Sunrise Real Estate Group Inc · 10KSB · For 12/31/04

Filed On 4/8/05 3:23pm ET   ·   SEC File 0-32585   ·   Accession Number 1010549-5-247

Annual Report -- Small Business   ·   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       48    208K 
 2: EX-31.1     Section 302 Certification of Ceo                       2±     7K 
 3: EX-31.2     Section 302 Certification of Cfo                       2±     7K 
 4: EX-32.1     Section 906 Certification of Ceo                       1      6K 
 5: EX-32.2     Section 906 Certification of Cfo                       1      6K 

10KSB   ·   Annual Report -- Small Business
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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-KSB

(Mark One)                                                                      

[X] ANNUAL  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
1934                                                                            
For the fiscal year ended: December 31, 2004                                    

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

 Commission file number: 000-32585

 SUNRISE REAL ESTATE DEVELOPMENT GROUP, INC.
 -------------------------------------------------------------------------
(Name of Small Business Issuer in its Charter)

Texas                                      75-2713701 
--------------------------------------------------------------------------------
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)                                            

Suite 1502, No.333,Zhaojiabang Road                                             
Shanghai, PRC                                  200031     
--------------------------------------------------------------------------------
(Address of principal executive offices)                (Zip Code)              

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

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

Securities  registered pursuant to Section 12(g) of the Act:                    
Common Stock, $0.01 par value                                                   

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

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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-KSB or any  amendment to
this Form 10-KSB. [X]                                                           

The issuer's  revenues for its most recent  fiscal year ended  December 31, 2004
were US$7,723,641.                                                              

As of March 30,  2005 the  aggregate  market  value of the Common  Stock held by
non-affiliates,  6,614,934 shares of Common Stock,  was $33,074,670  based on an
average of the bid and ask prices of $5 per share of Common Stock on such date. 

The number of shares  outstanding of the issuer's Common Stock, $0.01 par value,
as of March 30, 2005 was 21,636,614 shares.                                     

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]       

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

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 SUNRISE REAL ESTATE DEVELOPMENT GROUP, INC.

 FORM 10-KSB

 TABLE OF CONTENTS
                                                                            Page
PART I                                                                          
Item 1.  Business..............................................................4
Item 2.  Property.............................................................10
Item 3.  Legal Proceedings....................................................10
Item 4.  Submission of Matters to a Vote of Security Holders..................10

PART II                                                                         
Item 5.  Market for Common Equity and Related Stockholder Matters.............11
Item 6.  Management's Discussion and Analysis or Plan of Operation............12
Item 7.  Financial Statements.................................................22
Item 8.  Changes in and Disagreements with Accountants on Accounting            
         and Financial Disclosure.............................................23
Item 8A. Controls and Procedures..............................................23
Item 8B. Other Information....................................................23

PART III                                                                        
Item 9.  Directors and Executive Officers, Promoters and Control Persons;       
         Compliance with Section 16(a) of the Exchange Act....................24
Item 10. Executive Compensation...............................................27
Item 11. Security Ownership of Certain Beneficial Owners and Management         
         and Related Stockholder Matters......................................28
Item 12. Certain Relationships and Related Transactions.......................30
Item 13. Exhibits and Reports on Form 8-K.....................................30
Item 14. Principal Accounting Fees and Services...............................31

Consolidated Financial Statements                                               

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Part I

ITEM 1. Description of business                                                 

Corporate History                                                               

Sunrise Real Estate  Development  Group,  Inc.  ("SRRE") was incorporated in the
State of Texas on October 11,  1996.  On October 28,  2003,  Olympus  Investment
Corporation, a Brunei corporation, based in Taipei, Taiwan, purchased all of the
78,400  shares of common  stock  owned by Yarek  Bartosz,  and then  became  the
majority, 51% shareholder of the Company.                                       

Effective  December 22, 2003, the name of the Company,  Parallax  Entertainment,
Inc. was changed to Sunrise Real Estate  Development  Group, Inc. Also effective
December 22, 2003, the outstanding shares of common stock,  153,262 shares, were
reverse  split,  one for five,  resulting  in 30,614  shares  being  issued  and
outstanding,  post reverse split. Thereafter,  on December 27, 2003, the Company
sold in a private  placement to non-US persons  6,600,000 shares of common stock
for $0.025 per share, an aggregate of $165,000.  SRRE relied on the Regulation S
exemption from the  registration  requirements  of the Securities Act of 1933 in
connection with this private placement.                                         

On August 31, 2004, SRRE, CY-SRRE and Lin Chi-Jung,  an individual and agent for
the  beneficial  shareholder  of CY-SRRE,  i.e.  Ace  Develop,  entered  into an
exchange  agreement  that SRRE  issue  5,000,000  shares of common  stock to the
beneficial shareholder or its designees, in exchange for all outstanding capital
stock of CY-SRRE. The transaction was closed on October 5, 2004. Lin Chi-Jung is
Chairman of the Board of  Directors  of SRRE,  the  President of CY-SRRE and the
principal and controlling shareholder of Ace Develop.                           

Also on August 31, 2004, SRRE, LRY and Lin Chi-Jung, an individual and agent for
beneficial  shareholders of LRY, i.e. Ace Develop, Planet Tech and Systems Tech,
entered into an exchange  agreement that SRRE issue 10,000,000  shares of common
stock to the beneficial  shareholders,  or their designees,  in exchange for all
outstanding capital stock of LRY. The transaction was closed on October 5, 2004.
Lin Chi-Jung is Chairman of the Board of Directors of SRRE, the President of LRY
and the  principal and  controlling  shareholder  of Ace Develop.  Regarding the
10,000,000 shares of common stock of SRRE issued in this transaction,  8,500,000
shares were issued to Ace Develop, 750,000 shares were issued to Planet Tech and
750,000 shares were issued to Systems Tech.                                     

Prior to the  closing  of the  aforesaid  Exchange  Agreements,  Sunrise  was an
inactive "shell" company. Following the closing, Sunrise, through its two wholly
owned subsidiaries,  LRY and CY-SRRE, has engaged in the real estate development
and brokerage businesses in Mainland China.                                     

As a result of the  acquisition,  the former  owners of  CY-SRRE  and LRY hold a
majority  interest  in  the  combined  entity.   Generally  accepted  accounting
principles  require in certain  circumstances  that a company whose stockholders
retain the majority  voting  interest in the combined  business to be treated as
the acquirer for financial reporting purposes.  Accordingly, the acquisition has
been accounted for as a "reverse  acquisition"  arrangement  whereby CY-SRRE and
LRY are deemed to have purchased  SRRE.  However,  SRRE remains the legal entity
and the Registrant for Securities and Exchange  Commission  reporting  purposes.
The  historical  financial  statements  prior to  October  5,  2004 are those of
CY-SRRE and LRY and their  subsidiaries.  All shares and per share data prior to
the  acquisition  have  been  restated  to  reflect  the  stock  issuance  as  a
recapitalization of CY-SRRE and LRY.                                            

Our  ultimate  goal is to be  fully  engaged  in the real  property  development
business.  We are now a sales brokerage  business with accumulated  expertise in
the areas of property sales & marketing.  We generated  consolidated revenues of
more  than  $7.7  million  from our  sales  brokerage  business  in  2004.  With
experience  and in-depth  local market  know-how,  we are now ready to enter the
property  development  sector,  while at the same time  maintaining  our  steady
growth in the brokerage business.                                               

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General Business Description                                                    

The Company was  incorporated on October 11, 1996 in Texas, USA and was formally
known as Parallax  Entertainment,  Inc. The Company has gone through a series of
transition leading to the completion of a reverse merger on October 5, 2004. The
Company's  business is now in the real estate  consultation,  agency sales,  and
property underwriting in the People's Republic of China ("the PRC").            

The Company  recognizes that in order to  differentiate  itself from the market,
there is a need to avoid  direct  competition  with the rest of the  large-scale
property  developers who have abundant funds to acquire land. We aim at crafting
a niche position as the marketing alliance of other developers.                 

One of the Company's  subsidiaries  began  operations as a real estate marketing
agent in 2001. Within three years of operation, that subsidiary has successfully
marketed  10.7  million  square  meters of gross floor area of  residential  and
commercial properties in Mainland China's major and secondary cities.           

Company chart                                                                   

Sunrise operates through a tier of wholly owned subsidiaries with 100% ownership
of capital stock of Sunrise Real Estate Development Group, Inc., a Cayman Island
corporation  ("CY-SRRE")  and LIN RAY YANG  Enterprise,  Ltd., a British  Virgin
Island company ("LRY"). Neither CY-SRRE nor LRY have operations but respectively
conduct  operations in Mainland China through wholly owned subsidiaries based in
Shanghai,  the People's Republic of China (the "PRC").  CY-SRRE operates through
its wholly owned subsidiary,  Shanghai Xin Ji Yang Real Estate  Consultation Co.
Ltd ("SHXJY"). LRY operates through its wholly owned subsidiary,  Shanghai Shang
Yang Real Estate  Consultation  Co. Ltd.  ("SHSY").  SHXJY is a property  agency
business  earning  commission  revenue  from  marketing  and  sales  service  to
developers.  SHSY is a property investment company,  investing in and partnering
with developers to whom they provide  marketing  services.  In January 2005, LRY
established a new  subsidiary - Suzhou Gao Feng Hui Property  Management Co, Ltd
("SZGFH").  This subsidiary is a joint investment between LRY and its partnering
developer, SIP Hi-Dragon Real Estate Development Co., Ltd. The major business of
SZGFH is to render property rental service, buildings management and maintenance
service  for  office   buildings   and   service   apartments.   Our   corporate
organizational table is as follows:                                             

Figure 1: Company Organization Chart                                            

 Sunrise Real Estate
 Development Group, Inc.
 |
 |
------------------------------------------------        
|                                             |         
|                                             |         
Sunrise Real Estate                              LIN RAY YANG             
Development Group, Inc.                         Enterpise Ltd., BVI           
     Cayman                      100%                 |              80%
            |                  -------------------------------------------------
100%     |                            |                            |      
Shanghai Xin Ji Yang Real         Shanghai Shang Yang        Suzhou Gao Feng Hui
   Estate Consultation         Real Estate Consultation      Property Management
   Company Limited               Company Limited             Company Limited

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Celebrity-turned-entrepreneur,  Lin Chi Jung,  and the founder of  Taiwan's  top
property  sales  agency,  Lin  Chou  Chin,  established  SHXJY in end of 2001 in
Shanghai jointly.  SHXJY combined professional  strengths from Taiwan,  Mainland
China and Hong Kong to venture into  Mainland  China's  property  marketing  and
sales brokerage sector.                                                         

SHXJY has fifty-two sales teams operating in fifteen provinces in the PRC. As of
December 31, 2004,  SHXJY has contracts to market and sell a total property area
exceeding  10.69  million  square  meters.  SHXJY is  comprised  of three  major
divisions:  research and development,  planning,  and sales divisions.  It has a
total work force of 450 personnel including 30 Taiwanese  expatriates.  SHXJY is
one of the largest foreign-based brokerage agencies in Shanghai.                

SHSY was incorporated in March 2004 as a property  development  advisory company
with the  goal of  becoming  established  in the land  development  business  in
Mainland China. SHSY identifies,  evaluates and negotiates development projects.
SHSY  is  comprised  of  professional  project  planning,   property  investment
evaluation and project marketing teams.                                         

SHSY's first  project is the  development  of a commercial  building  within the
Suzhou Industrial Park, called the Sovereign Building. The Sovereign Building is
a joint venture  between SHSY and SIP  Hi-Dragon  Real Estate  Development  Co.,
Ltd., SHSY will undertake the sale of all units within the project.             

SZGFH was incorporated in January 10, 2005 as a property management company. The
registered  capital of SZGFH is $300,000;  whereby LRY invested 80% into it, and
Hui Long  took-up  the rest of the 20% stake.  The Company  anticipates  that it
would be able to secure a number of service  contracts  from the  existing  unit
owners of Sovereign  Building.  We are hoping that the rental  revenue from this
subsidiary  will help our group to have a more  diversified  revenue  base.  Our
historical  revenue  stream  has  mainly  been in the form of  commission  based
revenue,  which  sometimes  may expose us to  developer-related  risks,  such as
fluctuation in property price,  cyclical  collection flow and project management
issues.  The durable and  accumulative  rental revenue will provide us a cushion
against the cyclical nature of the real estate industry.                        

With a relatively short history and smaller capital base, the Company recognizes
that in order to differentiate  itself from the market, there is a need to avoid
direct competition with large-scale  property developers who have abundant funds
to acquire  land.  We aim at utilizing  our  professional  experience to carve a
niche and position the Company as the  marketing  alliance of other  developers.
This  strategic  plan is designed to expand our  activities  beyond our existing
revenue base,  enabling the Company to assume higher  investment  risk and allow
flexibility in collaborating  with partnering  developers.  The plan is aimed at
improving the capital  structure of the Company,  diversifying our revenue base,
creating higher values and equity returns.                                      

In the past 3 years, the Company has created a reputation as a leading sales and
marketing  agency  for  new  projects.   With  our  accumulated   expertise  and
experience,  we will now slowly take a more aggressive role by  participating in
property  development.  We will select the property  developers with outstanding
qualifications  as our  strategic  partners,  and continue to build  strength in
design, planning, positioning and marketing services.                           

Business Activities                                                             

Since 2002,  the Company's  main  operating  subsidiary has engaged in sales and
marketing  agency work for newly built property units. The Company has developed
a good network with  landowners and earned the trust of developers,  allowing us
to explore opportunities in property investment.                                

As part of this goal, a new operating subsidiary with an experienced  management
team has been acquired to focus on developing a new strategic  plan for property
investment  activities.  The new  strategic  plan is designed to expand  Company
activities  beyond  our  existing  revenue  base,  to  assume a  higher  risk of
investment  and allow  flexibility  in  structuring  collaboration  models  with
partnering developers.                                                          

While the Company has an excellent track record as a leading sales and marketing
agency for new developments,  we are slowly becoming a small equity  participant
in property development projects.                                               

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Property Marketing and Sales Agency                                             

Depending on the scope of our  engagement  and our partners'  requirements,  the
scope of our services could be a combination of the following models:           

Commission Based Services                                                       
-------------------------                                                       

Commission  based  services  refer to  marketing  and sales  agency  services to
perform the following services:                                                 

a.       Integrated Marketing Planning                                          
b.       Advertising Planning & Execution                                       
c.       Sales Planning and Execution                                           

In this type of  business,  the  Company  signs a  marketing  and  sales  agency
agreement  with  property  developers  to  undertake  the  marketing  and  sales
activities of a named project. The scope of service varies according to clients'
needs;  it could be a full  package  of all the above  services  (a, b and c), a
combination of any 2 of the above services or a single service.                 

Most of our existing revenue come from commission  based services,  representing
at least 80% of our annual  revenues.  We secure  those  projects via bidding or
direct appointment. Through existing client rapport and selling results, we have
secured a number of  projects  from  previous  clients  via direct  appointment,
especially on subsequent phases of projects that we marketed before.  Almost 40%
of our existing projects are such subsequent  phases,  representing a quarter of
our current year revenues.                                                      

Normally before we are retained by a developer,  we will evaluate and determined
the  acceptable  selling value of a project;  this value will be proposed to the
developer and the parties will negotiate an Average Selling Value ("ASV") as the
basis of property selling price in our agency agreement.                        

The actual  retail value of the project is generally  priced higher than the ASV
depending on the actual market  conditions and our confidence level upon project
launching. On average, we are able to sell the property at a 20% markup of ASV. 

Our normal commission structure is a combination of:                            

a)   Base Commission of 1.5% on the Acceptable Selling Value                    
b)   Surplus  Commission of 20% - 40% of the  difference  between ASV and actual
sales price.                                                          

Our wholly owned  subsidiary,  Shanghai SHXJY Real Estate  Consultation Co, Ltd.
("SHXJY"), engages in this sales and marketing phase of our business.           

Property Investment                                                             

The Company's ultimate goal is to acquire strategic raw land properties to build
commercial and residential projects.                                            

In the PRC, all land titles are owned by the government,  and private  companies
are granted the Land Use Rights  Certificate  ("LURC") of not more than 70 years
depending on the purpose of the  development For example,  residential  property
has a land use right of 70 years, commercial and entertainment land has land use
rights of 50 years.                                                             

During  tenure of a land use right,  the assignee may claim the piece of land as
its property asset,  whereby this property is  transferable  and may be used for
various  commercial  purposes,  i.e.,  sales and purchase,  renting and leasing,
subject to mortgage and  guarantee,  provided  that the  principal  owner of the
rights would have to pay government usage fees annually.                        

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The PRC's regulation framework also requires that a property development company
possess  Land Use Right  Certificates  before  registering  itself as a Property
Development  Company.  The  Company  has not  acquired  any Land Use  Rights and
therefore is not registered as a Property Development Company. However it is our
goal to do so.                                                                  

Mainland China's Property Sector                                                

     |X|  The industry's macro environment is slowly opening up and the property
 sector is gradually developing to be a more regulated market.
     |X|  Stable economic growth provides a solid and secure base for investment
returns in the property sector.                             

Figure 2: GDP  Growth of US,  Japan,  Taiwan,  and China for the  period of 2000
through 2004                                                                    

[OBJECT OMITTED]                                                                

Figure  3: Per  Capita  GDP as  Multiple  of China  for US,  Japan,  Hong  Kong,
Singapore, Taiwan, and China.                                                   

[OBJECT OMITTED]                                                                

Government regulation                                                           
---------------------                                                           
The Law on the Protection of the Investment from Taiwan Compatriot              

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This  regulation  ensures  that the PRC  Government  shall  in no  circumstances
interfere in the  economic  cooperation  between the  Mainland  China and Taiwan
because of political differences.  The PRC Government shall not discriminate and
shall protect the legal benefits of Taiwan  compatriots'  investment in Mainland
China.  This policy allows Taiwan  business to safely  operate in Mainland China
without government discrimination.                                              

On August 31,  2003,  the State  Council of the PRC issued Guo Fa (2003)  No.18,
State  Council's  notice  regarding the  accelerating  real estate market in the
direction of  continuous  and healthy  development.  There is no doubt that this
policy will become an important  contribution to the PRC's economic development.
It explicitly  provides for assistance to middle/low  income households by means
of subsidies,  clearly defining the regulations to control land pricing so as to
enable the majority of households  to pay the housing price and fulfill  Chinese
citizens' dreams of buying ordinary commodity  housing.  Such decision will have
positive direct influence on the overall economic growth of the country.        

The No.18 policy  conforms to the public  opinion to satisfy  market  supply and
demand,  it also provides that strong support will be provided to qualified real
estate development companies.  The construction cost for economical and suitable
housing will also be reduced through  measures such as land transfers,  reducing
or waiving  administrative  and  institutional  charges  as well as tax  revenue
preferential policies and so on. Enterprises will all be under fair competition,
eliminating those previous under-the-table compromising transactions.           

Regulation No.18                                                                

The Policies that benefit real estate  developers in the No.18 regulation are as
follows:                                                                        

o    Increase the supply of ordinary commodity housing.                         
o    Control construction of upscale commodity apartment.                       
o    Stimulate the secondary housing market.                                    
o    Increase  the  collection  of  housing  accumulation  funds and exert  more
efforts in granting loans.                                            
o    Strengthen the supervision and management of mortgage and exert more effort
     in providing  credit  support to those  qualified  real estate  development
enterprises projects                                                  

Environmental matters                                                           
---------------------                                                           

None                                                                            

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Employees                                                                       

As of December 31, 2004, we had the following number of employees:              

     Department                                                        Employees
     ----------                                                        ---------
   Administration Dept.                                                   21
   Marketing Department Dept.                                             40
   R&D Dept                                                                9
   Accounting Dept.                                                        7
   Advertising & Communication Planning Dept.                             14
   Financing Dept.                                                         2
   Investor Relations Dept.                                                2
Suzhou Subsidiary of XJY                                              
   Administration Dept.                                                    9
   Accounting Dept.                                                        2
   Marketing Dept.                                                        71
   R&D Department                                                          7
Nanchang Branch of XJY                                                
   Administration Dept.                                                    4
   Accounting Dept.                                                        2
Marketing Dept.                                                       
   Advertising & Communication Planning Dept.                              1
Beijing Subsidiary of XJY                                             
   Administration Dept.                                                    4
   Accounting Dept.                                                        1
   Marketing Dept.                                                         1
Yangzhou Branch of XJY                                                
   Administration Dept.                                                    2
   Accounting Dept.                                                        2
   Marketing Dept.                                                        32
   Total                                                                 233

ITEM 2.  DESCRIPTION OF PROPERTY                                                

We  currently  rent our  facilities  at 7/F & 15/F,  No.333,  Zhaojiabang  Road,
Shanghai, the PRC. In addition, we have regional field support office in various
cities in Mainland China, namely Suzhou, Beijing, Nanjing and Yangzhou.         

ITEM 3. LEGAL PROCEEDINGS                                                       

The Company is not a party to any legal proceedings of a material nature.       

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

None                                                                            

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 PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                

Our common stock is quoted on the Over the Counter  Bulletin  Board system under
the  symbol  "SRRE."  The  following  table  sets  forth  the  high  and low bid
quotations  of our common  stock  reported  by the OTCBB  system for the periods
indicated.                                                                      

Over-the-counter  market quotations reflect inter-dealer prices,  without retail
mark-up,  mark-down,  or commissions,  and may not necessarily  represent actual
transactions.                                                                   

(Expressed in USD)                                                              

------------------- ---------------------- ---------------------- 
                   2004                     2003
------------------- ---------------------- ---------------------- 
                 High         Low        High        Low
------------------- ---------- ----------- ----------- ---------- 
First quarter         6.30        5.90        1.85       0.00     
------------------- ---------- ----------- ----------- ---------- 
Second quarter        10.01       3.50        0.55       0.21     
------------------- ---------- ----------- ----------- ---------- 
Third quarter         7.50        7.00        0.50       0.21     
------------------- ---------- ----------- ----------- ---------- 
Fourth quarter        7.50        3.50        6.50       0.25     
------------------- ---------- ----------- ----------- ---------- 

Source: http://yahoo.finance.com                                  

According  to the  transfer  agent's  records,  at March 1, 2005,  approximately
10,471 holders,  including  beneficial holders,  held our common stock. On March
30, 2005, the closing price of our common stock was $5.00.                      

No cash  dividends  were paid to  common  stockholders  in 2004 and 2003.  Major
reason  being we are still a growing  company  and we would  require  sufficient
liquidity to fund our aggressive business activities. The Company would consider
paying dividends in the future when cash surplus allowed so.                    

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ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS                                                                   

Please read this discussion along with the Consolidated Financial Statements and
Notes found at ITEM 7. "FINANCIAL STATEMENTS."                                  

OVERVIEW                                                                        

As a result of the completion of merger  exercise on October 5 2004, the holding
companies  of the 2 businesses  i.e.,  LIN RAY YANG  Enterprise  Ltd., a British
Virgin Island company ("LRY"),  and Sunrise Real Estate Development Group, Inc.,
a Cayman Islands company ("CY-SRRE") became our wholly-owned  subsidiaries,  and
their  respective  subsidiaries  (SHSY  &  SHXJY)  businesses  became  our  only
business.                                                                       

Since the former  stockholders  of LRY and  CY-SRRE  acquired a majority  of our
voting  interests  in the  merger,  the  transaction  was  treated  as a reverse
acquisition,  with  LRY and  CY-SRRE  treated  as the  acquirer  for  accounting
purposes.  Accordingly,  the pre-merger  financial statements of LRY and CY-SRRE
are our  historical  financial  statements.  Before the completion of the merger
exercise, SRRE had no continuing operations and its historical results would not
be meaningful if combined with the historical results of SHXJY.                 

As a result of the  acquisition,  the former  owners of  CY-SRRE  and LRY hold a
majority  interest  in  the  combined  entity.   Generally  accepted  accounting
principles  require in certain  circumstances  that a company whose stockholders
retain the majority  voting  interest in the combined  business to be treated as
the acquirer for financial reporting purposes.  Accordingly, the acquisition has
been accounted for as a "reverse  acquisition"  arrangement  whereby CY-SRRE and
LRY are deemed to have purchased  SRRE.  However,  SRRE remains the legal entity
and the Registrant for Securities and Exchange  Commission  reporting  purposes.
The  historical  financial  statements  prior to  October  5,  2004 are those of
CY-SRRE and LRY and their  subsidiaries.  All shares and per share data prior to
the  acquisition  have  been  restated  to  reflect  the  stock  issuance  as  a
recapitalization of CY-SRRE and LRY.                                            

SRRE and its subsidiaries,  namely,  CY-SRRE,  LRY, SHXJY, SZXJY, BJXJY and SHSY
are  collectively  referred  to  as  "the  Company"  hereafter.   The  principal
activities of the Company are the provision of property  brokerage  services and
real estate marketing services in Mainland China.                               

RECENT DEVELOPMENTS                                                             

Before 2004, our major business is agency business,  whereby our only subsidiary
then, SHXJY was contracted by property developers to market and sell their newly
developed  property  units;  in return we earn a commission  fee calculated as a
percentage of the selling price.  Our business  operation in SHXJY  continues to
demonstrate growth in revenue.                                                  

In 2004,  through  another  subsidiary,  SHSY,  we  venture  into a higher  risk
business  model  whereby our  commission  was not  calculated as a percentage of
selling price  anymore;  instead,  our  commission  revenue is equivalent to the
price difference between the final selling price and underwriting price. In this
higher risk model named  "Underwriting  Model", we negotiated with the developer
for an  underwriting  price  as low as  possible,  with  the  condition  that we
guarantee to acquire all unsold units within certain period.  In return, we were
given  the  flexibility  to price  the  final  selling  price and earn the price
difference between the final selling price and the underwriting  price. The risk
of this kind of arrangement is that, if there is any unsold unit upon the expiry
period,  we  may  have  to  absorb  the  unsold  units  from  developers  at the
underwriting price and hold them as our stock or investment. As per the terms of
underwriting  agreement,  there are 2 expiry periods: the first is in the mid of
2005 whereby we committed to sell 60% of the contracted  value; the second is by
the end 2005, whereby we committed to the remaining 40% of the contracted value.

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While we expect revenue to stem from these two subsidiaries  businesses,  we can
provide no assurance that this will result in any increase in profitability.    

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

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

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

RECENTLY ISSUED ACCOUNTING STANDARDS                                            

In December  2003,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Interpretation  46R  (FIN  46R),  a  revision  to  Interpretation  46 (FIN  46),
Consolidation  of Variable  Interest  Entities.  FIN 46R  clarifies  some of the
provisions of FIN 46 and exempts certain entities from its requirements. FIN 46R
is effective at the end of the first interim period ending after March 15, 2004.
Entities that have adopted FIN 46 prior to this  effective  date can continue to
apply  the  provisions  of FIN 46 until the  effective  date of FIN 46R or elect
early  adoption  of FIN 46R.  The  adoption of FIN 46 and FIN 46R did not have a
material impact on our financial statements.                                    

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

APPLICATION OF CRITICAL ACCOUNTING POLICIES                                     

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting  period.   Critical   accounting   policies  for  us  include  revenue
recognition, impairment of goodwill, and accounting for income taxes.           

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Goodwill                                                                        
--------                                                                        

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

Income Taxes                                                                    
------------                                                                    

SFAS 109,  Accounting  for Income Taxes,  establishes  financial  accounting and
reporting standards for the effect of income taxes. The objectives of accounting
for income taxes are to recognize the amount of taxes payable or refundable  for
the current  year and  deferred  tax  liabilities  and assets for the future tax
consequences  of events  that  have been  recognized  in an  entity's  financial
statements  or tax  returns.  Judgment is required in  assessing  the future tax
consequences of events that have been recognized in our financial  statements or
tax returns.  Variations in the actual outcome of these future tax  consequences
could materially impact our financial position or our results of operations.    

Revenue Recognition                                                             
-------------------                                                             

Agency commission  revenue from property broking is recognised when the property
developer  and the  buyer  complete  a  property  sales  transactions,  which is
normally  at the time  when the  property  developer  receives  from the buyer a
portion  of the sales  proceeds  in  accordance  with the terms of the  relevant
property sales agreement.                                                       

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

RESULTS OF OPERATIONS                                                           

We provide the discussion and analysis of our changes in financial condition and
results of operations  with  comparison to that of last fiscal year only.  There
will be no comparison  for last fiscal year vis-a-vis the period before as there
was  no  pro-forma  consolidated  financial  statement  prior  to  the  "reverse
acquisition" exercise.                                                          

Revenue                                                                         
-------                                                                         

Our net revenues  after sales tax are mainly agency  commission fee derived from
SHXJY. Net revenue was $7.7 million in 2004 compared to $5.3 million in 2003. In
2004, we were contracted to sell property value worth $283 million,  which was a
134% increase from last year contracted value of $121 million. We expect we will
experience  the  similar  if not  better  revenue  growth  rate in 2005  for our
commissioned agency business.                                                   

In 2004,  another  operating  subsidiary,  SHSY is  contributing  minimal  gross
revenue  of  $122,380  as it is still in the  early  stage  of  development;  in
February  2004,  SHSY has won a project  to  underwrite  an office  building  in
Suzhou.  Property Sales  Underwriting  is  comparatively  a higher risk business
model  compared  to our pure  commission  based  agency  business,  whereby  our
commission was not calculated as a percentage of selling price anymore; instead,
our commission  revenue is equivalent to the price difference  between the final
selling  price and  underwriting  price.  In this  relatively  high risk  model,

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namely,  "Underwriting  Model", we negotiated with developer for an underwriting
price as low as possible,  with the  condition  that we guarantee to acquire all
unsold units within certain period.  In return, we were given the flexibility to
price the final  selling price and earn the price  difference  between the final
selling price and the  underwriting  price. The risk of this kind of arrangement
is that,  if there is any  unsold  unit upon the expiry  period,  we may have to
absorb the unsold property units from developers at the  underwriting  price and
hold it as our stock or investment.                                             

This  underwriting  project  launched in January 2005 after the property develop
obtained  the  necessary  permit for sale.  Since  then,  we have sold  almost a
quarter of the underwritten floor areas as of March 23, 2005; this will generate
potential  revenue of $3.8 million.  The total revenue to be generated from this
project  is $15  million.  We expect  with the  inclusion  of this  underwriting
income,  the composition of our group revenue will change  tremendously in 2005,
with  both  agency   commission  and  underwriting   income  each   representing
approximately half of the revenue.                                              

Cost of Revenue                                                                 
---------------                                                                 

Cost of  revenue  increased  to $4.2  million  when  compared  with that of last
corresponding  period.  The increase is primarily in tandem with the increase in
sales.  Besides,  there were other elements for the significant increase in cost
of revenue in 2004;                                                             

1.   Advertising  costs:  For  most  of the  projects  handled  by the  Company,
     advertising  costs  are borne by  corresponding  property  developers.  For
     certain projects in 2004, we committed to bear all advertising costs on our
     own in exchange for a higher agency  commission rate. All advertising costs
     incurred in the promotion of the Company's  property  projects are expensed
     as incurred.  Total  advertising costs for 2004 was $1.3 million while just
     $17,000 was incurred in 2003.  Due to the cyclical  nature of our business,
     we have no guarantee to match the advertising costs to the related revenue;
     however,  we are confident that advertising  costs expensed in 2004 will be
     recovered when the related revenue is generated in 2005.  Advertising costs
     are  usually  incurred  according  to the  timeline  specified  in  project
     budgeting.  It is budgeted  according to a percentage of our expected sales
     amount.   Due  to  the  nature  of  property  marketing  and  sales  cycle,
     advertising  costs are usually  incurred  two to three  months prior to the
     formal  sales  launch  activities;  in some  cases,  advertising  costs and
     activities may take place before  year-end,  while sales launch  activities
     were take place after  year-end.  As advertising  costs are expended off as
     incurred,  there is possibility that advertising  costs incurred in current
year are not exactly matching with the related revenue earned.        

2.   Operating Incentives:  Operating Incentive is awarded to the management and
     operation  team for  achieving  and exceeding  certain  preset  performance
     targets for the year,  operating incentive of $165,000 was incurred in this
year.                                                                 

General and Administrative Expenses                                             
-----------------------------------                                             

The Company's general & administrative expenses increased by 229% over 2003. The
increase in general and administrative  expenses was mainly due to the following
reasons:                                                                        

1.   Regionalized  Management  Initiative  Program:  The increase in  management
     member and sales personnel  resulting from the introduction of Regionalized
     Management Initiative Program caused the increase in staff costs during the
     year. In addition,  the rental and other office  expenses  arising from the
     set-up of SHSY,  SZXJY and SHXJY's  two  branches  located in Nanchong  and
     Yangzhou  in 2004 also caused the  increase  in general and  administrative
expenses.                                                             

2.   Establishment of SHSY: The setting up of SHSY in March 2004 is to undertake
     higher risk business  arrangement with developer,  i.e.;  underwriting case
     and any other property  investment  project in the future. The running cost
of this subsidiary is amounted to $487,940 in 2004.                   

3.   Business  Development  Incentive:  This  incentive  was  attributed  to the
     initial  management  team members for their  valuable  contribution  to the
     Company. It was calculated at 0.2% of the total value of properties sold in
     2004.  During the year,  business  development  incentive  of $565,456  was
declared to the initial management team.                              

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In addition to the general and administration  expenses  associated with the new
subsidiaries  and  branches,  the expenses also  included  housing  allowance of
$138,000 given to the top management  who are Taiwanese  expatriate.  As being a
social  committed  enterprise,  we also made  contribution  to the  community by
donating to local schools and providing  education  subsidies in rural areas. In
2004, the total contribution for the above was $48,000.                         

LIQUIDITY AND CAPITAL RESOURCES                                                 

Source of Cash:                                                                 
---------------                                                                 

|X|  Our  principal  sources  of cash are  commission  revenue  from our  agency
     business. As agency business will remain the core of our operation, it will
     continue to be our primary source of cash. On top of that, we are expecting
     another source of operating cash from our newly set-up investment  division
     as  well.  We  believe  these  sources  will  continue  to  meet  our  cash
     requirements,  including  debt service,  operating  expenses and promissory
     deposits for various property projects. Although we expect these sources of
     cash to be  sufficient  to fund our  planned  uses of cash,  we can make no
  assurance that the expected property sales will be completed as planned.

|X|  Another major source of cash is from the injection of capital  amounting to
     $2 million by LIN RAY YANG Enterprise Ltd., a British Virgin Island company
("BVI LRY").                                                          

|X|  Proceeds from  borrowings  were also a key source of cash for SRRE. We have
     obtained $1 million  under a commercial  promissory  note.  The  commercial
     promissory  note bears interest at a rate of 5% per annum.  All outstanding
     principal  and interest  are due at maturity as of December  31,  2004.  In
     January  2005 the line of maturity of the Note was  extended  for a year to
     December 31, 2005. Interest is due on demand and all outstanding  principal
are due at maturity.                                                  

|X|  We have also entered in a mortgage loan  agreement  with Suzhou  Commercial
     Bank.  This  is a 5-  year  term  loan  amounting  to  $1.48  million.  The
     arrangement of this term loan is mainly to finance the  acquisitions of two
     floors of an office building under development in Suzhou, the PRC. The term
     loan bears 0.4875% monthly interest with a monthly repayment installment of
     $28,510.   We  may  face   difficulty  in  paying  back  the  loan  if  the
     property-underwriting project in Suzhou does not provide the cash source as
planned.                                                              

|X|  We have also profit  sharing  partners whom  committed to share part of our
     investment risk in the property  underwriting  project  spearheading by our
     subsidiary, SHSY. The total proceeds from these profit sharing partners are
     $972,633.  Profit  distributable  to these profit sharing  partners will be
     allotted to them respectively after deducting all the costs involved in the
project.                                                              

Uses of Cash                                                                    
------------                                                                    

|X|  Most of our cash  resources  were used to fund the  operating  expenses and
     personnel  related  expenses,  such as salary and commission  paid to sales
forces, advertising cost, maintenance of regional offices and etc.    

|X|  We also  committed  in placing  performance  guarantee  deposits to certain
property developers in order to secure the relevant projects.         

We expect that moving forward we may utilize more available cash sources to fund
for  Performance  Guarantee in order to secure  higher  quality  projects and to
allow us to negotiate for better agency commission structure.                   

Potential Cash Pressure for 2005                                                
--------------------------------                                                

|X|  Sales Underwriting Agreement                                               

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     Our subsidiary,  SHSY has  underwritten the sale of Suzhou Hui Long Project
     (the building name is called Sovereign  Building),  a property developed by
     an independent developer.  Under this underwriting agreement, we negotiated
     with  developer  for an  underwriting  price,  with the  condition  that we
     guarantee to acquire all unsold units within certain period.  In return, we
     were given the  flexibility  to price the final  selling price and earn the
     price  difference  between  the final  selling  price and the  underwriting
     price.  We are  optimistic  that we would be able to sell off the committed
units by the date agreed by both parties.                             

     The total sum of the underwriting  value is $49 million.  We have committed
     to sell 60% of the total underwriting value by May 25, 2005. As of March 9,
     2005,  we have  managed to sell off 35% of the  committed  value  since the
     launch the sales on January 8, 2005. The management is confident to achieve
     the 60% target by May 25, 2005. If we do not meet the 60% target by May 25,
     2005,  we have to acquire  from the  independent  developer  the  remaining
     unsold units. The requirement to pay the unsold units will partly be funded
     by mortgage  loans from banks and partly be funded by the  proceeds  earned
from the sold units.                                                  

This report contains certain forward-looking statements and information relating
to us that are based on the beliefs and  assumptions  made by our  management as
well as information  currently  available to the  management.  When used in this
document,  the words  "anticipate",  "believe",  "estimate",  and  "expect"  and
similar expressions,  are intended to identify forward-looking  statements. Such
statements  reflect  our  current  views with  respect to future  events and are
subject to certain risks,  uncertainties and assumptions.  Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect,  actual results may vary materially  from those  described  herein as
anticipated, believed, estimated or expected.                                   

RISK FACTORS                                                                    
SRRE has  identified  a number  of risk  factors  faced  by the  Company.  These
factors,  among others, may cause actual result, events or performance to differ
materially from those expressed in any  forward-looking  statements made in this
Form 10-KSB or in press releases or other public  disclosures.  Investors should
be aware of the existence of these factors.                                     

Risk relating to the Group                                                      

Risk relating to Property Underwriting Agreement                                
Shanghai Shangyang Real Estate Consultation Company Limited ("SHSY"), one of our
subsidiaries,  has  entered  into a  Property  Underwriting  Agreement  with  an
independent  property  developer to underwrite the Sovereign Building Project, a
commercial  building developed by the developer at a fixed  underwriting  price.
When an unit is sold, the price  difference  between the ultimate  selling price
and the fixed  underwriting  price will be attributable to SHSY According to the
Property Underwriting  Agreement,  we have committed to distribute all the units
within a certain  period of time.  If we fail to sell all the units,  we have to
acquire  all the  unsold  units  from the  developer.  Hence,  we are  bearing a
potential  risk of liability,  and our future cash flow and  liquidity  would be
adversely affected.                                                             

We may be unable to recognize our income                                        

Generally,  we recognize our income after the contracts  signed with  developers
are fulfilled and confirmations are received from the developers. But, sometimes
we cannot  recognize  income even we have  rendered our services  because of the
following reasons:                                                              
|X|  The developers  have not received  payments from potential  property buyers
who promise to pay the outstanding sum by cash,                       
|X|  The property owners are unable to obtain the mortgage  financing from bank,
     in the case where property buyer is paying the outstanding sum via mortgage
financing                                                             
|X|  Even  if  the  property  owners  obtain  the  mortgage  loan,  because  the
     developers'  credit is relatively low, the banks are unwilling to grant the
bridging loan to developer in time,                                   
|X|  The developers intend to be in arrears with the sales commission, hence not
granting confirmation to the Company to invoice them according.       

Development  of new business may stretch our cash flow and strain our  operation
efficiency                                                                      
In end of 2004, We have  established  a joint  venture with SIP  Hi-Dragon  Real
Estate Development Co., Ltd. - Suzhou Gao Feng Hui Property  Management Co., Ltd
to expand our business;  our proportion of investment is 80%. The business scope

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of the new company is to conduct renting service,  building  management  service
and buildings  maintenance  management service of office buildings,  hotel-style
flat, some activities we have little  experience of. Such expansion and the need
to integrate  operations  arising  from the  expansion  may place a  significant
strain on our managerial,  operational and financial resources, and will further
contribute to an increase need in our financing requirements.                   

Risk associated with a Guaranteed Return Promotion                              
In  order  to sell  out the  underwritten  property  of  Sovereign  Building  as
scheduled,  we have launched a Promotional Package in end of November 2004. This
promotional  package  allow  buyers  and  investors  to  enjoy  a 5 or  8  years
guaranteed investment return of 8.5% and 8.8% per annum respectively. The return
is guaranteed by the Suzhou Gao Feng Hui Property Management Co., Ltd ("SZGFH"),
an  independent  company that we have 80% stake in,  whereby  SZGFH's  principal
activities  are the  provisions  of real estate  leasing  service  and  property
management  service.  However,  we may not  successfully  lease out the targeted
properties  at prices  higher  than  that we  committed  as per the  promotional
package. Our failure to do so could adversely affect our financial condition. In
addition, one of our subsidiaries,  Shanghai Shang Yang Real Estate Consultation
Co., Ltd.,  must bear joint  liability for the guarantee  return  agreement that
Suzhou  Gao Feng Hui  Property  Management  Co.,  Ltd enters  into with  several
property  owners.  If Gao Feng Hui fails to fulfill the agreement,  Shang Yang's
financial condition may be affected adversely.                                  

Our acquisition of new property may involve risks                               
We acquired two floors of the  Sovereign  Building this year and financed 50% of
the property  acquisition  sum via a 5-year term loan with the remainder 50% due
in November 2005. This  acquisition  involves  several risks,  including but not
limited to the  following:                                                      
|X|  Acquired  property  may not  perform as well as we  expected or ever become
profitable.                                                           
|X|  Improvements to the properties may ultimately cost  significantly more than
we had estimated.                                                     
|X|  The  mentioned  loan is a floating  rate debt.  Accordingly,  increases  in
interest rates could materially increase our interest expense.        
|X|  If we are unable to generate sufficient cash flow from operation,  when the
     remainder 50% of the property  acquisition  sum is due, our operation would
be adversely affected.                                                

We may be unable to effectively manage our growth                               
We will need to manage our growth  effectively,  which may entail  devising  and
effectively  implementing  business and integration plans, training and managing
our growing workforce,  managing our costs and implementing adequate control and
reporting systems in a timely manner. We may not successfully  manage our growth
or in integrating and assimilating any acquired business operations. Our failure
to do so could affect our success in executing  our business  plan and adversely
affect our revenues, profitability and results of operations.                   

Dependence on the  performance of the property  sector in specific  geographical
area                                                                            
The properties we resell and intend to invest are mainly based in Yangtze Delta,
especially in Shanghai.  Our future prospects are therefore heavily dependent on
the  continued  growth of the property  sector  around  Yangtze  Delta,  and our
business may be affected by any adverse developments in the supply and demand or
housing prices in the property sector around Yangtze Delta. The current level of
property  development and investment activity in Yangtze Delta and other markets
is  substantial.  However,  there is no assurance that such property  resale and
investment  activity in Yangtze  Delta or any of the other  markets of ours will
continue at this level in the future or that we will be able to benefit from the
future  growth of the  property  market in Yangtze  Delta or any of these  other
property markets.                                                               

Financing considerations                                                        
Property sector is a  capital-intensive  business.  Adequate financing is one of
the major  factors,  which can affect our ability to executive  our plan in this
regard.  We finance our business mainly from internal funds and bank borrowings,
and currently we are preparing for our listing exercise and raising equity fund.
There is no guarantee  that we will always have  internal  funds  available  for
future  developments  or  we  will  not  experience  difficulties  in  obtaining

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financing and renewing credit  facilities  granted by financial  institutions in
the  future.  And  there  may be a delay in  listing  and  equity  fund  raising
activities. Our access to debt or equity financing depends on banks' willingness
to lend and on  conditions  in the  capital  markets,  and we may not be able to
secure additional  sources of financing on commercially  acceptable terms, if at
all.                                                                            

Any rise in interest rate would increase our interest cost                      
An increase in interest rates will increase the interest expense associated with
our  floating-rate  debt and the  refinancing of any fixed-rate  debt originally
financed at a lower rate.                                                       

Dependence on qualified personnel                                               
As a small company, our success depends on the service of our executive officers
and other skilled managerial and technical  personnel.  The loss of the services
of one or more of such  employees  could have material  adverse effect on us. In
addition, as our business continues to grow, we will need to recruit,  train and
retain  additional  qualified  employees.  If we  fail  to  attract  and  retain
qualified personnel, our business and prospects would be adversely affected.    

Risk relating to partnering developers                                          
We have been recording enormous growth rate this year. Currently, Xin Ji Yang is
our major contributor in term of both revenue and net income. As a service-based
company,  Xin Ji Yang  depends much on the working  relationship  and the agency
contracts  with its partnering  developers.  We are exposed to the risk that the
developers  may  experience  financial or other  difficulties,  which may affect
their  ability or will to carry out the  development  projects and the reselling
contracts,  thus delaying or canceling the fulfillment of the agency  contracts.
Any of these factors could adversely affect our revenues.                       

Our  controlling   shareholders   may  take  actions  that  are  not  in  public
shareholders' best interests                                                    
The Ace Develop  Properties  Limited  directly  controls 62% of our  outstanding
common stock and Lin  Chi-jung,  our  Chairman,  indirectly  controls 62% of our
outstanding  common  stock.  Accordingly,  under and subject to the  Articles of
Incorporation  and the Company Law, the Ace Develop  Properties  Limited and Lin
Chi-Jung, by virtue of their controlling  ownership of share interests,  will be
able to exercise substantial control over our business by directly or indirectly
voting at either  shareholders  meetings or the board of  directors  meetings in
matters of significance  to us and our public  shareholders,  including  matters
relating  to: |X|  Election of  directors  and  supervisors;  |X| The amount and
timing of dividends and other  distributions;  |X| Acquisition of or merger with
another company; and |X| Amendment of the Articles of Incorporation.            

Risk  relating to the Real Estate  Industry in Yangtze  Delta and Other Areas of
the PRC                                                                         

The real estate market in Yangtze Delta and other areas of the PRC              
We are subject to real estate market conditions in the PRC generally and Yangtze
Delta in  particular.  Private  ownership  of property in the PRC is still at an
early stage of development.  Although there is a perception that economic growth
in the PRC and the higher  standard  of living  resulting  from such growth will
lead to a greater  demand for private  properties in the PRC, it is not possible
to  predict  with  certainty  that such a  correlation  exists  as many  social,
political,  economic,  legal and other factors may affect the development of the
property market.                                                                

The PRC  property  market,  including  the Yangtze  Delta  property  market,  is
volatile and may  experience  oversupply and property  price  fluctuations.  The
central and local  governments  frequently  adjust  monetary and other  economic
policies to prevent and curtail the overheating of the PRC and local  economies,
and such economic adjustments may affect the real estate market in Yangtze Delta
and other parts of China.  Furthermore,  the central and local  governments from
time to time make  policy  adjustments  and adopt new  regulatory  measures in a
direct  effort to control  the over  development  of the real  estate  market in
China,  including  Yangtze  Delta.  Such  policies may lead to changes in market
conditions,  including  price  instability and imbalance of supply and demand of
residential  properties,  which may materially adversely affect our business and
financial  conditions.  Also,  there is no assurance that there will not be over
development in the property  sector in Yangtze Delta and other parts of China in
the future.  Any future over development in the property sector in Yangtze Delta
and other parts of China may result in an oversupply of properties and a fall of
property  prices in  Yangtze  Delta or any of our  other  markets,  which  could
adversely affect our business and financial condition.                          

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We face Increasing competition which may adversely affect our profitability     
In recent years,  a large number of property  companies  have begun  undertaking
property  sales and  investment  projects in Yangtze  Delta and elsewhere in the
PRC, some of which may have better track record and greater  financial and other
resources than we do. The intensity of the competition may adversely  affect our
business and financial position. In addition,  the real estate market in Yangtze
Delta and  elsewhere  in the PRC is rapidly  changing.  If we cannot  respond to
changes  of  the  market   conditions  more  swiftly  or  effectively  than  our
competitors do, our business and financial position will be adversely affected. 

Interest rate and mortgage financing risks                                      
Mortgages  are becoming  increasingly  popular as a means of financing  property
purchases in the PRC. An increase in interest rates may  significantly  increase
the cost of mortgage financing,  thus reducing the affordability of mortgages as
a source of financing for residential property purchases. The PRC government has
increased the down payment  requirement  and imposed  certain  other  conditions
which make  mortgage  financing  unavailable  or  unattractive  to the potential
property purchasers. There is no assurance that the down payment requirement and
other  condition will not be further  revised  upward.  If the  availability  or
attractiveness  of mortgage  financing  is  significantly  limited,  many of our
prospective  customers  would not be able to purchase the  properties  and, as a
result, our business and future prospects would be adversely affected.          

Risks relating to the PRC                                                       
All of our current deal sources are located in China and all of our revenues are
derived from our  operations  in China.  Accordingly,  our  business,  financial
condition,  results of operations  and  prospects are subject,  to a significant
extent, to economic, political and legal developments in China.                 

PRC economic, political policies and social conditions could affect our business
The economy of PRC differs from the economies of most  developed  countries in a
number  ofiirespects,  including  amount  of  government  involvement,  level of
development,  growth  rate,  control  of  foreign  exchange  and  allocation  of
resources.  The PRC Government  has been reforming the PRC economic  system from
planned economy to market oriented  economy for more than 20 years, and has also
begun  reforming the  government  structure in recent years.  These reforms have
resulted in significant economic growth and social progress. Although we believe
these  reforms  will  have a  positive  effect  on  our  overall  and  long-term
development,  we cannot predict  whether any future changes in PRC's  political,
economic and social  conditions,  laws,  regulations  and policies will have any
adverse  effect on our  current or future  business,  results of  operations  or
financial condition.                                                            

Changes in foreign  exchange  regulations  may  adversely  affect our ability to
remit dividends and our results of operations and financial condition           
Substantially  all of our revenues and  operating  expenses are  denominated  in
Renminbi.  Conversion of Renminbi is under strict  government  regulation in the
PRC. The Renminbi is currently freely  convertible under the "current  account",
including trade and service related foreign exchange transactions and payment of
dividends,  but not under the "capital  account",  which includes foreign direct
investment and loans.  Under the existing  foreign  exchange  regulations in the
PRC,  we will be able to pay  dividends  in  foreign  currencies  without  prior
approval from the State  Administration  for Foreign  Exchange by complying with
certain procedural  requirements.  However, there is no assurance that the above
foreign  policies  regarding  payment of  dividends in foreign  currencies  will
continue in the future.                                                         

Fluctuation of the Renminbi could materially  affect the value of, and dividends
payable on, the Shares in foreign currency term                                 
The value of the Renminbi is subject to changes in the PRC Government's policies
and depends to a large extent on China's domestic and international economic and
political developments,  as well as supply and demand in the local market. Since
1994,  the official  exchange rate for the  conversion of Renminbi to US dollars
has generally been stable.  However, we cannot give any assurance that the value
of the  Renminbi  will  continue to remain  stable  against the US dollar or any

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other foreign currency. Since our income and profit are denominated in Renminbi,
any  devaluation  of the  Renminbi  would  adversely  affect  the value of,  and
dividends, if any, payable on, our Shares in foreign currency terms             

The PRC Legal System Embodies Uncertainties                                     
The PRC legal  system is a civil law system  based on written  statutes.  Unlike
common law  systems,  it is a system in which  decided  legal  cases have little
precedent value. In 1979, the PRC government began to promulgate a comprehensive
system of laws and  regulations  governing  economic  matters  in  general.  The
overall effect of legislation over the past 25 years has significantly  enhanced
the  protections  afforded to various  forms of foreign  investment  in Mainland
China. Our PRC operating subsidiaries,  Xing Ji Yang and Shang Yang, both wholly
foreign-owned  enterprises (WFOE) are subject to laws and regulations applicable
to foreign  investment  in mainland  China in general  and laws and  regulations
applicable to WFOE in particular.  However,  these laws,  regulations  and legal
requirements are constantly  changing,  and their interpretation and enforcement
involve  uncertainties.  These  uncertainties  could limit the legal protections
available to us and other foreign investors.  In addition, we cannot predict the
effect  of  future   developments  in  the  PRC  legal  system,   including  the
promulgation  of new laws,  changes to existing  laws or the  interpretation  or
enforcement thereof, or the pre-emption of local regulations by national laws.  

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ITEM 7. FINANCIAL STATEMENTS                                                    

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS          
                                                                            Page
                                                                            ----

Reports of Independent Public Accountants.....................               F-1

Consolidated Balance Sheets -                                                   
  December 31, 2004 and 2003 .................................               F-2

Consolidated Statements of Operations -                                         
  December 31, 2004 and 2003 .................................               F-3

Consolidated Statements of Stockholders' Equity -                               
  December 31, 2004 and 2003 .................................               F-4

Consolidated Statements of Cash Flows -                                         
  December 31, 2004 and 2003 .................................               F-5

Notes to Consolidated Financial Statements....................        F-6 - F-16

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 Report of Independent Registered Public Accounting Firm

To the Board of Directors of                                                    
Sunrise Real Estate Development Group, Inc.                                     

We have audited the  accompanying  consolidated  balance  sheets of Sunrise Real
Estate Development Group, Inc. as of December 31, 2004 and 2003, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years ended December 31, 2004 and 2003.  These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.                      

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform 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.  The audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a  test  basis,  evidence  supporting  the  amounts  and  disclosures  in the
financial statements. An audit also includes assessing the accounting principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.                                               

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  consolidated  financial  position of Sunrise Real
Estate  Development Group, Inc. as of December 31, 2004 and 2003 and the results
of its  consolidated  operations and cash flows for the years ended December 31,
2004 and 2003, in conformity with generally  accepted  accounting  principles in
the United States of America.                                                   

BDO McCabe Lo & Company                                                         
Certified Public Accountants                                                    

Hong Kong, March 21, 2005                                                       

F-1 

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                                                        [Enlarge/Download Table]


                   Sunrise Real Estate Development Group, Inc.                          

                           Consolidated Balance Sheets                                  

(Expressed in US Dollars)                                                               
                                                              December 31,  December 31,
                                                                  2004          2003    
                                                              ------------  ------------
                                                                                        
ASSETS                                                                                  

Current assets                                                                          
  Cash and cash equivalents                                   $    969,913  $  1,279,759
  Accounts receivable (Note 3)                                   2,280,172       348,528
  Promissory deposits (Note 4)                                   2,784,994        36,247
  Other receivables and deposits (Note 5)                          362,586       102,549
                                                              ------------  ------------

  Total current assets                                           6,397,665     1,767,083

Plant and equipment - net (Note 6)                                 596,685       200,241
Deposits for acquisitions of properties (Note 7)                 1,480,036          --  
Goodwill (Note 8)                                                  183,029          --  
                                                              ------------  ------------

Total assets                                                  $  8,657,415  $  1,967,324
                                                              ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY                                                    

Current liabilities                                                                     
  Bank loan (Note 9)                                          $    276,084  $       --  
  Promissory note payable (Note 10)                              1,000,000          --  
  Accounts payable                                                 193,762       120,632
  Venture deposits (Note 11)                                       972,633          --  
  Customer deposits                                                   --          22,451
  Amount due to director (Note 12)                                  59,167          --  
  Other payables and accrued expenses (Note 13)                  1,620,980       154,238
  Other tax payable (Note 14)                                      114,747        17,698
  Income tax payable (Note 15)                                      56,575       117,184
  Dividends payable                                                   --         543,708
                                                              ------------  ------------

  Total current liabilities                                      4,293,948       975,911
                                                              ------------  ------------

Commitments and contingencies (Note 16)                               --            --  

Long-term bank loan (Note 9)                                     1,203,952          --  

Minority interest                                                    3,948          --  

Stockholders' equity                                                                    
  Common stock, par value $0.01 per share;                                              
    200,000,000 shares authorized; 21,636,614 and                                       
     15,000,000 shares issued and outstanding, respectively        216,366       150,000
   Additional paid-in capital                                    2,233,844       200,000
  Statutory reserve (Note 17)                                      175,004       143,163
  Retained earnings                                                530,353       498,250
                                                              ------------  ------------

  Total stockholders' equity                                     3,155,567       991,413
                                                              ------------  ------------

Total liabilities and stockholders' equity                    $  8,657,415  $  1,967,324
                                                              ============  ============

See accompanying notes to financial statements. 

F-2 

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 Sunrise Real Estate Development Group, Inc.

 Consolidated Statements of Operations

(Expressed in US Dollars)                                                       

                                                    Years Ended December 31,
                                                  2004            2003
                                                  ------------    ------------

Net revenue                                        $  7,723,641    $  5,297,422 

Cost of revenue                                      (4,162,762)     (2,331,320)
                                                  ------------    ------------

Gross profit                                          3,560,879       2,966,102 

Operating expenses                                   (1,048,574)       (755,313)

General and administrative expenses                  (2,335,714)       (709,988)
                                                  ------------    ------------

Operating profit                                        176,591       1,500,801 

Interest income                                           7,887           2,859 

Other income, net                                        54,891          12,393 

Finance expenses                                        (23,333)           --   
                                                  ------------    ------------

Profit before income tax and minority interest          216,036       1,516,053 

Income tax (Note 15)                                   (164,174)       (239,138)
                                                  ------------    ------------

Profit before minority interest                          51,862       1,276,915 

Minority interest                                        12,082            --   
                                                  ------------    ------------

Net profit                                         $     63,944    $  1,276,915 
                                                  ============    ============

Earnings per share - basic and diluted             $      0.004    $      0.085 
                                                  ============    ============

Weighted average common shares outstanding                                      
    - basic                                         16,600,060      15,000,000
                                                  ============    ============

See accompanying notes to financial statements. 

F-3 

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                   Sunrise Real Estate Development Group, Inc.                                                             

                 Consolidated Statements of Stockholders' Equity                                                           

(Expressed in US Dollars)                                                                                                  
                                              Common Stock                                                                 
                                      ---------------------------                               Retained                   
                                         Number                     Additional                  earnings/         Total    
                                        of share                     paid-in       Statutory   (accumulated   stockholders'
                                         issued         Amount       capital        reserve       losses)        equity    
                                      ------------   ------------  ------------  ------------  ------------   ------------ 
                                                                                                                           
Balance, December 31, 2002                                                                                                 
  (Recapitalization of CY-SRRE and                                                                                         
     LRY) (Note 1)                      15,000,000   $    150,000  $    200,000  $     13,340  $   (105,134)  $    258,206 

Net profit for the year                       --             --            --            --       1,276,915      1,276,915 

Transfer between reserves                     --             --            --         129,823      (129,823)          --   

Dividends                                     --             --            --            --        (543,708)      (543,708)
                                      ------------   ------------  ------------  ------------  ------------   ------------ 

Balance, December 31, 2003              15,000,000   $    150,000  $    200,000  $    143,163  $    498,250   $    991,413 

Issuance of common stock in respect                                                                                        
of reverse acquisition                   6,636,614         66,366        33,844          --            --          100,210 

Recapitalization of LRY (Note 1)              --             --       2,000,000          --            --        2,000,000 

Net profit for the year                       --             --            --            --          63,944         63,944 

Transfer between reserves                     --             --            --          31,841       (31,841)          --   
                                      ------------   ------------  ------------  ------------  ------------   ------------ 

Balance, December 31, 2004              21,636,614   $    216,366  $  2,233,844  $    175,004  $    530,353   $  3,155,567 
                                      ============   ============  ============  ============  ============   ============ 

See accompanying notes to consolidated financial statements.

F-4 

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                   Sunrise Real Estate Development Group, Inc.                            

                      Consolidated Statements of Cash Flows                               
                Increase/(Decrease) in Cash and Cash Equivalents                          

(Expressed in US Dollars)                                                                 
                                                                Years Ended December 31,  
                                                                   2004           2003    
                                                               -----------    ----------- 
                                                                                          
Cash flows from operating activities                                                      
  Net income                                                   $    63,944    $ 1,276,915 
      Adjustments to reconcile net income to                                              
         net cash /provided by operating activities                                       
      Depreciation of plant and equipment                           81,602         29,193 
      Minority interest                                            (12,082)          --   
      Change in:                                                                          
        Accounts receivable                                     (1,931,644)      (256,338)
        Promissory deposits                                     (2,748,747)          --   
        Other receivables and deposits                            (256,935)       (47,214)
        Amount due from related party                                 --            8,272 
        Accounts payable                                            59,075        117,611 
        Venture deposits                                           972,633           --   
        Customer deposits                                          (22,451)          --   
        Other payables and accrued expenses                      1,451,144        137,049 
        Other tax payable                                           97,049         13,073 
        Income tax payable                                         (60,609)        89,096 
                                                               -----------    ----------- 

Net cash (used in)/provided by operating activities             (2,307,021)     1,367,657 
                                                               -----------    ----------- 
Cash flows from investing activities                                                      
   Acquisition of plant and equipment                             (451,451)      (108,099)
   Deposits for acquisition of properties                       (1,480,036)          --   
   Cash increase due to reverse acquisition by CY-SRRE & LRY       118,797           --   
   Acquisition of interest in subsidiary (Note 18)                (193,180)          --   
                                                               -----------    ----------- 

Net cash used in investing activities                           (2,005,870)      (108,099)
                                                               -----------    ----------- 

Cash flows from financing activities                                                      
   New bank loan obtained                                        1,480,036           --   
   Increase in promissory note payable                           1,000,000           --   
   Recapitalization of LRY                                       2,000,000           --   
   Capital contribution from minority interest                      12,082           --   
   Dividends paid                                                 (543,708)          --   
   Advances from/(repayments to) directors                          54,635       (233,011)
                                                               -----------    ----------- 

Net cash provided by/(used in) financing activities              4,003,045       (233,011)
                                                               -----------    ----------- 

Net (decrease)/increase in cash and cash equivalents              (309,846)     1,026,547 

Cash and cash equivalents at beginning of year                   1,279,759        253,212 
                                                               -----------    ----------- 

Cash and cash equivalents at end of year                       $   969,913    $ 1,279,759 
                                                               ===========    =========== 

Supplemental disclosure of cash flow information                                          
   Cash paid during the year:                                                             
      Income tax paid                                              224,783        150,042 

   Non-cash activities:                                                                   
      Accrued dividends                                               --          543,708 

See accompanying notes to financial statements. 

F-5 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)                                                       

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS                               

Sunrise Real Estate Development  Group, Inc.  ("CY-SRRE") was established in the
Cayman  Islands on April 30, 2004 as a limited  liability  company.  CY-SRRE was
wholly owned by Ace Develop  Properties  Limited ("Ace  Develop"),  of which Lin
Chi-Jung, an individual, is the principal and controlling shareholder.  Shanghai
Xin Ji Yang Real Estate  Consultation  Company Limited ("SHXJY") was established
in the  People's  Republic  of China (the "PRC") on August 14, 2001 as a limited
liability company.  SHXJY was originally owned by a Taiwanese company,  of which
the principal and controlling shareholder was Lin Chi-Jung. On June 8, 2004, all
the fully paid up capital of SHXJY was transferred to CY-SRRE.  On June 25, 2004
SHXJY and two individuals  established a subsidiary,  namely, Suzhou Xin Ji Yang
Real Estate  Consultation  Company Limited ("SZXJY") in the PRC. SHXJY holds 90%
of equity interest in SZXJY. On December 24, 2004,  SHXJY acquired 85% of equity
interest  in  Beijing  Xin Ji Yang  Real  Estate  Consultation  Company  Limited
("BJXJY"), a PRC company incorporated on April 16, 2003 with limited liability. 

LIN RAY YANG  Enterprise  Ltd.  ("LRY") was  established  in the British  Virgin
Islands on November 13, 2003 as a limited  liability  company.  LRY was owned by
Ace  Develop,  Planet  Technology  Corporation  ("Planet  Tech")  and  Systems &
Technology  Corporation ("Systems Tech"). On February 5, 2004, LRY established a
wholly owned subsidiary,  Shanghai Shang Yang Real Estate  Consultation  Company
Limited  ("SHSY")  in the  People's  Republic  of China (the "PRC") as a limited
liability company.                                                              

SHXJY,  SZXJY, BJXJY and SHSY commenced  operations in November 2001, June 2004,
January 2004 and February 2004 respectively. Each of SXJY, SZXJY, BJXJY and SHSY
has been granted a twenty  years  operation  period  which can be extended  with
approvals from relevant PRC authorities.                                        

On August 31,  2004,  Sunrise  Real Estate  Development  Group,  Inc.  ("SRRE"),
CY-SRRE and Lin Chi-Jung, an individual and agent for the beneficial shareholder
of CY-SRRE, i.e. Ace Develop, entered into an exchange agreement that SRRE issue
5,000,000 shares of common stock to the beneficial shareholder or its designees,
in exchange for all  outstanding  capital stock of CY-SRRE.  The transaction was
closed on October 5, 2004. Lin Chi-Jung is Chairman of the Board of Directors of
SRRE, the President of CY-SRRE and the principal and controlling  shareholder of
Ace Develop.                                                                    

On August 31, 2004,  SRRE,  LRY and Lin Chi-Jung,  an  individual  and agent for
beneficial  shareholders of LRY, i.e. Ace Develop, Planet Tech and Systems Tech,
entered into an exchange  agreement that SRRE issue 10,000,000  shares of common
stock to the beneficial  shareholders,  or their designees,  in exchange for all
outstanding capital stock of LRY. The transaction was closed on October 5, 2004.
Lin Chi-Jung is Chairman of the Board of Directors of SRRE, the President of LRY
and the  principal and  controlling  shareholder  of Ace Develop.  Regarding the
10,000,000 shares of common stock of SRRE issued in this transaction,  8,500,000
shares were issued to Ace Develop, 750,000 shares were issued to Planet Tech and
750,000 shares were issued to Systems Tech.                                     

As a result of the  acquisition,  the former  owners of  CY-SRRE  and LRY hold a
majority  interest  in  the  combined  entity.   Generally  accepted  accounting
principles  require in certain  circumstances  that a company whose stockholders
retain the majority  voting  interest in the combined  business to be treated as
the acquirer for financial reporting purposes.  Accordingly, the acquisition has
been accounted for as a "reverse  acquisition"  arrangement  whereby CY-SRRE and
LRY are deemed to have purchased  SRRE.  However,  SRRE remains the legal entity
and the Registrant for Securities and Exchange  Commission  reporting  purposes.
The  historical  financial  statements  prior to  October  5,  2004 are those of
CY-SRRE and LRY and their  subsidiaries.  All shares and per share data prior to
the  acquisition  have  been  restated  to  reflect  the  stock  issuance  as  a
recapitalization of CY-SRRE and LRY.                                            

F-6 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)                                                       

SRRE was initially  incorporated in Texas on October 10, 1996, under the name of
Parallax  Entertainment,  Inc.  ("Parallax").  On December  12,  2003,  Parallax
changed its name to Sunrise Real Estate Development Group, Inc.                 

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

The principal  activities  of the Company are the provision of property  broking
services and real estate marketing services in Mainland China.                  

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Basis of Accounting and Principles of Consolidation                             
---------------------------------------------------                             

The consolidated  financial statements are prepared in accordance with generally
accepted  accounting  principals in the United States of America and present the
financial statements of SRRE and its subsidiaries,  CY-SRRE,  LRY, SHXJY, SZXJY,
BJXJY and SHSY. All  significant  inter-company  transactions  and balances have
been eliminated.                                                                

Foreign Currency Translation and Transactions                                   
---------------------------------------------                                   

The  functional  currency  of  SRRE,  CY-SRRE  and LRY is US$ and the  financial
records  are  maintained  and the  financial  statements  prepared  in US$.  The
functional  currency of SHXJY,  SZXJY,  BJXJY and SHSY is Renminbi (RMB) and the
financial records are maintained and the financial statements prepared in RMB.  

Foreign  currency  transactions  during  the  period  are  translated  into each
company's  denominated  currency at the exchange rates ruling at the transaction
dates.  Gain and loss resulting from foreign currency  transactions are included
in the consolidated statement of operations.  Assets and liabilities denominated
in  foreign  currencies  at the  balance  sheet  date are  translated  into each
company's  denominated  currency  at period end  exchange  rates.  All  exchange
differences are dealt with in the consolidated statements of operations.        

For the purpose of preparing the Company's  consolidated  financial  statements,
the financial  statements in RMB have been translated into United States Dollars
at US$1.00 = RMB8.28,  translation  adjustments would be included as a component
of stockholders' equity.                                                        

Exchange rate between US$ and RMB is fairly  stable during the years  presented.
The rates  ruling as of December  31, 2004 and 2003 are US$1:  RMB8.28 and US$1:
RMB8.28, respectively. Due to the stability of the exchange rates, there were no
net adjustments in stockholders' equity.                                        

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(Expressed in US Dollars)                                                       

Plant, Equipment and Depreciation                                               

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

                                                                Estimated Useful
                                                                 Life (in years)
                                                                ----------------

Furniture and fixtures                                                 5-10     
Computer and office equipment                                           5       
Motor vehicles                                                          5       

Maintenance, repairs and minor renewals are charged directly to the statement of
operations as incurred.  Additions and betterments are capitalized.  When assets
are  disposed  of, the related  cost and  accumulated  depreciation  thereon are
removed  from the  accounts  and any  resulting  gain or loss is included in the
statement of operations.                                                        

Long-lived Assets                                                               
-----------------                                                               

Long-lived  assets are reviewed  for  impairment  whenever  events or changes in
circumstances  indicate  that the  carrying  amount of the  assets  might not be
recoverable.  The Company does not perform a periodic  assessment  of assets for
impairment in the absence of such  information  or indicators.  Conditions  that
would necessitate an impairment  assessment include a significant decline in the
observable  market  value of an asset,  a  significant  change in the  extent or
manner in which an asset is used,  or a  significant  adverse  change that would
indicate  that the  carrying  amount  of an asset  or  group  of  assets  is not
recoverable.  For long-lived  assets to be held and used,  the Company  measures
fair value based on quoted  market  prices or based on  discounted  estimates of
future cash flows.                                                              

Use of Estimates                                                                
----------------                                                                

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

Fair Values of Financial Instruments                                            
------------------------------------                                            

The carrying amounts of certain  financial  instruments  approximate  their fair
values as of December  31, 2004 and 2003  because of the  relatively  short-term
maturity of these instruments.                                                  

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(Expressed in US Dollars)                                                       

Allowance for Doubtful Accounts                                                 
-------------------------------                                                 

The Company  records an allowance for doubtful  accounts  based on  specifically
identified  amounts that the Company believes to be  uncollectible.  The Company
has a limited  number of customers  with  individually  large amounts due at any
given balance sheet date. Any  unanticipated  change in one of those  customers'
credit worthiness or other matters  affecting the  collectibility of amounts due
from such customers could have a material affect on the results of operations in
the period in which such changes or events occur.  After all attempts to collect
a receivable have failed, the receivable is written off against the allowance.  

Cash and Cash Equivalents                                                       
-------------------------                                                       

Cash and cash equivalents include all highly liquid investments with an original
maturity of three months or less.                                               

Advertising Costs                                                               
-----------------                                                               

All  advertising  costs  incurred in the promotion of the Company's  real estate
projects are expensed as incurred.  Advertising  expenses  were  $1,067,712  and
$17,467 for 2004 and 2003 respectively.                                         

Revenue Recognition                                                             
-------------------                                                             

Agency  commission  revenue from property  brokerage  and marketing  services is
recognised  when the property  developer and the buyer complete a property sales
transactions, which is normally at the time when the property developer receives
from the buyer a portion of the sales  proceeds in accordance  with the terms of
the relevant property sales agreement.                                          

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

Net Earnings per Common Share                                                   
-----------------------------                                                   

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

Income Taxes                                                                    
------------                                                                    

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

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(Expressed in US Dollars)                                                       

NOTE 3 - ACCOUNTS RECEIVABLES AND ALLOWANCE FOR DOUBTFUL ACCOUNTS               

Accounts  receivable are customer  obligations due under normal trade terms. The
Company  performs  continuing  credit  evaluations of the  customers'  financial
condition and the Company generally does not require collateral.                

Senior management reviews accounts  receivable from time to time to determine if
any receivables  will  potentially be  uncollectible.  The Company  includes any
account  receivable  balances  that are  determined to be  uncollectible  in the
allowance for doubtful accounts. After all attempts to collect a receivable have
failed,  the  receivable  is written  off against  the  allowance.  Based on the
information  available  to the  Company,  for the year ended  December  31, 2004
account receivable balances of $Nil (2003: $26,714) were written off against the
allowance.  As of December 31, 2004 and 2003,  there was no balance of allowance
for doubtful accounts.                                                          

NOTE 4 - PROMISSORY DEPOSITS                                                    

The balance includes a promissory deposit of US$2,416,480  related to a property
underwriting agreement (the "Property  Underwriting  Agreement") entered into by
the Company  with a property  developer  in Suzhou,  the PRC.  According  to the
Property Underwriting Agreement, the Company acts as its sole distribution agent
for a commercial  building  under  development  in Suzhou (the "Suzhou  Property
Underwriting  Project");  and has placed the foregoing promissory deposit to the
property  developer  until all the properties  are sold within the  underwriting
period from September 26, 2004 to November 25, 2005.                            

NOTE 5 - OTHER RECEIVABLES AND DEPOSITS                                         

                                                   December 31,   December 31,
                                                   2004           2003
                                                   ------------   ------------

Other receivables                                   $    291,199   $     53,668 
Advances to staff                                         21,699         24,342 
Rental deposits                                           49,688         24,539 
                                                   ------------   ------------
                                                   $    362,586   $    102,549
                                                   ============   ============

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)                                                       

NOTE 6 - PLANT AND EQUIPMENT, NET                                               

                                                  December 31,    December 31,
                                                  2004            2003
                                                  ------------    ------------

Furniture and fixtures                             $     50,924    $     30,996 
Computer and office equipment                           143,683          56,752 
Motor vehicles                                          519,645         146,296 
                                                  ------------    ------------

                                                       714,252         234,044
Less: Accumulated depreciation                         (117,567)        (33,803)
                                                  ------------    ------------

                                                  $    596,685    $    200,241
                                                  ============    ============

NOTE 7 - DEPOSITS FOR ACQUISITIONS OF PROPERTIES                                

On November 18, 2004, the Company entered into sales and purchase  agreements to
acquire two floors of the Suzhou Property Underwriting Project mentioned in Note
4 above at a total  consideration  of $2.96 million for long-term  retention.  A
5-year  mortgage loan (Note 9) of $1.48 million has been borrowed from a bank to
pay for the deposits in December  2004.  The remaining  balance of $1.48 million
will be payable in November  2005.  In  accordance  with the sales and  purchase
agreements,  the  properties  under  development  will be completed on or before
March 31, 2006.                                                                 

NOTE 8 - GOODWILL                                                               

The Company  accounted  for the  acquisition  of BJXJY as described in Note 1 in
accordance  with SFAS No. 141  "Business  Combinations",  which  resulted in the
recognition of goodwill. Goodwill represents the excess of acquisition cost over
the estimated fair value of the net assets  acquired as of 24 December 2004. The
portion of the purchase price allocated to goodwill was $183,029.               

No  amortization  of goodwill  was  necessary  in  accordance  with SFAS No. 142
"Goodwill and other Intangible Assets".                                         

The Company test goodwill for  impairment  annually  during the forth quarter of
each fiscal year using a fair value approach,  in accordance with the provisions
of SFAS  142.  As of  December  31,  2004,  the  Company  completed  the  annual
impairment  test. Based on the result of the first step of the test, the Company
believes that there was no impairment of goodwill as of December 31, 2004. If an
event occurs or circumstances  change that would more likely than not reduce the
fair value of the Company below its carrying  value,  goodwill will be evaluated
for impairment between annual tests.                                            

NOTE 9 - BANK LOAN                                                              

The bank loan is a 5-year  loan bears  interest  at a rate of 0.4875% per month.
The bank loan is guaranteed  by the developer as mentioned in Note 4 above;  and
will then be  secured  by the  properties  once the title of the  properties  is
transferred to the Company.                                                     

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)                                                       

NOTE 10 - PROMISSORY NOTE PAYABLE                                               

The  amount is  unsecured  and bears  interest  at a rate of 5% per  annum.  The
promissory note will be repayable on December 31, 2005.                         

NOTE 11 - VENTURE DEPOSITS                                                      

The Company has entered into co-operation agreements with two venturers,  one of
them is an  independent  third  party;  the  other  one is one of the  Company's
directors,   Chang   Shu-Ching,   to  jointly  carry  out  the  Suzhou  Property
Underwriting  Project  mentioned in Note 4 above.  According to the co-operation
agreements,  the Company, Chang Shu-Ching and the other venturer are entitled to
share 65%,  10% and 25% of the net results of the Suzhou  Property  Underwriting
Project,  respectively.  Venture  deposits have been received from the venturers
and  will  not  be  repayable  until  the  completion  of  the  Suzhou  Property
Underwriting Project in November 2005.                                          

NOTE 12 - RELATED PARTY                                                         

A related  party is an entity that can control or  significantly  influence  the
management  or  operating  policies  of another  entity to the extent one of the
entities may be prevented from pursuing its own  interests.  A related party may
also be any party the entity deals with that can exercise that control.         

Amounts due to director                                                         

The Company,  from time to time,  receives from and repays to the director.  The
amount due to director does not bear any interest,  unsecured, and does not have
clearly defined terms of repayment.                                             

NOTE 13 - OTHER PAYABLES AND ACCRUED EXPENSES                                   

                                                     December 31,   December 31,
                                                     2004           2003
                                                     ------------   ------------

Accrued staff commission & bonus                     $  1,167,283   $     59,336
Other payables                                            223,573         56,967
Accrued commission                                        192,279           --  
Other accrued expenses                                     37,845         37,935
                                                     ------------   ------------

                                                     $  1,620,980   $    154,238
                                                     ============   ============

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)                                                       

NOTE 14 - OTHER TAX PAYABLE                                                     

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

NOTE 15 - INCOME TAX                                                            

Enterprise  Income  Tax  ("EIT") in the PRC is  generally  charged at 33% of the
assessable  profit.  According to the  relevant  PRC tax rules and  regulations,
SHXJY and SHSY are companies registered in Shanghai Pudong Development Zone that
are entitled to a lower EIT rate of 15%.  Whereas SZXJY and BJXJY are subject to
EIT rate of 33%.                                                                

Income  tax  represents  current  PRC income  tax,  which is  calculated  at the
statutory  income tax rate on the assessable  income for the year ended December
31, 2004 and 2003.                                                              

The provision for income tax consisted of:                                      

                                                  Years Ended December 31,
                                                  2004            2003
                                                  ------------    ------------

Current PRC corporate income tax                   $    164,174    $    239,138 
Deferred tax                                               --              --   
                                                  ------------    ------------

Provision for income tax                           $    164,174    $    239,138 
                                                  ============    ============

Reconciliation between the provision for income taxes computed by applying the  
statutory tax rate in Mainland China to income before income taxes and the      
actual provision for income taxes is as follows:                                

                                                    Years Ended December 31,
                                                  2004            2003
                                                  ------------    ------------

Provision for income taxes at statutory tax rate   $     71,291    $    500,297 
Tax concessions                                         (94,870)       (272,889)
Permanent difference                                     (8,645)         11,730 
Increase in valuation allowances                        196,398            --   
                                                  ------------    ------------

Effective tax                                      $    164,174    $    239,138 
                                                  ============    ============

The components of deferred tax assets are as follows:                           

                                                  December 31,    December 31,
                                                  2004            2003
                                                  ------------    ------------

Net operating loss carried forwards                $    267,456            --   
Less: Valuation allowances                             (267,456)           --   
                                                  ------------    ------------

                                                $       --      $       --
                                                  ============    ============

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)                                                       

NOTE 16 - COMMITMENTS AND CONTINGENCIES                                         

Operating Lease Commitment                                                      

During the years ended  December 31, 2004 and 2003,  the Company  incurred lease
expenses  amounting to $342,067 and  $186,030  respectively.  As of December 31,
2004, the Company had  commitments  under  operating  leases,  requiring  annual
minimum rentals as follows:                                                     

                                                                    December 31,
                                                                    2004
                                                                    ------------

January 1, 2005 to December 31, 2005                                $    230,703
January 1, 2006 to December 31, 2007                                      55,572
                                                                    ------------

                                                                    $    286,275
                                                                    ============

Property Underwriting Commitment                                                

As of December 31, 2004, the Company had commitment under the Property          
Underwriting Agreement mentioned in Note 4 above as follows:                    

                                                     December 31,   December 31,
                                                     2004           2003
                                                     ------------   ------------

Property underwriting commitment                     $ 47,457,254   $       --  
                                                     ============   ============

The management of the Company believes that all the properties will be sold     
within the underwriting period.                                                 

Capital Commitments                                                             

As of December 31, 2004, the Company had capital commitments for the acquisition
of properties as follows:                                                       

                                                   December 31,   December 31,
                                                   2004           2003
                                                   ------------   ------------

Commitments for the acquisition of properties       $  1,480,036   $       --   
                                                   ============   ============

The Company is not aware of any liability relating to federal,  state, and local
environmental  laws,  ordinances,  and  regulations  that  would have a material
adverse effect on its business, financial position, or results of operations.   

The Company is also party to various  claims and routine  litigation  arising in
the  ordinary  course of  business.  We do not believe  that the results of such
claims and litigation,  individually  or in the aggregate,  will have a material
adverse effect on our business, financial position, or results of operations.   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)                                                       

NOTE 17 - STATUTORY RESERVE                                                     

According to the relevant  enterprises  regulations in the PRC, a PRC company is
required to transfer a least 10% of its profit  after  taxation,  as  determined
under  accounting  principles  generally  accepted in the PRC, to the  statutory
reserve until the balance reaches 50% of its registered  capital.  The statutory
reserve  can be used to make  good  losses or to  increase  the  capital  of the
relevant company.                                                               

NOTE 18 - ACQUISITION OF INTEREST IN SUBSIDIARY                                 

In early 2004, BJXJY won an agency contract regarding the distribution of a real
estate  project,  namely,  De Paris, in Beijing.  Thereafter,  the management of
BJXJY invited the Company to  participate  in the project by investing in BJXJY.
The  management of the Company  decided to acquire 85% equity  interest in BJXJY
because of the following reasons:                                               

a) to  participate in the De Paris project which is considered to be profitable;
and b) to develop the Company's property broking business in Beijing.           

Net assets acquired:                                                            

Cash and bank balances                                             $     12,220 
Other receivables, deposits and prepayments                               3,102 
Plant and equipment                                                      26,595 
Other payables and accrued expenses                                     (15,598)
Minority interest                                                        (3,948)
                                                                  ------------
                                                                        22,371
Goodwill on acquisition                                                 183,029 
                                                                  ------------
                                                                  $    205,400
                                                                  ------------
Satisfied by:                                                                   
Cash consideration                                                 $    205,400 
                                                                  ============

Analysis  of the net  outflow  of cash and cash  equivalents  in  respect of the
acquisition of interest in subsidiary:                                          

Cash consideration                                                 $   (205,400)
Cash and bank balances acquired                                          12,220 
                                                                  ------------
                                                                   $   (193,180)
                                                                  ============

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)                                                       

Pro-forma information:                                                          

The following  table reflects the results of operations on a pro-forma  basis as
if the  acquisition  of BJXJY had occurred at the  beginning  of the  respective
periods shown.                                                                  

                                                      Years Ended December 31,
                                                       2004           2003
                                                      -----------    -----------
                                                      (Unaudited)    (Unaudited)

Net revenue                                           $ 7,723,641    $ 5,297,422
                                                      -----------    -----------

Net (loss)/income                                     $   (99,234)   $ 1,276,915
                                                      -----------    -----------

(Loss)/earnings per share - basic and diluted         $    (0.005)   $     0.059
                                                      ===========    ===========

The  pro-forma  financial  information  is  not  necessarily  indicative  of the
operating  results that would have occurred had the acquisition been consummated
as of the dates  indicated,  nor are they  necessarily  indicative of the future
operating results.                                                              

NOTE 19 - CONCENTRATION OF CUSTOMERS                                            

During the years ended  December  31,  2004 and 2003,  the  following  customers
accounted for more than 10% of total net revenue:                               

                                                       Percentage of
                   Percentage of Net Sales             Accounts Receivable
                      Years Ended December 31,          Years Ended December 31,
                      2004            2003              2004            2003
                      --------        --------          --------        --------
Customer A              30%               *               85%               *   
Customer B              10%              18%               *                *   
Customer C               *               15%               *               31%  
Customer D               *               14%               *                *   
Customer E               *               10%               *               44%  

* less than 10%                                                                 

NOTE 20 - SUBSEQUENT EVENT                                                      

On January 10, 2005, the Company  established a new subsidiary,  namely,  Suzhou
Gao Feng Hui Property  Management Co., Ltd.  ("SZGFH"),  with a PRC third party.
The registered  capital of SZGFH is $300,000.  The Company's  equity interest in
SZGFH is 80%. The  principal  activities  of SZGFH are the provision of property
leasing service and property management service.  SZGFH commenced  operations in
January 2005.                                                                   

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

On November 3, 2004, the registrant's Board of Directors engaged BDO McCabe Lo &
Company,  Certified Public Accountants,  8th Floor Wing On Centre,111  Connaught
Road Central,  Hong Kong, PRC as the Registered  Public Accounting Firm to audit
the registrant's financial statements,  replacing its former accountant, John J.
Geib, Chartered Accountant, Southcentre Executive Tower 405, 11012 Macloed Trail
South,  Calgary,  Alberta T2J 6A5, Canada.  As reported in its Current Report on
Form 8-K dated October 5, 2004, the registrant  acquired the outstanding capital
stock of (i) Lin Ray Yang  Enterprise  Ltd., a British  Virgin  Islands  company
("LRY") and (ii) Sunrise Real Estate  Development  Group, Inc., a Cayman Islands
company,  ("CY-SRRE")  on  October  5, 2004.  Prior to these  acquisitions,  the
registrant  did not have any  business  or  operations.  Because  the  principal
offices of LRY and CY-SRRE are located in Shanghai,  PRC, the registrant's Board
of Directors  determined that the registrant's best interests would be served by
retaining a principal accountant with offices in the Peoples Republic of China. 

The report of John J. Geib, Chartered Accountant, on the financial statements of
the  registrant  for its fiscal year ended  December 31, 2003 did not contain an
adverse opinion or disclaimer of opinion, nor was it modified as to uncertainty,
audit scope or accounting principles.  However, in a comment to his report, John
J.  Geib  referred  to  Note 2 to the  registrant's  financial  statements  that
indicate that the  financial  statements  are affected by conditions  and events
that cast  substantial  doubt on the  company's  ability to  continue as a going
concern.  The  registrant  did not  have any  disagreement  with  John J.  Geib,
Chartered  Accountant,  whether or not  resolved,  on any  matter of  accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure,  which,  if not resolved to John J. Geib's  satisfaction,  would have
caused  him to make  reference  to the  subject  matter of the  disagreement  in
connection with his report.                                                     

ITEM 8A. CONTROLS AND PROCEDURES                                                

Based on the most recent  evaluation,  which was  completed as of the end of the
period  covered  by this Form  10-KSB,  the Chief  Executive  Officer  and Chief
Financial  Officer have  concluded  that the Company's  disclosure  controls and
procedures  were  effective  at December 31,  2004,  to ensure that  information
required to be disclosed in reports that the Company  files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized, and reported
within the time periods  specified in Securities and Exchange  Commission  rules
and  forms.  There  were no  changes in the  Company's  internal  controls  over
financial  reporting  during the quarter  ended  December  31,  2004,  that have
materially  affected,  or  are  reasonably  likely  to  materially  affect,  the
Company's internal controls over financial reporting.                           

ITEM 8B. Other Information                                                      

None                                                                            

23

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PART III

ITEM 9.  DIRECTORS  AND  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                               

                                                       Position with Company and
Date of Appointment     Name of Individual     Age            Subsidiaries      

October 28, 2003         LIN, CHI-JUNG          45      Chief Executive Officer,
                                                          President and Director
October 28, 2003          LO, YI-YUN            33      Chief Financial Officer/
                                                         Secretary
October 28, 2003        CHIU, CHI-YUAN          39              Director        
November 23, 2004        LI XIAO GANG           47              Director        
November 23, 2004      CHANG, SHU-CHING         34              Director        
November 23, 2004          CHEN REN             57              Director        
November 23, 2004         FU XUAN-JIE           54              Director        

On November  23, 2004,  Lo,  Yi-Yun  resigned as a member of Sunrise's  Board of
Directors. She remains the principal financial officer of SRRE.                 

Also on November 23, 2004, the Board of Directors  elected to the Board four new
Directors:  Miss  Chang  Shu-Ching,  Mr. Fu  Xuan-Jie,  Mr.  Chen Ren and Mr. Li
Xiao-Gang.                                                                      

Following is biographical  information for each of the 6 directors consisting of
the age,  principal  occupation,  and other relevant  information.  There are no
family  relationships  among  any of the  directors  or  executive  officers  of
Sunrise.  The  designation  of  "Affiliated"  noted  beside  the  director  name
indicates that the director is an officer or employee of Sunrise.               

Lin Chi-Jung, CEO, Chairman, and President (Affiliated)                         
-------------------------------------------------------                         
Mr. Lin  Chi-Jung,  age 45, is the Chairman of the Board of Director of SRRE and
at the same time,  assuming the President/CEO role SRRE, he is also the Chairman
of all the operating subsidiaries under the SRRE Group. Mr. Lin start serving as
the Director of SRRE since  October 28,  2003.  Mr. Lin Chi-Jung is the founding
director of XJY when it was  established in end 2002.  Prior to that, he started
his career and business in  entertainment  industry and became a famous actor in
Taiwan before turning to be a film director, producer,  distributor and investor
in mid 90's before venturing into real estate business in 2002.                 

Chiu Chi-Yuan, Director                                                         
-----------------------                                                         
Mr. Chiu  Chi-Yuan,  age 39, is the  Director of SRRE.  He was  appointed  since
October 28, 2003 and has been held  servicing as Director  since then. Mr. Chiu,
Chi-Yuan is the Managing Director of TransCapital Asset Management Ltd. where he
has served  since  2002.  During the period 2001 - 2003,  he was vice  president
international  business,  Waterland  Securities Co., Ltd., Taipei,  Taiwan. From
1998 - 2000, he was vice president,  Powerlink Technology  Development Co., Ltd,
Taipei, Taiwan.                                                                 

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Chang, Shu-Ching, Director                                                      
--------------------------                                                      
Miss Chang, age 35, was appointed as director on November 23, 2004. She has been
involved in the  entertainment and performing arts for over 10 years is a famous
Taiwanese actress and has lately been involved in property investment in China. 

Li Xiao-Gang, Director (Independent)                                            
------------------------------------                                            
Mr. Li  Xiao-Gang,  age 47, was appointed  independent  director on November 23,
2004. Mr. Li served as a director and deputy  secretary-general  of the Shanghai
Consultation Association since 1992. In 1992, he was also the deputy director of
the Economics Law Consultation  Center of the Shanghai Academy.  In 2000, he was
the director and Professor for Foreign  Investment  Research  Center of Shanghai
Academy of Social Sciences.                                                     

Fu Xuan-Jie, Director (Independent)                                             
-----------------------------------                                             
Mr. Fu Xuan-Jie,  age 54, was appointed as independent  director on November 23,
2004. Mr. Fu is an attorney and currently  practices law in his co-founded firm,
Fu Xuan-Jie & Associates Law Office. Prior to establishing his own law firm, Mr.
Fu was  associated  with  several  other  law  offices.  Mr. Fu  specializes  in
corporate  and  international  law,  especially  in the  areas of  international
compensation and financial legality cases.                                      

Chen Ren, Director (Independent)                                                
--------------------------------                                                
Mr. Chen,  age 57, was appointed as  independent  director on November 23, 2004.
Mr. Chen is currently the general manager of Shanghai Housing Developing Center,
a subsidiary of Shanghai Real Estate Group of Companies. He has been involved in
the  Shanghai  real  property  market  for the past 15 years.  Among some of the
companies that he has been  associated  with are:  Shanghai She-ye Property Ltd,
Shanghai Rui Nan Property Limited, the General Manager of Shanghai Gong Zhi Jing
Center.                                                                         

Conflicts of Interest                                                           
We believe  that our  officers  and  directors  will be subject to  conflicts of
interest.  The  conflicts  of  interest  arise  from  their  time spent on other
businesses unrelated to ours.                                                   

Family Relationships                                                            
There is no family relationship among directors,  executive officers,  or person
nominated or chosen to become the directors or executive officers.              

Involvement in Certain Legal Proceedings                                        
To our knowledge,  during the past five years, our officer and director has: (1)
not filed a petition under the federal  bankruptcy laws or any state  insolvency
law, nor had a receiver,  fiscal agent or similar  officer  appointed by a court
for the business or present of such a person, or any partnership in which he was
a general  partner at or within two yeas before the time of such filing,  or any
corporation or business  association of which he was an executive officer within
two years  before  the time of such  filing;  (2) were  convicted  in a criminal
proceeding or named subject of a pending criminal proceeding  (excluding traffic
violations  and  other  minor  offenses);  (3) were the  subject  of any  order,
judgment or decree,  not  subsequently  reversed,  suspended or vacated,  of any
court of competent  jurisdiction,  permanently or temporarily enjoining him from
or  otherwise  limiting  the  following  activities:  (i)  acting  as a  futures
commission merchant,  introducing broker,  commodity trading advisor,  commodity
pool operator, floor broker, leverage transaction merchant, associated person of
any of the foregoing, or as an investment advisor, underwriter, broker or dealer
in securities,  or as an affiliated person,  director of any investment company,
or engaging in or  continuing  any conduct or practice in  connection  with such
activity; (ii) engaging in any type of business practice;  (iii) engaging in any
activity in connection with the purchase or sale of any security or commodity or
in connection with any violation of federal or state  securities laws or federal
commodity  laws;  (4) were the  subject of any order,  judgment  or decree,  not
subsequently  reversed,  suspended or vacated, of any federal or state authority
barring,  suspending  or  otherwise  limiting for more than 60 days the right of
such person to engage in any activity  described above under this Item, or to be
associated with persons engaged in any such activity;  (5) were found by a court
of competent  jurisdiction  in a civil action or by the  Securities and Exchange
Commission to have violated any federal or state securities law and the judgment
in  subsequently  reversed,  suspended  or vacate;  (6) were found by a court of
competent  jurisdiction  in a civil action or by the Commodity  Futures  Trading
Commission  to have  violated any federal  commodities  law, and the judgment in
such civil action or finding by the Commodity Futures Trading Commission has not
been subsequently reversed, suspended or vacated.                               

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                                                        [Enlarge/Download Table]


Executive Officers                                                                                       

                                                                                                         
Lin, Chi-Jung                              Lin   Chi-Jung   is  a  Taiwanese   businessman.   He  is  the
President of SunRise Real Estate           controlling   shareholder  and  CEO  of  Sunrise.  He  founded
Development Group, Inc.                    Sunrise's  main  subsidiaries,  Shanghai  Xin Ji  Yang  Estate
President of Shanghai Xin Ji Yang          Consultation  Co. Ltd.,  in late 2001 and Shanghai  Shang Yang
Real-Estate Consultation Co, Ltd.          Real  Estate   Consultation   Co.  Ltd.,  in  2004.  Prior  to
President of Shanghai Shang Yang Real      establishing  the property  business,  Mr. Lin invested in the
Estate Consultation Company Limited.       filmmaking and publishing business.  Mr. Lin is a famous actor
                                           in Chinese  communities  around the world,  including Mainland
                                           China, Taiwan, North America and South East Asia.             

Lin, Chao Chin,                            Lin Chao Chin is one of the  co-founders  of  Shanghai  Xin Ji
Managing  Director,  Shanghai  Xin Ji      Yang Real Estate  Consultation  Co. Ltd. He brings with him 28
YanG Real Estate Consultation Co.          years of real estate industry experience,  particularly in the
Ltd.                                       areas  of  agency,   property   investment,   and  development
                                           services.  Prior to starting his  business in Mainland  China,
                                           he  co-founded  Taipei  Xin Lian Yang  Property  Co.  Ltd.  in
                                           Taiwan back in the early 80's,  which grew to have  contracted
                                           sales of NTD 120 Billion  (approx.  USD 3.4  billion)  and 800
                                           employees.  In 2001 he joined Lin Chi-Jung to re-establish his
                                           career  in  Mainland  China.  Currently,   Lin  Chao  Chin  is
                                           managing the day-to-day  business operation of Shanghai Xin Ji
                                           Yang  Real  Estate   Consultation   Co.  Ltd.  Lin  Chao  Chin
                                           graduated from Taiwan Chung Yuan University                   

Liu, Huan Zhang,                           Liu,  Huan Zhang is currently  head of  operations of Shanghai
Chief  Operating  Officer,  Shanghai       Shang Yang Real  Estate  Consultation  Co.  Ltd. He works with
Shang Yang Real Estate Consultation        the rest of Sunrise's  nationwide  team to identify and source
Co. Ltd.                                   development  projects.  Prior to joining Sunrise,  Mr. Liu had
                                           15  years  of  well-rounded  professional  experience  in real
                                           estate  investment  and  management.  Some  of the  well-known
                                           companies that he served are: Tai Yi  Construction  Management
                                           Co.   Ltd.   Taiwan,   and  Pan  Asia  Estate   Evaluation   &
                                           Certification  Ltd. Taiwan.  Mr. Liu earned both his Bachelors
                                           Degree  in  Civil  Engineering  and  Masters  Degree  in  City
                                           Planning from Zhong Xing University, Taiwan.                  

Lo, Yi-Yun                                 Ms. Lo has worked  principally in the financial and accounting
Chief Financial Officer                    related  field.  During her previous  employment,  she was the
                                           chief  accountant  for  Renaissance  Science Co. Ltd.  and was
                                           lead  accountant  for Jih-Sun  Security  Co.,  Ltd. and Taiwan
                                           Sire Ltd.                                                     

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Lan, Pei-Cheng                             In the real estate business for 18 years,  Mr. Lan has shocked
Vice President                             the  Shanghai,  Taiwan,  and Hong Kong industry by selling 80%
                                           of Kang Hong  Garden  Estates in  Shanghai in only two months.
                                           Mr. Lan was  responsible  with  bringing  of new sales  method
                                           into Mainland China.                                          

ITEM 10. EXECUTIVE COMPENSATION                                                 

Executive Compensation                                                          
----------------------                                                          
The  following  table  reflects  the  compensation  paid to our Chief  Executive
Officer  and each of our  compensated  executive  officers  whose  compensations
exceeded  $100,000 in fiscal years 2002, 2003 and 2004 for services  rendered to
SRRE and its subsidiaries.                                                      

                                                        [Enlarge/Download Table]

                                                                   Long Term Compensation                          

                                 Annual Compensation                 Awards      Payouts                           
                                 -------------------              -------------------------                        
(a)                        (b)     (c)      (d)          (e)          (f)           (g)         (h)        (i)     
                           Year  Salary    Bonus    Other Annual  Restricted     Securities    LTIP      All Other 
                                                    Compensation     Stock       Underlying   Payouts  Compensation
                                                                   Award(s)     Options/SARs                       
                                                                                                                   
Name    and     Principal          ($)      ($)          ($)          ($)           (#)         ($)        ($)     
Position [1]                                                                                                       
Lin,  Chi-Jung,   CEO,     2004  86,509   282,728      134,115         0             0           0          0      
President  &  Chairman                                                                                             
(appointed  on Oct 11,                                                                                             
2004)                                                                                                              

Executive  Officer  of     2003  44,468      0         14,499          0             0           0          0      
a subsidiary               2002  17,640      0            0            0             0           0          0      

Chiu,  Chi-Yuan,  CEO,     2004     0        0            0            0             0           0          0      
President  &  Chairman     2003     0        0            0            0             0           0          0      
(appointed  on  Oct 28                                                                                             
2003 and  resigned  on                                                                                             
Oct 11, 2004)                                                                                                      

Lin, Chao-Chin,            2004  55,096   282,728      108,742         0             0           0          0      
Executive Officer of       2003  41,080      0         14,499          0             0           0          0      
a subsidiary.              2002  34,519      0            0            0             0           0          0      

Yarek Bartosz              2003     0        0            0            0             0           0          0      
President, Secretary                                                                                               
(resigned  on Oct  28,     2002     0        0            0            0             0           0          0      
2003                                                                                                               

Gust Kepler                2002     0        0            0            0             0           0          0      
President  &  Director                                                                                             
(resigned July 2002)                                                                                               

[1] All compensation received by our officers and directors has been disclosed. 

There are no stock option, retirement,  pension, or profit sharing plans for the
benefit of our officers and directors.  Ms. Chang Shu-Ching is entitled to share
10% of the net results of the Suzhou Property Underwriting Project in proportion
to the venture deposit contributed by her.                                      

(d) Lin Chi-Jung and Lin Chao-Chin each received discretionary bonus of $282,728
in 2004.  This incentive was attributed to the initial  management  team members
for their valuable contribution to the Company. It was calculated at 0.2% of the
total value of properties sold in 2004.                                         

(e) Lin,  Chi-Jung received housing allowance of $115,991 and promotional fee of
$18,124 during the year 2004.                                                   

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Option/SAR Grants                                                                      

No  individual  grants of stock  options,  whether  or not in tandem  with Stock       
appreciation  rights  ("SARs")  and  freestanding  SARs  have  been  made to any       
Executive  officer or any director  since our inception,  accordingly,  no stock       
options have been exercised by our officers or directors in any fiscal year.           

ITEM 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND       
RELATED STOCKHOLDER MATTERS                                                            

The  following  tables set forth  information  concerning  the  holdings of each       
person known to the Company to be the beneficial owner of more than five percent       
of our common stock, of each director and named executive officer, and of all of       
the  Company's  directors  and  executive  officers as a group.  The  respective       
director,  officer,  or stockholder  furnished all  information  with respect to       
beneficial ownership to the Company.                                                   

Security Ownership of Certain Beneficial Owners                                        

--------------- ------------------------------------- ---------------------- ----------
      (1)                      (2)                            (3)                (4)   
Title of Class  Name and Address of Beneficial Owner   Amount and Nature of    Percent 
                                                       Beneficial Ownership      of    
                                                                                Class  
--------------- ------------------------------------- ---------------------- ----------
                                                                                       
Common Share    Lin Chi-Jung                              15,000,000            69.32% 

                11F, No. 249, Sec 1, Fushing S Rd.,                                    
                Da-an District, Taipei City 106,                                       
                Taiwan R.O.C                                                           
--------------- ------------------------------------- ---------------------- ----------

(1) Percentage is based upon 21,636,614 shares of common stock outstanding as at       
March 30, 2005.                                                                        
(2) Includes 13,500,000 shares owned by Ace Develop Properties Limited, of which       
Mr. Lin Chi-Jung is the sole owner                                                     
(3) Includes 750,000 shares owned by Planet Technology  Corporation of which Mr.       
Lin Chi-Jung is the beneficiary sole owner                                             
(4) Includes  750,000 shares owned by Systems and Technology  Corp. of which Mr.       
Lin Chi-Jung is the beneficiary sole owner                                             

Security Ownership of Management                                                       
--------------------------------                                                       

--------------- ------------------------------------- ---------------------- ----------
      (1)                      (2)                            (3)                (4)   
Title of Class  Name and Address of Beneficial Owner   Amount and Nature of    Percent 
                                                       Beneficial Ownership      of    
                                                                                Class  
--------------- ------------------------------------- ---------------------- ----------
Common Share    Lin Chi-Jung                                15,000,000          69.32% 

                11F, No. 249, Sec 1, Fushing S Rd.,                                    
                Da-an District, Taipei City 106,                                       
                Taiwan R.O.C                                                           
--------------- ------------------------------------- ---------------------- ----------

(1) Percentage is based upon 21,636,614 shares of common stock outstanding as at
March 30, 2005.                                                                 

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Changes in Control                                                              

To the knowledge of management,  there are no present arrangements or pledges of
our securities that may result in a change in our control of the Company.       

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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

Chang, Shu-Ching, one of the directors has ventured $277,895 into a co-operation
agreement  with the  Company  to  jointly  carry out  Suzhou  Hui Long  Property
Underwriting   Project   mentioned  in  Note  4  of  Item  7  above.  This  cash
participation  was used as a portion  of the  $2,416,480  Performance  Guarantee
Deposit paid to SIP HI-Dragon Real Estate Real Estate  Development Co., Ltd. for
participation  in  Suzhou  Property   Underwriting  Project.  It  represents  an
investment risk sharing participation of the director into the project,  whereby
the  director  will share the  investment  risk and profit of the  project via a
proportionate  profit  sharing  scheme  agreed upon with the company.  This cash
advance bears no interest  rate and will be fully paid off upon the  fulfillment
of the underwriting  contract,  however if the  underwriting  contract failed to
deliver its return, this amount will not be paid off.                           

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K                                 

Exhibit          Description                                                    
Number                                                                          

31.1             Certification of Lin, Chi-Jung, pursuant to Rule 15d-14(a)     

31.2             Certification of Lo, Yi-Yun, pursuant to Rule 15d-14(a)        

32.1             Certifications of Lin, Chi-Jung, pursuant to 18 U.S.C. 1350.   

32.2             Certifications of Lo, Yi-Yun, pursuant to 18 U.S.C. 1350.      

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                 

Audit Fees                                                                      

For the 2003 fiscal year audit,  we paid John Geib, CPA $2,700  Canadian for his
audit services. For the 2004 first and second quarter review, we paid John Geib,
CPA $2,338 Canadian for his review services.                                    

As mentioned in Item 6, the reverse  acquisition  arrangement  was  completed on
October 5, 2004. We have  disengaged our audit services with John Geib,  CPA. We
appointed  BDO  McCabe  Lo &  Company  ("BDO")  on  November  3,  2004 to be the
Company's  Independent  Auditor.  The  aggregate  fees billed by BDO McCabe Lo &
Company  for  services  rendered  during the year  ended  December  31,  2004 is
described as follows:                                                           

Fees for audit and review services  amounted to  approximately  $68,500 in 2004.
Fees for audit and review services  include the annual audit of the consolidated
financial  statements  of  the  Company  and  its  subsidiaries,  review  of the
Company's Quarterly Reports on Form 10-QSB,  audits required in the Form 8-K and
review of related documents.                                                    

Audit-Related Fees, Tax Fees and All Other Fees billed by John Geib and BDO     

None.                                                                           

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SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.                                                                     

                                   Sunrise Real Estate Development Group, Inc.

           /s/ Lin, Chi-Jung
                                    --------------------------------------------
         BY: Lin, Chi-Jung
                                        Principal Executive Officer and Director

DATE:  March 31, 2005                                         

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  Registrant and in the capacities and on
the dates indicated.                                                            

Signature                   Title                                Date           
---------                   -----                                ----           

/s/ Lin, Chi-Jung                                                               
---------------------       Principal Executive Officer           March 31, 2005
Lin, Chi-Jung               and Director                                        

/s/ Lo, Yi-Yun                                                                  
---------------------       Principal Financial Officer           March 31, 2005
Lo, Yi-Yun                  and Principal Accounting Officer                    

/s/ Lin, Chao-Chin                                                              
---------------------       Managing Director                     March 31, 2005
Lin, Chao-Chin                                                                  

/s/ Chiu, Chi-Yuan                                                              
---------------------       Director                              March 31, 2005
Chiu, Chi-Yuan                                                                  

/s/ Li Xiao Gang                                                                
---------------------       Director                              March 31, 2005
Li Xiao Gang                                                                    

/s/ Chang, Chu- Ching                                                           
---------------------       Director                              March 31, 2005
Chang, Chu-Ching                                                                

/s/ Chen Ren                                                                    
---------------------       Director                              March 31, 2005
Chen Ren                                                                        

/s/ Fu Xuan-Jie                                                                 
---------------------       Director                              March 31, 2005
Fu Xuan-Jie                                                                     

32

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10KSB Filing		Date		First		Last			Other Filings
		10/10/96		29
		10/11/96		4		5
		8/14/01		28					NT 10-Q
		12/31/02		26					10KSB
		4/16/03		28
		8/31/03		9
		10/28/03		4		40
		11/13/03		28
		12/12/03		29
		12/22/03		4
		12/27/03		4
		12/31/03		22		39			10KSB, NT 10-K
		2/5/04		28
		3/15/04		13
		4/30/04		28
		6/8/04		28
		6/25/04		28
		8/31/04		4		28			8-K
		9/26/04		32
		10/5/04		4		47
		11/3/04		39		47			8-K
		11/18/04		33
		11/23/04		40		41			3, 8-K
		12/24/04		28
For The Period Ended		12/31/04		1		47			NT 10-K
		1/1/05		36
		1/8/05		17
		1/10/05		6		38
		3/1/05		11
		3/9/05		17
		3/21/05		23
		3/23/05		15
		3/30/05		2		44			8-K/A
		3/31/05		48					10QSB, 8-K/A, NT 10-K
Filed On / Filed As Of		4/8/05
		5/25/05		17
		11/25/05		32
		12/31/05		16		36			10KSB
		1/1/06		36
		3/31/06		33					10KSB, 10QSB
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