufactured or acquired only after an end-user sale has
been negotiated.
 
 PROPERTY,
PLANT, AND EQUIPMENT – Property, plant, and equipment are stated on the basis of
historical cost less accumulated depreciation.  Depreciation is
provided using the straight-line method over the estimated useful lives of the
assets.  Major renewals and improvements are capitalized, while minor
replacements, maintenance, and repairs are charged to current
operations.
 
 LONG-LIVED
ASSETS – Long-lived assets consist of property and equipment. Long-lived assets
are reviewed for impairment whenever events or circumstances indicate their
carrying value may not be recoverable. When such events or circumstances arise,
an estimate of the future undiscounted cash flows produced by the asset, or the
appropriate grouping of assets, is compared to the asset's carrying value to
determine if impairment exists pursuant to the requirements of SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets”. If the asset
is determined to be impaired, the impairment loss is measured based on the
excess of its carrying value over its fair value. Assets to be disposed of are
reported at the lower of their carrying value or net realizable
value.
 
 
 F-9
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 FAIR
VALUE OF FINANCIAL INSTRUMENTS – Accounting principles generally accepted in the
United States of America require disclosing the fair value of financial
instruments to the extent practicable for financial instruments, which are
recognized or unrecognized in the balance sheet. The fair value of the financial
instruments disclosed herein is not necessarily representative of the amount
that could be realized or settled, nor does the fair value amount consider the
tax consequences of realization or settlement. In assessing the fair value of
these financial instruments, the Company uses a variety of methods and
assumptions, which were based on estimates of market conditions and risks
existing at that time. For certain instruments, including cash, accounts
receivable, accounts payable, accrued interest and promissory notes payable, it
was estimated that the carrying amount approximated fair value for the majority
of these instruments because of their short maturity. The fair value of the
Company's property and equipment is estimated to approximate their net book
values.
 
 INCOME
TAXES – Income tax expense is based on reported earnings before income
taxes.  Deferred income taxes reflect the impact of temporary
differences between assets and liabilities recognized for financial reporting
purposes and such amounts recognized for tax purposes, and are measured by
applying enacted tax rates in effect in years in which the differences are
expected to reverse. During the periods presented, the Company has not been
required to pay federal income taxes.
 
 INTEREST
– Interest expense is based on the varying instruments and their stated or
imputed rates of interest.  Interest expense was approximately $56,000
and $121,000 for the years ended December 31, 2008 and December 31, 2007,
respectively.
 
 BASIC AND
DILUTED EARNINGS (LOSS) PER SHARE – Basic and diluted earnings (loss) per share
equals net loss divided by weighted average shares outstanding during the
period.  Diluted earnings (loss) per share includes the impact of
common stock equivalents using the treasury stock method when the effect is
dilutive.  There were no common stock equivalents during 2008 or
2007.
 
 USE OF
ESTIMATES IN FINANCIAL STATEMENT PREPARATION – The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those
estimates.
  F-10
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 STOCK
OPTIONS AND WARRANTS – In December 2004, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No.
123 (revised), "Share-Based Payment" ("SFAS 123(R)"). SFAS 123(R) eliminates the
alternative to use the intrinsic value method of accounting, which generally
resulted in no compensation expense recorded in the financial statements related
to the issuance of equity awards to employees. SFAS 123(R) requires that the
cost resulting from all share based payment transactions be recognized in the
financial statements.   SFAS 123(R) establishes fair value as the
measurement objective in accounting for share based payment arrangements and
requires all companies to apply a fair value based measurement method in
accounting for generally all share based payment transactions with
employees.
 
 IMPACT OF
RECENTLY ISSUED ACCOUNTING STANDARDS
 
 In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations”, which replaces SFAS No. 141. The statement retains the purchase
method of accounting for acquisitions, but requires a number of changes,
including changes in the way assets and liabilities are recognized in the
purchase accounting. It also changes the recognition of assets acquired and
liabilities assumed arising from contingencies, requires the capitalization of
in-process research and development at fair value, and requires the expensing of
acquisition-related costs as incurred. SFAS No. 141(R) is effective for us
beginning January 1, 2009, and will apply prospectively to business combinations
completed on or after that date.
 
 We
adopted SFAS No. 157, “Fair Value Measurements,” on January 1, 2008. SFAS 157
defines fair value, establishes a framework for measuring fair value and expands
disclosure of fair value measurements. SFAS 157 applies under other accounting
pronouncements that require or permit fair value measurements and accordingly,
does not require any new fair value measurements. SFAS 157 clarifies that fair
value is an exit price, representing the amount that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between
market participants. As such, fair value is a market-based measurement that
should be determined based on assumptions that market participants would use in
pricing an asset or liability. As a basis for considering such assumptions, SFAS
157 established a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value as follows:
 
 •              Level
1. Observable inputs such as quoted prices in active markets;
 •              Level
2. Inputs, other than the quoted prices in active markets, that are observable
either directly or indirectly; and
 •              Level
3. Unobservable inputs in which there is little or no market data, which require
the reporting entity to develop its own assumptions.
 
 As of
December 31, 2008, the Company had no assets subject to fair value
measurement.
  F-11
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 SFAS 159,
“The Fair Value Option for Financial Assets and Financial Liabilities, including
an Amendment of SFAS 115,” became effective for us on January 1, 2008. SFAS 159
establishes a fair value option that permits entities to choose to measure
eligible financial instruments and certain other items at fair value at
specified election dates. A business entity shall report unrealized gains and
losses on items for which the fair value options have been elected in earnings
at each subsequent reporting date. For the twelve months ended December 31,
2008, there were no applicable items on which the fair value option was elected.
SFAS 159 may impact our consolidated financial statements in the
future.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51.” SFAS 160
requires: (i) the ownership interests in subsidiaries held by parties other than
the parent be clearly identified, labeled, and presented in the consolidated
statement of financial position within equity, but separate from the parent’s
equity; (ii) the amount of consolidated net income attributable to the parent
and to the noncontrolling interest be clearly identified and presented on the
face of the consolidated statement of income; (iii) changes in a parent’s
ownership interest while the parent retains its controlling financial interest
in its subsidiary be accounted for consistently; (iv) when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary and any gain or loss on the deconsolidation be initially measured at
fair value; and (v), entities provide sufficient disclosures that clearly
identify and distinguish between the interests of the parent and the interests
of the noncontrolling owners. SFAS 160 is effective for us as of January 1, 2009
and will apply prospectively, except for the presentation and disclosure
requirements, which will apply retrospectively. SFAS 160 is not expected to have
a material impact on our consolidated financial statements.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities, an amendment of FASB Statement No. 133.” SFAS No. 161
changes the disclosure requirements for derivative instruments and hedging
activities. Entities are required to provide enhanced disclosures about (a) how
and why an entity uses derivative instruments, (b) how derivative instruments
and related hedged items are accounted for under SFAS 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash flows.
SFAS 161 is effective for us beginning January 1, 2009 and is not expected to
have a material impact on our consolidated financial statements
  F-12
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.”  SFAS 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (“GAAP”)
in the United States (the GAAP hierarchy). SFAS 162 becomes effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
(“PCAOB”) amendment to AU Section 411, “The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles” and is not expected to
have a significant impact on our consolidated financial statements.
 
 In May
2008, the FASB issued SFAS No. 163 “Accounting for Financial Guarantee Insurance
Contracts—an interpretation of FASB Statement No. 60.” SFAS 163 resolves
existing inconsistencies in accounting for financial guarantee insurance
contracts by insurance enterprises under FASB Statement No. 60, “Accounting and
Reporting by Insurance Enterprises.” SFAS 163 requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation and clarifies how Statement 60 applies to financial
guarantee insurance contracts, including the recognition and measurement to be
used to account for premium revenue and claim liabilities. SFAS 163 also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS 163 is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and all interim periods within those fiscal years,
except for some disclosures about the insurance enterprise’s risk-management
activities. SFAS 163 is not expected to have a significant impact on our
consolidated financial statements.
 
 NOTE 4 –
PROPERTY AND
EQUIPMENT
 
 At
December 31, 2008 and 2007, the Company had property and equipment valued at
$0.
 
 NOTE 5 –
SALE OF SMS
ENVIROFUELS, INC.
 
 On August
20, 2008, the Company reached an agreement with certain affiliated parties to
sell the company’s SMS Envirofuels, Inc. subsidiary.  The terms of the
agreement called for the forgiveness of all debts owed to said affiliated
parties in return for 100% of SMSE’s stock.  As a result of this
transaction, the Company classified SMSE as “Discontinued Operations” for the
purposes of these financial statements in accordance with FASB Statement
144.  Additional disclosure can be found in Note 13.  As a
result of the transaction, the Company reduced Total Assets in the amount of
$659,619 and reduced Total Liabilities in the amount of
$6,899,625.  The difference of $6,240,006 was accounted for as capital
contributed by affiliated parties and was therefore added to Additional
Paid-In-Capital.
  F-13
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 6 –
SALE OF ASPECT
BUSINESS SOLUTIONS, INC.
 
 On
January 15, 2008, the Company reached an agreement with certain affiliated
parties to sell the company’s Aspect, Inc. subsidiary.  The terms of
the agreement called for the payment of approximately $65,000 to the Company in
return for 100% of Aspect’s stock. The $65,000 is being paid over 24 months in
the form of a note receivable with monthly payments of $2,708 per month which
began on February 15, 2008, and included the first payment due at closing. In
addition, the Company agreed to continue assuming Aspect’s outstanding debt as
of the date of the sale which was already previously consolidated.  As
a result of this transaction, the Company classified Aspect as “Discontinued
Operations” for the purposes of these financial statements in accordance with
FASB Statement 144 and recorded a “Gain on Disposal of Assets” of $62,151 which
represented the value of the assets given up of $2,849 less the consideration
received.  Additional disclosure can be found in Note 13. The total
debt assumed by the Company and not part of the sale was approximately
$2,385,000, which was subsequently forgiven (see Note 8).  On December
31, 2008, the Company determined that the remaining receivable from the sale of
Aspect was uncollectible.  As a result of this determination the
Company recognized a reduction of the gain of $54,167.
 
 NOTE 7 –
NOTES PAYABLE TO
OTHERS
 
 On
February 3, 2006, SMS borrowed $500,000 from an independent lender. The security
pledged for this note is equipment recently purchased plus the deposit placed on
equipment currently being prepared for delivery in the future.  The
interest rate on the unpaid balance is 18%. The Company is in default on this
note. On February 8, 2007, an agreement to transfer deposit rights and partial
release of the promissory note was signed by the Company and the independent
note holder. In the agreement, the Company has transferred the rights to the
deposit placed by the Company on 4 pieces of equipment that were to be used by
its subsidiary SMSE, a value of $170,000, in exchange for a release and
discharge of $240,000 of the promissory note. In addition, the Company has the
right to further release of $15,000 for any future transfer to note holder of
the rights in the deposits of 2 additional pieces of equipment, a value of
$85,000.  At December 31, 2008, the deferred liability is $70,000 and
the principal balance on the note is $260,000 with interest accrued of
$180,900.  As indicated in Note 5, on August 20, 2008, the Company
sold its SMSE subsidiary, some of the assets of which were used to collateralize
this promissory note.  At this time the Company cannot accurately
forecast the ramifications of this default.
  F-14
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 On
October 5, 2006, SMSE received an LOI, from EBOF, for the purchase of assets
associated with its production facility in Poteet. The initial terms of the LOI
enabled SMSE to sign a promissory note with EBOF for a line of credit not to
exceed $788,000. The expiration date of this note was February 2, 2007. SMSE is
in default on this note. The terms of the LOI were not met by the purchaser and
the LOI expired with no sale. The interest rate on the unpaid balance is
18%.  As of August 20, 2008, the principal balance on the note was
$350,000 and interest accrued was $101,980.  As part of the sale of
SMSE this liability was transferred to the new owners of SMSE.
 
 NOTE 8 –
NOTES PAYABLE TO
STOCKHOLDERS
 
 On April
15, 2003, the predecessor to SSC signed a one-year promissory note with a
stockholder for a line of credit up to $2,000,000.  This note was
extended for an additional one-year term on April 15, 2004.  On March
7, 2006, the line was reduced to $500,000 and extended to December 31,
2006.  On December 31, 2006, the note was extended to February 28,
2008, with an increase in the line amount to $1,000,000.  On February
28, 2008, the note was extended until February 28, 2009.  The note
bears 10% interest, is payable on demand and has no collateral.  As of
August 20, 2008, the principal balance was $622,634 and accrued interest was
$156,675.
 
 On
February 24, 2003, SMSE signed a one-year promissory note with a stockholder for
a line of credit up to $1,000,000. This note was extended for an additional
one-year term on February 24, 2004. On March 7, 2006, the credit line was
increased to $2,000,000 and extended to December 31, 2006.  On
December 31, 2006, the note was extended to February 28, 2008, and the line was
increased to $2,500,000.  On February 28, 2008, the note was extended
until February 28, 2009.  The line of credit bears 10% interest, is
payable on demand and has no collateral.   As of August 20, 2008,
the principal balance was $2,078,652 and accrued interest was
$774,916.
 
 The
stockholder also advanced money to ASPECT on an as-needed basis.  The
advances were assumed by SSC on January 15, 2008.  On August 20, 2008,
these advances were forgiven as part of the sale of SMSE.  As of
August 20, 2008, these advances totaled $2,343,810.
 
 During
the year ended December 31, 2008, the company borrowed an additional $55,000
against these credit facilities.  All of these stockholder credit
facilities have been cancelled and all balances due to stockholders forgiven in
consideration for the sale of SMSE on August 20, 2008.  More
information can be found in Notes 5 &13.
 
 F-15
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 9 –
ADVANCES FROM RELATED
PARTIES
 
 As of
December 31, 2008, the Company had received net, non-interest bearing advances
from certain related parties totaling $86,450.  These advances are not
collateralized and are due on demand.  Interest was not imputed on
these advances due to immateriality.
 
 NOTE 10 –
INCOME
TAXES
 
 Deferred
income 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 income tax purposes.  Significant components of
the Company’s deferred tax assets and liabilities, at December 31, 2008, were as
follows:
 
 Deferred
      tax assets:Net
      operating loss carry-forwards
              
              
              
              
              $
              6,363,474Total
      deferred tax assets
              
              
              
              
              
              2,227,216Valuation
      allowance
              
              
              (2,227,216
              )Net
      deferred tax asset
              
              $
              --
 
 The
Company’s net operating loss carry-forwards expire between 2013 and
2018.
 
 NOTE 11 –
COMMITMENTS AND
CONTINGENCIES
 
 YCO
Holdings, Inc., a dissolved subsidiary of the Company, was a party to an office
space operating lease agreement with an unrelated party for a term expiring on
January 31, 2007.  Although this contract was subject to the
bankruptcy filing, the lawsuit was dismissed in February, 2006 pursuant to a
Comprehensive Settlement Agreement which required the Company to make payments
in the amount of $470,000.  The payment schedule called for a $20,000
initial payment, followed by monthly payments of $7,500 for 60
months.  The Company is currently in default under the terms of the
Settlement Agreement.   At December 31, 2008, the remaining
balance is $307,500.
 
 WKB
      SettlementYear
              
              Annual
      Expense2009
              
              $
              90,0002010
              
              $
              90,0002011
              
              $
              90,0002012
              
              $
              37,500
 
 The
Company’s current offices are located in sub-leased space on a month to month
basis.
  F-16
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 During
the second and third quarters of 2005, ASPECT, one of the Company’s former
subsidiaries, did not have the funds necessary to cover all the payroll taxes.
In January 2006, the Internal Revenue Service (“IRS”) placed a lien on ASPECT
assets. A third party accounting firm which represented ASPECT, in the due
process hearing, negotiated an installment plan to settle the outstanding
liability. The payments were tendered from this third party firm on behalf of
the Company’s largest shareholder and holder of a line of credit with ASPECT.
The balance due at December 31, 2008 is approximately $38,000.
 
 NOTE 12 –
STOCKHOLDERS’
DEFICIT
 
 During
the year ended December 31, 2008, the Company issued 500,000 shares of its
common stock to its new Chairman and CEO for services rendered valued at
$100,000 based on the quoted market price of the Company’s common stock on the
date of issuance.
 
 Additionally,
the Company issued 1,644,000 shares of its common stock to several consultants
for services rendered during the Company’s transition valued at $372,401 based
on the quoted market price of the Company’s common stock on the date of
issuance.
 
 Interest
imputed on related party notes during the year ended December 31, 2008 was
$149,606.
 
 On August
20, 2008, the Company reached an agreement with certain affiliated parties to
sell the company’s SMS Envirofuels, Inc. subsidiary.  The terms of the
agreement called for the forgiveness of all debts owed to said affiliated
parties in return for 100% of SMSE’s stock.  More information can be
found in Notes 5 & 13.
 
 On May 2,
2008, the Company’s Board of Directors approved an amendment, subject to
shareholder approval, to the Company’s Articles of Incorporation to effect a
reverse stock split at the ratio of 1 for 5.  On May 5, 2008, the
majority stockholders of the Company approved the same resolution.
 
 The
Company has authorized capital consisting of 100,000,000 shares of common stock,
of which 30,690,386 shares of common stock were outstanding on May 5,
2008.  Pursuant to the reverse stock split, the 30,690,386 shares of
common stock previously outstanding were automatically converted into
approximately 6,138,077 shares of common stock.
 
 F-17
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE 13 -
DISCONTINUED
OPERATIONS
 
 SMSE
 SMSE, a
subsidiary of the Company, ceased production in December 2006 and its assets
located in Poteet, Texas were classified as Held for Sale at December 31,
2006.  On August 20, 2008, the Company sold SMSE to certain affiliated
parties (see Note 5). As a result of this transaction the Company classified
SMSE as “Discontinued Operations” for the purposes of these financial
statements.
 
 SMSE’s
activity represented the entirety of the Company’s alternative fuels segment
(see Note 14).  SMSE’s sales, reported in discontinued operations, for
the year ended December 31, 2008 and 2007 are $0 and $10,200,
respectively.  SMSE’s pretax loss from operations, reported in
discontinued operations, for the year ended December 31, 2008 and 2007 were
$302,795 and $629,358, respectively. Prior year financial statements have been
restated to present the operations of SMSE as a discontinued
operation.  Below is a table of all assets and liabilities for the
discontinued operations of SMSE:
 
 At
              
              
              AtDecember
      31,
              
              
              December
      31,Assets
      of discontinued operations:
              
              2008
              
              
              2007Cash
              
              $
              --
              
              
              $
              2,561Inventory
              
              
              --
              
              
              
              --Property
      and Equipment, net
              
              
              --
              
              
              
              574,619Other
      Assets
              
              
              --
              
              
              
              --Total
      Assets
              
              $
              --
              
              
              $
              577,180Liabilities
      of discontinued operations:Accounts
      Payable
              
              
              --
              
              
              
              252,281Accounts
      Payable - related parties
              
              
              --
              
              
              
              154,716Accrued
      Expenses
              
              
              --
              
              
              
              51,438Total
      Liabilities
              
              $
              --
              
              
              $
              458,435
 
 
 F-18
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 Aspect
  Aspect, a
subsidiary of the Company, was sold pursuant to a Stock Purchase Agreement with
certain affiliated individuals of the Company on January 15, 2008 (see Note
6).  As a result of this transaction the Company classified Aspect as
“Discontinued Operations” for the purposes of these financial
statements.
 
 Aspect’s
activity represents the entirety of the Company’s software sales and programming
segment (see Note 14).  Aspect’s sales, reported in discontinued
operations, for the year ended December 31, 2008 and 2007 are $14,634 and
$398,188, respectively. Aspect’s pretax loss from operations, reported in
discontinued operations, for the year ended December 31, 2008 and 2007 were
$93,376 and $291,323, respectively.  Prior year financial statements
have been restated to present the operations of Aspect as a discontinued
operation.  Below is a table of all assets and liabilities for the
discontinued operations of Aspect:
  At
                
                
                AtDecember
      31,
                
                
                December
      31,Assets
      of discontinued operations:
                
                2008
                
                
                2007Cash
                
                $
                --
                
                
                $
                17,184Prepaid
      Expenses
                
                
                --
                
                
                
                612Property
      and Equipment, net Total Assets
                
                $
                --
                
                
                $
                3,923
      21,719Liabilities
      of discontinued operations:Accounts
      Payable
                
                
                --
                
                
                
                22,094Accounts
      and Notes Payable - related parties
                
                
                --
                
                
                
                2,343,413Accrued
      Expenses Total Liabilities
                
                $
                --
                
                
                $
                60,220
      2,425,727
  F-19
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE 14 –
OPERATING RESULTS AND
SEGMENT INFORMATION
 
 (Discontinued)
              
              
              (Discontinued)Software
      Sales
              
              
              Alternative&
      Programming
              
              
              Fuels
              
              
              All
      Other
              
              
              TotalYear
      Ended December 31, 2008Revenues
      from operations
              
              $
              14,634
              
              
              $
              --
              
              
              $
              --
              
              
              $
              14,634Net
      operating loss from operations
              
              
              --
              
              
              
              --
              
              
              
              (585,450
              )
              
              
              (585,450
              )Loss
      from discontinued operations
              
              
              (93,376
              )
              
              
              (302,795
              )
              
              
              --
              
              
              
              (396,171
              )Assets
      held for sale
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Capital
      Expenditures
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Current
      Depreciation (included in gain on disposal)
              
              
              2,819
              
              
              
              --
              
              
              
              --
              
              
              
              2,819Year
      Ended December 31, 2007Revenues
      from operations
              
              $
              398,188
              
              
              $
              10,200
              
              
              $
              -
      -
              
              
              $
              408,388Net
      operating loss from operations
              
              
              --
              
              
              
              --
              
              
              
              (518,894
              )
              
              
              (518,894
              )Loss
      from discontinued operations
              
              
              (291,323
              )
              
              
              (629,358
              )
              
              
              --
              
              
              
              (920,681
              )Assets
      held for sale
              
              
              3,923
              
              
              
              574,619
              
              
              
              --
              
              
              
              578,542Capital
      Expenditures
              
              
              1,726
              
              
              
              --
              
              
              
              --
              
              
              
              1,726Depreciation
              
              
              5,251
              
              
              
              --
              
              
              
              --
              
              
              
              5,251
 
 The
Company reports its operations by segments, which for the Company, relates to
specific subsidiaries that are individually managed and have separate financial
results that are viewed by the Company’s chief operating
decision-maker.  Profit from operations is net sales less cost of
sales and selling, general and administrative expenses.  There are two
segments: software sales and programming, and alternative fuels.  In
addition, the Company reports certain administrative activities under the
corporate segment labeled “All Other.”
 
 As
previously discussed, the Company sold its SMSE business segment on August 20,
2008.  The results of SMSE are presented herein as discontinued
operations.
 
 Also, as
previously discussed, the Company sold its ASPECT business segment on January
15, 2008.  The results of ASPECT are presented herein as discontinued
operations.
  F-20
 SUNRISE
SOLAR CORPORATION
 
 (A
DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE 15 –
Related Party
Transactions
 
 On August
20, 2008, the Company sold its SMSE subsidiary to certain affiliated parties in
return for the forgiveness of certain debts (see Note 8).
 
 The
Company’s current office location is subleased on a month-to-month basis from
its former majority shareholder.
 
 NOTE 16 –
Reclassification
 
 Certain
accounts from prior periods have been reclassified to conform to current period
presentations.
 
 NOTE 17 –
Subsequent
Events
 
 2008 Equity Incentive
Plan
 On
February 27, 2009, the Company filed a Form S-8 with the Securities and Exchange
Commission.  The purpose of the filing was to register up to 3 million
shares of the Company’s common stock to be issued to eligible persons under the
Company’s 2008 Equity Incentive Plan.
 
 As of
February 28, 2009, the Company had issued 2,540,667 shares of its common stock
to eligible persons pursuant to the 2008 Equity Incentive plan valued at
$1,684,214 based on the quoted market price of the Company’s common stock on the
date of issuance.
 
 Share Issuances Outside the
Plan
 Additionally,
as of February 28, 2009, the Company had issued 790,000 shares of its common
stock to several consultants valued at $403,600 based on the quoted market price
of the Company’s common stock on the date of issuance.
  F-21