Edgar Filing: SUNRISE ENERGY RESOURCES INC

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For Annual and Transition Reports pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934 (Mark One)

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

For the three months ended

March 31, 2009

¨	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 1-11248

SUNRISE ENERGY RESOURSES, INC.

(Name of Registrant as specified in its charter)

Delaware		84-0938688
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

570 Seventh Avenue, Suite 800
New York, New York		10018
(Address of principal executive office)		(Zip Code)

Registrant’s telephone number, including area code: (917) 463-4210

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

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

Check weather the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act ¨

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

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

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

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

(Do not check if a smaller reporting company)

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

Yes ¨ No x

State issuer’s revenues for its most recent fiscal year: $2,372,529

As of May 15, 2009, the Registrant had 23,690,037 shares of common stock $.001 par value issued and outstanding.

Transitional Small Business Disclosure Format (Check one): Yes ¨; No x

SUNRISE ENERGY RESOURCES, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Financial Statements (unaudited)
Item 1.

	Balance Sheets – March 31, 2009 and December 31, 2008	3

	Statements of Operations and Comprehensive Loss - for the three months ended March 31, 2009 and 2008	4

	Statements of Changes in Stockholder’s Equity (Capital Deficit) – March 31, 2009 and December 31, 2008	5

	Statements of Cash Flows - for the three months ended March 31, 2009 and 2008	6

	Notes to the Unaudited Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	16

Item 4.	Controls and Procedures	16

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 3.	Defaults upon Senior Securities	19

Item 4.	Submission of Matters to a Vote of Security Holders	19

Item 5.	Other Information	19

Item 6.	Exhibits and Reports on Form 8-K	19

SIGNATURES		20

PART I.

SUNRISE ENERGY RESOURCES INC.

BALANCE SHEETS

(Expressed in US Dollars)

	March 31, 2009 (UNAUDITED)			December 31, 2008 (as restated)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	2,616		$	17,428
Other current assets					116,123

TOTAL ASSETS	$	2,616		$	133,551

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Other accounts payable – related party		293,367			278,371
Interest payable – related party		22,476			22,476

Total current liabilities		315,843			300,847

STOCKHOLDERS’ EQUITY
Common Stock, $.001 par value, 75,000,000 authorized, 23,690,037 and 23,542,337 issued and outstanding as of March 31, 2009 and December 31, 2008		23,690			23,542
Additional Paid in Capital		6,626,723			6,479,170
Retained earnings (Accumulated deficit)		(6,963,639	)		(6,670,009	)
Total stockholders' equity (deficit)		(313,227	)		(167,296	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,616		$	133,551

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

SUNRISE ENERGY RESOURCES INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in US Dollars except share amounts)

UNAUDITED

	For the three months ended

	March 31,
	2009			2008 (as restated)

OPERATING EXPENSES
Sales, general and administrative expenses		(177,507	)		(174,691	)

OPERATING LOSS		(177,507	)		(174,691	)

OTHER INCOME (EXPENSE)

Interest expense, net		(116,123	)		(244,750	)

Loss from continuing operations		(293,630	)		(419,441	)

DISCONTINUED OPERATIONS
Gain on disposal of discontinued segment		3,302,948
Loss from operations of discontinued segment					(434,000	)
Income/(Loss) from discontinued operations		3,302,948			(434,000	)

NET INCOME/(LOSS)		3,009,318			(853,441	)

TOTAL COMPREHENSIVE INCOME/(LOSS)	$	3,009,318		$	(853,441	)

BASIC NET LOSS PER SHARE	$	0.13		$	(0.04	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		23,616,187			22,412,185

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

SUNRISE ENERGY RESOURCES INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(CAPITAL DEFICIT)

(Expressed in US Dollars except share amounts)

UNAUDITED

													Total
							Retained			Accumulated			Stockholder's
	Common				Additional		Earnings			Other			Equity
	Stock				Paid-in		(Accumulated			Comprehensive			(Capital
	Shares		Amount		Capital		Deficit)			(Loss)			Deficit)
BALANCE, DECEMBER 31, 2007		21,704,682	$	21,705	$	4,643,353	$	(3,523,559	)	$	( 32,192	)	$	1,109,307

Private placement of shares		1,837,655		1,837		1,835,817								1,837,654
Net loss for the year								(6,449,398	)					(6,449,398	)
Comprehensive loss for the year											(1,396,661	)		(1,396,661	)

BALANCE, DECEMBER 31, 2008		23,542,337	$	23,542	$	6,479,170	$	(9,972,957	)	$	(1,428,853	)	$	(4,899,098	)

Private placement of shares		147,700		148		147,552								147,700
Net loss for the year								3,009,318						3,009,318
Comprehensive loss for the year											1,428,853			1,428,853

BALANCE, MARCH 31, 2009		23,690,037	$	23,690	$	6,626,722	$	(6,963,639	)	$	-		$	(313,227	)

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

SUNRISE ENERGY RESOURCES INC.

STATEMENTS OF CASH FLOWS

(Expressed in US Dollars)

UNAUDITED

	For the three months ended March 31,
	2009			2008 (as restated)

CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:
Net loss	$	3,009,318		$	(853,441	)
Adjustments to reconcile net loss to net cash in operating activities:
Gain on disposal of discontinued segment		(3,302,948	)
Loss from operations of the discontinued segment					434,000
Increase in other accounts payable and accruals		14,995
Increase in interest payable		116,123			107,488
NET CASH FLOW FROM OPERATING ACTIVITIES		(162,512	)		(311,953	)

CASH PROVIDED BY FINANCING ACTIVITIES:
Short term notes repaid					(558,257	)
Proceeds from share issuance		147,700			1,415,005
NET CASHFLOW FROM FINANCING ACTIVITIES		147,700			856,748

CASH USED IN INVESTING ACTIVITIES
Investment into discontinued operations					(524,634	)
NET CASH FLOW FROM INVESTING ACTIVITIES					(524,634	)

INCREASE (DECREASE) IN CASH		(14,812	)		20,161
CASH, at the beginning of the period		17,428			33

CASH, at the end of the period	$	2,616		$	20,194

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

SUNRISE ENERGY RESOURCES INC.

STATEMENTS OF CASH FLOWS

SUPPLEMENTAL INFORMATION

(Expressed in US Dollars)

UNAUDITED

	Three Months Ended
	March 31,
	2009		2008 (as restated)
Cash paid for:
Income taxes	$	-	$	-

Non-cash investing and financing transactions:	$	-	$	-

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

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

1. NATURE OF BUSINESS

Until December 31, 2008 all operating activities of Sunrise Energy Resources Inc. were conducted through its wholly owned Ukrainian subsidiaries, TOV Energy-Servicing Company Esko Pivnich (“Esko Pivnich” or “EP”) and Pari (“Pari”) both formed as Ukrainian Closed Joint Stock Companies (CJSC). Esko Pivnich and Pari were engaged in oil and gas exploration and development in the country of Ukraine. While the Company had 8 leases which were licensed to the Company’s wholly owned subsidiaries Esko Pivnich and Pari, the production activities were limited to Karaikozovsk field in Eastern Ukraine. In addition to selling oil and gas produced from its Karaikozovsk lease, the Company purchased oil and gas from third parties. The purchased hydrocarbons were subsequently resold to third parties in order to enable Esko Pivnich to fulfill its monthly delivery obligations.

Sunrise Energy Resources Inc. currently has its headquarters at the following address: 570 Seventh Avenue, Suite 800, New York, New York 10018. As of March 31, 2009 the company employed 2 people.

Absence of proved reserves in Karaikozovsk field

On March 11, 2009 the Company received a letter from its geologists, Netherland, Sewell & Associates, Inc. stating that based on the prices and costs used in the evaluation, which was conducted in accordance with the guidelines of the US Securities and Exchange Commission (SEC), they have determined that there were no proved reserves in Karaikozovsk field as of December 31, 2008.

Millington Situation

As at December 31, 2008, the Company had $5,328,828 of principal outstanding under Convertible Debenture Agreements CD-1001, CD-1009, CD-1011 and CD-1013. In addition, on December 31, 2008 the Company owed to Millington $239,886 in accrued interest on the above notes. During first quarter 2009, an additional interest of $116,123 accrued on the outstanding principal. In accordance with the Convertible Debenture Agreements, the Company was obligated to repay the principal together with the accrued interest within 3 (three) years of the receipt of funds. The first Convertible Debenture Agreement CD-1001 for the face value of $917,200 was dated March 30, 2006 and matured on March 30, 2009. On March 13, 2008, Millington Solutions LLC notified the Company that it did not intend to extend the maturity date of CD-1001 as well as the maturity dates of CD-1009, CD-1011 and CD-1013 tranches.

Furthermore, pursuant to Clause 3 - “Lender’s Right of Acceleration” of the Convertible Debenture Agreements CD-1001, CD-1009, CD-1011 and CD-1013, the Millington Solutions had the right, to declare the entire unpaid principal and interest under the Note due immediately in the event, the Company failed to make any payment of principal or interest within fifteen days after its due date or if one or more judgments which in the aggregate exceeded $100,000 were entered against the Company. Accordingly, in the event, the Company were unable to secure adequate financing to service the redemption of CD-1011 and/or any other tranche, the Company would technically be in default on all tranches CD-1001, CD-1009, CD-1011 and CD-1013 which at that time become immediately due for repayment in the total amount of $5,684,837 including capitalized interest as of March 31, 2009.

Disposition of assets and discontinuance of operations

On March 27, 2009, the Company received a proposal from Millington Solutions LLC to transfer all Company’s assets to Millington Solutions LLC in exchange for the total extinguishment of all liability to Millington Solutions LLC including but not limited to principal and interest accrued under the convertible debenture notes CD-1001, CD-1009, CD-1011 and CD-1013. Upon deliberation, the management on March 30, 2009 determined to accept the proposal of Millington Solutions LLC for the following key reasons:

The Company has received a notice from Millington Solutions LLC stating that Millington did not intend to extend the maturity date of the Millington Notes. The Company’s inability to make the payment of principal and interest accrued under CD-1001 in the amount of $1,211,621 will result in the Company technically defaulting on all Millington Notes in the total amount of $5,684,837 including principal and interest accrued to March 31, 2009. The Company believed that it exhausted its best efforts to raise external financing to redeem CD-1001 in the first instance and other Millington Notes;

·	All of the Company’s licenses expire during 2009 and are unlikely to be renewed due to the absence of proved reserves, uncertain prospects and a significant capital infusion required to renew the licenses and further develop them.

For the aforesaid reasons it was determined that the management was justified in accepting the proposal submitted by Millington Solutions. As a result of transferring all operations to Millington Solutions, the transactions related to all operations in Ukraine are considered to be discontinued operations for future reporting.

At the time of this report, the Company and Millington Solutions are drafting definitive agreements to complete the disposal. The Company and Millington Solutions anticipate that the disposal transaction would be closed during the second quarter of 2009. The Company and Millington Solutions have agreed that regardless of the actual date of executing the definitive agreements, December 31, 2008 shall be deemed the effective closing date for the disposal.

December 31, 2008, statements have been restated to reflect the discontinued operations results of operations, financial position and cash flows are separately reported for all periods presented.

2.	PRESENTATION OF FINANCIAL STATEMENTS

Basis of Presentation – The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

Going concern — The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the financial statements, the Company incurred a net income of $3,009,318 during the quarter ended March 31, 2009, while the Company’s current liabilities exceeded its current assets by $313,227.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis by raising additional funds in equity markets. At the present time the Company does not believe it will be able to obtain additional funding. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

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

3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

Cash and Cash Equivalents – Cash include petty cash and cash held on current bank accounts. Cash equivalents include short-term investments with an original maturity of three months or less that are readily convertible to known amount of cash which are subject to insignificant risk of changes in value. Cash and cash equivalents as of March 31, 2009 and December 31, 2008 consisted mainly of USD denominated current accounts held at Citibank.

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

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

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

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

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

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

Fair Value of Financial Instruments – SFAS No. 107, “Disclosures About Fair Value of Financial Instruments,” requires disclosure of the fair value of certain financial instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of financial instruments approximate their carrying values due to the immediate or short term maturity of these financial instruments.

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

Comprehensive Income (Loss) - Statement of SFAS 130, “Reporting Comprehensive Income,” establishes standards for reporting and displaying of comprehensive income, its components and accumulated balances. Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements. Foreign exchange translation gains and losses of the Company are reflected in Comprehensive gains and losses.

Segment Reporting – Prior to December 31, 2008, the Company’s business operations were located in Ukraine and related primarily to exploration and development of crude oil and natural gas properties. For the purposes of these financial statements, these operations were presented under the heading of “Discontinued Operations”.

4. OTHER ACCOUNTS PAYABLE AND ACCRUALS

Other accounts payable and accruals as of March 31, 2009 and December 31, 2008 consisted of the following:

	3/31/2009		12/31/2008


Professional Services	$	18,276		3,280

Related parties
Advances from shareholders		275,091		275,091

Total	$	293,367	$	278,371

The amounts of $18,276 and $3,280 were due to the Company’s auditor and financial printer. The amount of $275,091 represents advances from shareholders with no specific terms paid to the Company during 2005 and 2006.

5. INTEREST PAYABLE

Interest payable of $22,476 as of March 31, 2009 and December, 31 2008 represented interest accrued on the loans from related parties (Note 4).

6. SHAREHOLDERS’ EQUITY

During the first 3 months of 2009, the Company raised $147,700 from private placements of 147,700 shares Company’s unregistered stock to non-US investors in reliance on Regulation S as promulgated under the Securities Act of 1933.

No dividends were declared or paid by the Company during the periods ended March 31, 2009 and December 31, 2008.

7. INCOME/LOSS PER COMMON SHARE

Basic net loss per common share has been computed based on the weighted-average number of shares of common stock outstanding during the applicable period. In accordance with SFAS No. 128 “Earnings per share”, diluted net income per common share is computed based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the applicable period, as if all potentially dilutive securites were converted into common stock. However, according to paragraph 16 of SFAS No. 128, no potential common shares shall be included in the computation of any diluted per share amount when a loss from continuing operations exists.

	Three Months Ended
	March 31,
	2009			2008
	(Unaudited) (in US dollars, except per share amounts)

Loss from continuing operations		(293,630	)		(419,441	)
Income/(Loss) from discontinued operations		3,302,948			(434,000	)
Net income/(loss) attributable to common stockholders	$	3,009,318		$	(853,441	)

Weighted average common shares outstanding, basic		23,616,187			22,412,185
Loss from continuing operations per commion share, basic		(0.01	)		(0.02	)
Income/(Loss) from discontinued operations per common share, basic		0.14			(0.02	)
Income/(Loss) per common share, basic	$	0.13		$	(0.04	)

Weighted average common shares outstanding, diluted		23,616,187			22,412,185
Loss from continuing operations per commion share, basic		(0.01	)		(0.02	)
Income/(Loss) from discontinued operations per common share, basic		0.14			(0.02	)
Loss per common share, diluted	$	0.13		$	(0.04	)

8. RELATED PARTIES

Related parties include shareholders and entities under common ownership. Transactions with related parties are performed on terms that are comparable to those available to unrelated parties. For details of related party balances outstanding as of March 31, 2009 and December 31, 2008 (Notes 4 and 5).

Our related parties are CJSC Infox and Zaccam Trading, Ltd.. During the period ended March 31, 2009 we received $147,700 from Zaccam Trading, Ltd to finance general corporate expenses.

9. COMMITMENTS AND CONTINGENCIES

Environmental remediation – Under Ukrainian law, the Company is obligated to meet certain environmental remediation obligations related to its oil and gas production activities. This amount cannot be estimated at this time but is considered not to be a material amount. In accordance with the disposal term sheet executed by the Company and Millington Solutions LLC, the Millington would assume all environmental remediation obligations relating to the oil & gas properties previously held by the Company through its former subsidiaries Esko Pivnich and Pari.

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

10. RISK MANAGEMENT POLICIES

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

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

Interest rate risk – Interest rate risk arises from the possibility that changes in interest rates will affect the value of a financial instrument.

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

11. SUBSEQUENT EVENTS

None.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Discussion and Analysis of Financial Condition

Introduction

On March 31, 2009, the Company and Millington Solutions, LLC agreed that the Company would transfer its entire interests in its wholly owned subsidiaries Esko Pivnich and Pari to Millington in settlement of Convertible Debenture Notes due to Millington in the total amount of $5,684,837 including principal and accrued interest to March 31, 2009. Millington agreed to assume any and all environmental remediation liability that may arise in relation to properties previously owned by Esko Pivnich and Pari.

Current Activities

Cash requirements

The Company anticipates it will require around $100,000 to sustain operations and effectively evaluate new business opportunities over the next twelve months. The Company believes it will be able to raise these funds through equity and debt financing; however, there is no guarantee that funds will be raised.

Critical Accounting Policies and Recent Accounting Pronouncements

We have identified the policies below as critical to our business operations and the understanding of our financial statements. The impact of these policies and associated risks are discussed throughout Management’s Discussion and Analysis where such policies affect our reported and expected financial results. A complete discussion of our accounting policies is included in Note 3 of the Notes to Financial Statements.

Going Concern

These financial statements have been prepared on a going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, these financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

In order for us to continue as a going concern, we require additional financing. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to continue as a going concern, we would likely be unable to realize the carrying value of our assets reflected in the balances set out in the preparation of financial statements. The Company’s limited revenue history, absence of revenue sources following the sale and discontinuation of its oil&gas business and limited funding raise substantial doubt about the Company’s ability to continue as a going concern.

Accordingly, our independent auditors included an explanatory paragraph in their report of the December 31, 2008 financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional notes and disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Use of Estimates

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

Revenue Recognition

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

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

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Disclosure regarding Forward-Looking Statements

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

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

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

As used in this annual report, the terms “we”, “us”, “our”, “Company” and “Sunrise” means Sunrise Energy Resources, Inc. and its subsidiaries, unless otherwise indicated.

All dollar amounts refer to US dollars unless otherwise indicated.

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2008. Based upon that evaluation, our Directors, Chief Executive and Chief Financial Officer, concluded that our disclosure controls and procedures were effective.

Management’s Report on Internal Controls and Procedures

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section 13a-15(f) of the Securities Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s CEO and the company’s CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in conformity with U.S. generally accepted accounting principles and include those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

As of December 31, 2008, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the criteria established by COSO, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2008, as a result of the identification of the material weakness described below.

A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The Company’s management has identified a material weakness in the effectiveness of internal control over financial reporting arising from a shortage of adequately qualified staff in the accounting department. As a result, the reported US GAAP accounts included small clerical errors which were not timely discovered. No particular disclosure has been materially affected by the above weakness.

We intend to continue providing US GAAP training to our staff and to streamline processes and procedures of preparing the US GAAP accounts. These steps would enable us to prepare the accounts in advance and ensure that more time is available for review and amendments. This would also help us improve the completeness and accuracy of the financial statements. We are also reviewing the possibility of hiring more qualified staff in our accounting department. However, due to budget constraints it may be unfeasible to recruit sufficient resources to completely correct the deficiency at this time.

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some person, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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

Conclusion

The above identified material weakness did not result in material audit adjustments to our 2008 financial statements. We intend to continue training our staff in US GAAP to reduce the likelihood of an error and to afford us more time for review and amendment of financial reports. However, based on our current size and size of operations, we do not believe it is economically feasible to fully remediate this weakness. We cannot assure you that, as circumstances change, any additional material weakness will not be identified.

Changes in internal control over financial reporting

The Company’s principal executive officers and principal financial officer have concluded that there were no changes in the Company’s internal controls over the financial reporting or disclosure controls and procedures or in other factors during the last quarter that have materially affected or are reasonably likely to materially affect these controls as of the end of the period covered by this report based on such evaluation.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no outstanding legal proceedings material to the Company to which the Company or any of its assets are subject, nor are there any such proceedings known to be contemplated. Management believes that the resolution of all business matters which would have a material impact on the Company’s financial position or operating results have been recorded.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risks discussed in our 2008 Annual Report on Form 10-K including Risk Factors of Part I, which risks could materially affect our business, financial condition or future results. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 3. Defaults upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES AND REPORTS ON FORM 8-K

Reports on Form 8-K

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

Balance Sheets as of March 31, 2009 and December 31, 2008

Statements of Changes in Stockholders’ Equity (Capital Deficit) for the three months ended March 31, 2009

Statements of Operations and Comprehensive Loss for the three months ended March 31, 2009 and 2008.

Notes to the Financial Statements for the periods ended March 31, 2009 and December 31, 2008

Exhibit Number	Description	Incorporation by Reference

31.1	Rule 13a-14(a) Certification of Chief	Filed Herewith
	Executive Officer
31.2	Rule 13a-14(a) Certification of Chief	Filed Herewith
	Financial Officer
32.1	Section 1350 Certification of Chief	Filed Herewith
	Executive Officer
32.2	Section 1350 Certification of Chief	Filed Herewith
	Financial Officer

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Sunrise Energy Resources, Inc.

	/s Konstantin Tsirulnikov
Date: May 15, 2009	Konstantin Tsirulnikov
	President and Chief Executive Officer