UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, ~~2022~~2023

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

Commission file number: 000-32585

SUNRISE REAL ESTATE GROUP, INC.

(Name of Small Business Issuer in its Charter)


Texas	6500	75-2713701
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

No. 18, Panlong Road

Shanghai, PRC 201702

(Address of Principal Executive Offices) (Zip Code)

Issuer’s telephone number: + 86-21-6139-8018

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


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	SRRE	N/A

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act of 1934. Yes ☐ No ☒

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☐ No ☒

Indicate by check mark if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this Chapter) is not contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is 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 file ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No ☒

The aggregate market value of the common stock held by non-affiliates 15,334,803 shares was approximately $35,~~204~~980,~~973.85~~573, based on the average opening and closing price of $0.~~209~~39 for the Common Stock on June 30, ~~2022~~2023.

The number of shares outstanding of the issuer’s Common Stock, $0.01 par value, as of ~~April~~May 2531, ~~2023~~2024 was 68,691,925 shares.

Table of Contents

TABLE OF CONTENTS


PART I
Item 1.	Business	2
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	3034
Item 2.	Property	30
Item 1C	Cybersecurity	34
Item 3.	Legal Proceedings	31
Item 2.	Property	35
Item 4.	Mine Safety Disclosures	31
Item 3.	Legal Proceedings	35
Item 4.	Mine Safety Disclosures	35
PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	3135
Item 6.	Selected Financial Data	3235
Item 7.	Management’s Discussion and Analysis of Financial Condition, and Results of Operations	3336
Item 7A.	Quantitative and Qualitative Disclosures about Market Risks	4042
Item 8.	Financial Statements and Supplementary Data	4143
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	6466
Item 9A.	Controls and Procedures	6466
Item 9B.	Other Information	6567
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	6568
Item 11.	Executive Compensation	6972
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	7174
Item 13.	Certain Relationships and Related Transactions and Director Independence	7274
Item 14.	Principal Accountant Fees and Services	7275
PART IV
Item 15.	Exhibits and Financial Statement Schedules	7476

Table of Contents

PART I

ITEM 1. BUSINESS

Corporate History

~~The principal activities of~~ Sunrise Real Estate Group, Inc. (“SRRE”) is a Texas holding company and conducts business primarily through its operating subsidiaries in China. The principal activities of SRRE and its subsidiaries (collectively referred to as the “Company”) are real estate development ~~and property brokerage services,~~ including ~~real estate marketing services,~~ property leasing services; and property management services in the People’s Republic of China (“PRC”). Our investors hold shares of common stock in SRRE, the Texas holding company Our current ownership interests in our various subsidiaries and other entities are set forth in the ~~below~~ organizational chart below.

We operate through our wholly-owned subsidiaries, CY-SRRE and LRY. CY-SRRE and LRY do not have operations themselves but conduct operations in Mainland China through their respective subsidiaries that are based in the PRC. CY-SRRE operates through its wholly owned subsidiary, Shanghai Xin Ji Yang Real Estate Consultation Company Limited (“SHXJY”). LRY operates primarily through its wholly owned subsidiary, Shanghai Shang Yang Investment Management and Consulting Company Limited (“SHSY”) and majority owned subsidiary, Huaian Zhanbao Industrial Co., Ltd. SHSY and SHXJY and are property agency businesses earning commission revenue from marketing and sales services to developers.

We and our subsidiaries do not have material contractual arrangements with one or more variable interest entities (VIEs) based in China. Pursuant to the Special Administrative Measures on the Access of Foreign Investment (Negative List) (2021 Edition), or the 2021 Negative List, jointly issued by the NDRC and the MOFCOM on December 27, 2021 and enforced on January 1, 2022, the foreign investment related to real estate development does not fall within the category of industries in which foreign investment is restricted or prohibited. See “Government Regulation -. Regulations on Foreign-Invested Real Estate Enterprise.

Sunrise Real Estate Development Group, Inc. (“CY-SRRE”), a wholly-owned subsidiary of SRRE, was established in the Cayman Islands on April 30, 2004 as a limited liability company. Shanghai Xin Ji Yang Real Estate Consultation Company Limited (“SHXJY”) was established in the PRC on August 20, 2001 as a limited liability company. SHXJY was originally owned by a Taiwanese company, the principal and controlling shareholder of which 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 and SHXJY held 90% equity interest in SZXJY at the time.

On August 9, 2005, SHXJY sold 10% equity interest in SZXJY to a company owned by a director of SZXJY, and transferred 5% equity interest in SZXJY to CY-SRRE. Following the sale and transfer, CY-SRRE effectively held 80% equity interest in SZXJY. On November 24, 2006, CY-SRRE, SHXJY, a director of SZXJY and a third party established a subsidiary, namely, Suzhou Shang Yang Real Estate Consultation Company Limited (“SZSY”) in the PRC, with CY-SRRE holding 12.5% equity interest, SHXJY holding 26% equity interest and the director of SZXJY holding 12.5% equity interest in SZSY. At the date of incorporation, SRRE and the director of SZXJY entered into a voting agreement that provided that SRRE is entitled to exercise the voting right in respect of his 12.5% equity interest in SZSY. As a result of the voting agreement, SRRE effectively holds 51% of the voting power of SZSY. On September 24, 2007, CY-SRRE sold 5% equity interest in SZXJY to a company owned by a director of SZXJY. Following the sale, CY-SRRE held 75% equity interest in SZXJY.

In October 2011, SHXJY purchased a 24% interest in Linyi Shang Yang Real Estate Consultation Company Limited (“LYSY”) and acquired approximately 103,385 square meters of land for the purpose of developing the land into villa-style residential housing. On March 6, 2012, SHXJY established a wholly-owned subsidiary, namely Linyi Rui Lin Construction and Design Company Limited (“LYRL”). SHXJY’s 24% equity interest in LYSY was then transferred to LYRL. On May 27, 2020, LYRL received 10% of the issued and outstanding shares of LYSY from Nanjing Longchang Real Estate Development Group. LYRL owned 34% of LYSY following the purchase. The Company and a shareholder of LYSY, Zhang Shu Qin, who holds 46% equity interest in LYSY, entered into a voting agreement that the Company is entitled to exercise the voting rights in respect of her 46% equity interest in LYSY. The Company effectively holds 80% voting rights in LYSY and therefore considers LYSY to be a subsidiary of the Company.

LIN RAY YANG Enterprise Ltd. (“LRY”), a wholly-owned subsidiary of SRRE, was established in the British Virgin Islands on November 13, 2003 as a limited liability company. On February 5, 2004, LRY established a wholly owned subsidiary, Shanghai Shang Yang Investment Management and Consulting Company Limited (“SHSY”) in the PRC as a limited liability company. On January 10, 2005, LRY and a PRC third party established a subsidiary, Suzhou Gao Feng Hui Property Management Company Limited (“SZGFH”), in the PRC, with LRY holding 80% of the equity interest in SZGFH. On May 8, 2006, LRY acquired 20% of the equity interest in SZGFH from the third party. Following the acquisition, LRY effectively held 100% of the equity interest in SZGFH. The Company sold SZGFH in 2017.

In 2011, we acquired 49% ownership interest in Wuhan Yuan Yu Long Property Development Company Limited (“WHYYL”). The purpose of this project company is for a development project in Wuhan.

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.

Table of Contents

In 2011, we acquired 49% ownership interest in Wuhan Yuan Yu Long Property Development Company Limited (“WHYYL”). The purpose of this project company is for a development project in Wuhan.

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 under which SRRE issued 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 was 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 under which SRRE issued 10 million shares of common stock to the beneficial shareholders, or their designees, in exchange for all outstanding capital stock of LRY. The transaction closed on October 5, 2004. Lin Chi-Jung was Chairman of the Board of Directors of SRRE, the President of LRY and the principal and controlling shareholder of Ace Develop. Regarding the 10 million shares of common stock of SRRE issued in this transaction, SRRE issued 8.5 million shares to Ace Develop, 750,000 shares to Planet Tech and 750,000 shares 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 shareholders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. Accordingly, the acquisition was accounted for as a “reverse acquisition” arrangement whereby CY-SRRE and LRY are deemed to have purchased SRRE. However, SRRE remained the legal entity and the Registrant for Securities and Exchange Commission reporting purposes.

On May 23, 2006, Sunrise Real Estate Development Group, Inc. changed its name to Sunrise Real Estate Group, Inc.

~~General Business Description~~Auditor

~~SRRE~~Our ~~went~~auditor, ~~through~~RH aCPA, ~~series~~with ofheadquarters ~~transactions~~at ~~leading~~38-25 toBell Blvd, Bayside, NY 11361, is an independent registered public accounting firm with the ~~completion~~PCAOB, and as an auditor of apublicly ~~reverse~~traded ~~merger~~companies onin ~~October 5~~the United States, ~~2004~~is subject to United States laws providing for regular inspections by the PCAOB to assess its compliance with the applicable professional standards. ~~Prior~~The PCAOB has access to inspect the ~~closing~~working papers of ~~the~~our ~~exchange~~auditor ~~agreements~~and ~~described~~our inauditor ~~“Corporate~~is ~~History”~~not ~~above,~~subject ~~SRRE~~to ~~was~~the andeterminations ~~inactive~~announced ~~“shell”~~by ~~company~~the PCAOB on December 16, 2021. ~~Following~~In ~~the~~addition, ~~closing~~on December 15, ~~SRRE~~2022, ~~through~~the ~~its~~PCAOB ~~two~~determined ~~wholly~~that ~~owned~~it ~~subsidiaries,~~has ~~CY-SRRE~~secured complete access to inspect and ~~LRY,~~investigate ~~has~~registered ~~engaged~~public accounting firms headquartered in mainland China and Hong Kong. The PCAOB has voted to vacate the ~~property~~previous ~~brokerage~~determinations ~~services~~to the contrary. Given that the accounting firm, ~~real~~RH ~~estate~~CPA, ~~marketing~~is ~~services~~a U.S. based entity, ~~property~~the ~~leasing~~Holding ~~services~~Foreign ~~and~~Companies ~~property~~Accountable ~~management~~Act ~~services~~will innot ~~the~~affect ~~PRC~~us.

~~The~~Dividends Company recognizes that in order to differentiate itself from the market, it should avoid direct competition with large-scale property developers who have their own marketing departments. Our objective is to develop a niche position with marketing alliances with mid-sized and ~~smaller~~Cash developers and become their outsourcing marketing and sales agents. This strategic plan is designed to expand our activities beyond our existing revenue base, enabling us to assume higher investment risk and giving us flexibility in collaborating with partnering developers. The plan is aimed at improving our capital structure, diversifying our revenue base, and creating higher values and equity returns.Transfers

~~SRRE~~We istransfer acash ~~Texas~~amongst ~~holding~~our ~~company~~subsidiaries and ~~conducts~~SRRE ~~business~~through ~~primarily~~the ~~through~~general ~~its~~banking ~~operating~~system as regulated by the Chinese government. We have been able to transfer cash from our subsidiaries to SRRE and distribute dividends to our shareholders in ~~China~~compliance with Chinese government restrictions on currency exchange and regulations. ~~The~~Chinese ~~Company’s~~regulations ~~principal~~generally ~~activities~~restrict ~~are~~cross ~~real~~border ~~estate~~fund ~~development~~transfers to dividend payments to upstream companies, such as SRRE, or a return of invested funds. Chinese companies can only transfer funds to their overseas parent companies through profit distribution and ~~property~~a ~~brokerage~~withdrawal ~~services~~of investments. Before distributing earnings overseas to SRRE, ~~including~~a ~~real~~subsidiary ~~estate~~needs ~~marketing~~to ~~services~~provide verification of its earnings, ~~property~~which ~~leasing~~usually ~~services;~~involves an auditor issuing an audit report, and ~~property~~the ~~management~~subsidiary ~~services~~must inpay the ~~PRC~~relevant income tax. ~~Our~~Profit ~~investors~~distributions ~~hold~~require ~~shares~~payment of ~~common~~a ~~stock~~capital ingains ~~SRRE~~tax, ~~the~~typically ~~Texas~~at ~~holding~~a ~~company~~rate of 10%.

WeIn doNovember ~~not~~2022, ~~have~~SHSY orpaid ~~intend~~a dividend to ~~set~~LRY upin ~~any~~the ~~subsidiary~~amount orof ~~enter~~200 ~~into~~million ~~any~~RMB. ~~contractual~~This ~~arrangements~~dividend toresulted ~~establish~~in a ~~variable~~capital ~~interest~~gains ~~entity~~tax ~~structure~~of ~~with~~20 ~~any~~million ~~entity in China~~RMB. WeAs ~~operate~~a ~~through our wholly-owned subsidiaries~~result, ~~CY-SRRE and~~ LRY. ~~CY-SRRE~~received ~~and~~180 ~~LRY~~million doRMB ~~not~~( ~~have~~$25,375,686) ~~operations~~net ~~themselves~~of ~~but~~taxes. ~~conduct~~On ~~operations~~March in2023, ~~Mainland~~LRY ~~China~~transferred ~~through~~$10,303,789 ~~their~~to ~~respective subsidiaries that are based in the PRC. CY-~~SRRE ~~operates~~to ~~through~~pay ~~its~~a ~~wholly~~dividend ~~owned~~to ~~subsidiary~~our shareholders, ~~SHXJY.~~which ~~LRY~~funds ~~operates~~initially ~~through~~came ~~its~~from ~~wholly owned subsidiaries,~~ SHSY. ~~SHXJY~~There ~~and SHSY~~ are ~~property~~no ~~agency~~Chinese ~~business~~tax ~~earning~~consequences ~~commission~~to ~~revenue~~pay ~~from~~dividends ~~marketing and sales services~~ to ~~developers.~~United ~~Our~~States ~~current ownership interests in our various subsidiaries and other entities are set forth in the below organizational chart:~~investors

Foreign Companies – Government Regulation

Table of Contents

~~Figure~~We and our subsidiaries do not have material contractual arrangements with one or more variable interest entities (VIEs) based in China. Pursuant to the Special Administrative Measures on the Access of Foreign Investment (Negative List) (2021 Edition), or the 2021 Negative List, jointly issued by the NDRC and the MOFCOM on December 27, 2021 and enforced on January 1:, ~~Company~~2022, ~~Organization~~the ~~Chart~~foreign investment related to real estate development does not fall within the category of industries in which foreign investment is restricted or prohibited.

1We have not sought and do not presently intend to seek foreign investors that would makes us subject to these regulations, so we do not have special restrictions for our operations, although they could have an impact should we decide to sell our properties to a foreign investor. ItAn ~~was~~initial ~~previously~~amount ~~known~~of asregistered ~~Shanghai~~capital ~~Shang~~is ~~Yang~~required ~~Real~~for ~~Estate~~all ~~Consultation~~companies Coregistered to commence business in China., ~~Limited~~All of SRRE’s subsidiaries have registered capital consistent with the existing regulations. The ~~company~~amount ~~changed~~of ~~its~~registered ~~name~~capital tois ~~Shanghai~~determined ~~Shang~~by ~~Yang~~us ~~Investment~~unless ~~Management~~the ~~and~~subsidiary ~~Consulting~~is ~~Company~~established ~~Limited~~for ona ~~May~~specific 28purpose, ~~2013~~such as the purchase of a specific property. For such purchase, the registered capital needs to equal the purchase price of the property intended to be purchased.

2.Foreign ~~Zhong~~companies Jioperating Puin FaChina ~~Real~~typically ~~Estate~~require Coapproval and authorization from the Chinese government to operate their businesses. China has a series of laws, ~~Ltd.~~regulations, ~~(“SHGXL”)~~and isapproval ~~consolidated~~procedures ~~into~~to manage and regulate the ~~Company’s~~business ~~financials~~activities ~~because~~of ~~the~~foreign ~~Company~~companies ~~controls~~within ~~the~~its ~~development~~borders. ~~rights~~Generally, ~~and~~foreign iscompanies ~~beneficiary~~need ofto ~~the~~establish ~~revenue~~branches, ~~that~~subsidiaries, ~~SHGXL~~or ~~generates~~representative offices in China and register them according to relevant regulations.

3. The ~~Company~~regulations ~~and a shareholder of LYSY, who holds 46% equity interest in LYSY, entered into a voting agreement~~ that ~~entitles~~are ~~the~~applicable ~~Company~~ to ~~exercise~~our ~~the~~operations voting rights in respect of her 46% equity interest in LYSY. The Company effectively holds 80% voting rights in LYSY and therefore considers LYSY a subsidiary of the Company. On May 27, 2020, LYRL received 10% of the issued and outstanding shares of LYSY from Nanjing Longchang Real Estate Development Group. LYRL owned 34% of LYSY following the purchase.require:

~~Our major business is real estate agency sales, real estate marketing services, real estate investments, property leasing services, property management services, and real estate development in the PRC~~1. ~~Additionally,~~Sufficient weregistered ~~have expanded our business to financial activities such as entity investment, fund management, and financial services~~capital. ~~The chart and accompanying narrative below provides the specific entities that conduct operations, as well as the approximate percentage of revenues generated by such entities:~~

2. Tax registration and payment of taxes.

3. Various licenses and certificates applicable to real estate development companies such as us, including:

(a)Real Estate Development Certificate.

(b)Business License.

(c)Land Approval Documents issued by the land management department.

(d)Land Use Permit.

(e)Construction Project Planning Permit.

(f)Construction Project Construction Permit.

(g)Project Investment Permit.

(h)Commercial Housing Presale Permit.

The specific licenses required by real estate development companies may vary depending on factors such as the region, project scale, and type. Our subsidiaries have all of the required permissions and approvals, including approvals and permissions specifically required for subsidiaries of foreign holding companies, and we have not been denied any permissions or approvals. We and our subsidiaries are not required to obtain approvals from the China Securities Regulatory Commission (CSRC), Cyberspace Administration of China (CAC), or any governmental agency for their operations other than those that provide the approvals listed above.

If we do not maintain the required approvals or permissions to operate the business, consequences could include a government shutdown of the specific operations that are not in compliance. Such event will adversely affect us and our subsidiaries’ ability to do business in China.

Table of Contents

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Lin Ray Yang Enterprise Ltd.

Holding company

British Virgin Islands

Sunrise Real Estate Group Inc.

USA

100

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Sunrise Real Estate Development Group Inc.

Holding company

Cayman Islands

Sunrise Real Estate Group Inc.

USA

100

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Shanghai Xin Ji Yang Real Estate Consultation Co., Ltd

Consultation service

China

Sunrise Real Estate Development Group Inc.

Cayman Islands

100

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Shanghai Shangyang Investment Management and Consulting Co., Ltd

Consultation service

0.75% (USD599,199)

China

Lin Ray Yang Enterprise Ltd.

British Virgin Islands

100

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Zhong Ji Pu Fa Real Estate Co., Ltd

Property Development

0.51% (USD411,660)

China

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Huai’an Zhan Bao Property Investment Co., Ltd

Holding Company

(0%)

China

Lin Ray Yang Enterprise Ltd.

British Virgin Islands

78.46

Zhan Li (HK) Ltd.

Hong Kong

Beijing Zuitaoran Fashion Ltd.

China

Shanghai Ba A Management Centre (Limited Partnership)

China

0.77

Fang Ken Management Centre (Limited Partnership)

China

0.77

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Huai‘an Tianxi Real Estate Development Co., Ltd

Property Development

98.65% (USD78,940,077) (

China

Huai’an Zhan Bao Property Investment Co., Ltd

China

100

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Shanghai Ruijian Design Co., Ltd

Consultation service

China

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

100

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Linyi Ruilin Design Co., Ltd

Consultation service

China

Shanghai Ruijian Design Co., Ltd

China

100

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Place ofOrganizationor Citizenship

Linyi Shangyang Real Estate Development Co., Ltd

Property development

China

Zhang Shu Qing

Taiwan

Linyi Ruilin Design Co., Ltd

China

Chen Jia Wei

Taiwan

Huang Xin Hua

Taiwan

Guo Wei Chun

Taiwan

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Suzhou Xin Ji Yang Real Estate Consultation Co., Ltd

Consultation service,

0.09%(USD69,252)

China

Shanghai Xin Ji Yang Real Estate Consultation Co., Ltd

China

Jacky Pan Investment Inc

British Virgin Islands

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Suzhou Shang Yang Real Estate Consultation Co., Ltd

Consultation service,

Suzhou Xin Ji Yang Real Estate Consultation Co., Ltd

China

Shanghai Xin Ji Yang Real Estate Consultation Co., Ltd

China

In addition, if the industry in which we operate initially did not require government approval to conduct business, subsequent policy changes necessitate governmental approval, we are prepared to take the following steps:

1. Understand Policy Requirements: Thoroughly research new regulations and policies to understand the specific requirements and approval procedures that the government imposes on the industry.

2. Ensure Compliance Adjustments: Adjust our operations according to policy requirements to ensure compliance with relevant regulations. This may involve improving management systems, enhancing safety standards, and implementing environmental protection measures.

3. Apply for Licenses or Approval Documents: Prepare the necessary application materials according to government procedures and submit them to the relevant departments promptly. Ensure that the application materials are accurate and complete to increase the likelihood of approval.

4. Communicate with Government Departments: Actively communicate with relevant government departments to understand the progress of approvals, promptly address potential issues, and seek government support and guidance.

5. Train Employees: Ensure that employees understand the new policy requirements by providing relevant training to ensure that our operations comply with regulations.

6. Continuously Monitor Policy Changes: Establish an effective policy monitoring mechanism to stay informed about dynamic changes in industry policies, enabling us to prepare in advance and adjust its business strategies accordingly.

Adapting to policy changes may require time and effort but operating in compliance is a crucial prerequisite for ensuring our sustainable development. If we can respond actively and make timely adjustments, there is an opportunity to smoothly obtain necessary licenses or approval documents and continue operating legally.

Risks Related to Doing Business in China

All of our business operations are in China. Accordingly, we face various legal and operational risks and uncertainties under the complex and evolving PRC laws and regulations, including the following:

●

Changes in Chinese political policies and economic and social policies or conditions may materially and adversely affect our business, results of operations and financial condition and may result in our inability to sustain our growth and expansion strategies.

●

Uncertainties with respect to the interpretation and enforcement of Chinese laws, rules and regulations could have a material adverse effect on us.

●

Changes in political, business, economic and trade relations between the United States and China may have a material adverse impact on our business, results of operations and financial condition.

●

Fluctuation in the value of RMB may result in foreign currency exchange losses.

●

The increasing focus on environmental sustainability issues may create operational challenges for us, increase our costs and harm our reputation.

●

Interventions in or the imposition of restrictions and limitations by the PRC government on currency conversion and payments of foreign currency and RMB out of mainland China may limit our ability to utilize our cash balances effectively, including making funds held by our China-based subsidiaries unavailable for use outside of mainland China, which could limit or eliminate our ability to pay dividends and affect the value of your investment.

●

Changes in the laws and regulations of China or noncompliance with applicable laws and regulations may have a significant impact on our business, results of operations and financial condition, and may cause the value of our securities to decline.

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Jacky Pan Investment Inc

British Virgin Islands

12.5

Sunrise Real Estate Development Group Inc.

Cayman Islands

12.5

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Shanghai Xin Ji Yang Real Estate Brokerage Co., Ltd

Consultation service,

China

Suzhou Xin Ji Yang Real Estate Consultation Co., Ltd

China

Jacky Pan Investment Inc

British Virgin Islands

Sunrise Real Estate Development Group Inc.

Cayman Islands

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Sanya Shang Yang Real Estate Consultation Co., Ltd

Consultation service,

China

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

100

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Wuhan Yuan Yu Long Real Estate Dev. Co., Ltd.

Property development

China

Sanya Shang Yang Real Estate Consultation Co., Ltd

China

Wang Zhi Qing

China

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Shanghai Huitian Wealth Mgmt. Co., Ltd

Consultation service,

China

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

Pan Jian

China

Wang Zhan

China

Company

Operation

% of Rev Basedon 2022

Place ofOrganization

Shareholder(s)

Place ofOrganizationor Citizenship

%Ownership

Shanghai Daerwei Trading Co., Ltd

Sales & wholesale.

China

Shanghai Guangpeng Investment & Managament Co., Ltd

China

35.18

Shanghai Shenji Biological Tech. Co., Ltd

China

31.86

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

12.61

Linyi Ruilin Design Co., Ltd

China

7.3

Beijing Zuitaoran Clothes Co., Ltd

China

4.7

Xiamen Ruixu Investment Partnership (Limited Partnership)

China

2.37

Tao Hong

China

1.93

Kuang Gui Yuan

China

1.24

Xiamen Xuyao Investment Partnership (Limited Partnership)

China

1.13

Wang Wenhua

China

0.74

Shanghai YuanChong Managment & Consulting Partnership (Limited Partnership)

China

0.56

Shanghai Xuhao Management & Consulting Partnership (Limited Partnership)

China

0.39

●

We rely to a significant extent on dividends and other distributions on equity paid by our principal operating subsidiaries in China to fund offshore cash requirements.

● Under the EIT Law, if we are classified as a China resident enterprise for Chinese enterprise income tax purposes, such classification would likely result in unfavorable tax consequences to us and our non-Chinese stockholders.

~~For~~● ~~the~~We ~~year~~and ~~ended~~our ~~December~~stockholders ~~31,~~face ~~2022,~~uncertainty ~~the~~with ~~Company’s~~respect ~~operating~~to ~~revenue~~indirect ~~was~~transfers ~~$80,020,189,~~of ~~which~~equity ~~was~~interests ~~generated~~in China resident enterprises through transfer of non-Chinese-holding companies. Enhanced scrutiny by the ~~following~~Chinese ~~operating~~tax ~~subsidiaries:~~authorities may have a negative impact on potential acquisitions and dispositions we may pursue in the future.

a.● ~~Huai’an~~Given ~~Tianxi~~the ~~Real~~lack ~~Estate~~of ~~Development~~reciprocity ~~Co.,~~and ~~Ltd~~treaties ~~(“HATX”),~~ in ~~which~~China ~~SRRE~~and ~~has~~the afact ~~78.46%~~that ~~indirect~~all ~~ownership~~of ~~through~~our ~~its~~directors ~~subsidiary,~~and ~~conducts~~officers ~~real~~reside ~~estate~~in ~~development and contributed $78~~China,~~940,077~~ ~~(approximately~~there ~~98.65%~~may ofbe ~~SRRE’s~~difficulties ~~total operating revenue~~ in ~~2022).~~effecting ~~HATX~~service isof ~~100%~~legal ~~owned~~process, byconducting ~~Huaian Zhanbao Industrial Co.~~investigations, ~~Ltd.~~collecting ~~(“HAZB”)~~evidence, ~~which~~enforcing isforeign ~~78.46%~~judgments ~~owned~~or bybringing ~~Lin~~original ~~Ray~~actions ~~Yang~~in ~~Enterprise~~China ~~Ltd.,~~and ~~10%~~there ~~owned~~are bysignificant ~~Zhan~~costs Liand ~~(HK)~~time ~~Ltd.,~~constraints ~~10%~~associated ~~owned~~with byattempting ~~Beijing~~to ~~Zui~~enforce ~~Tao~~civil ~~Ran~~liabilities ~~Fashion~~in ~~Ltd,~~China ~~0.77%~~based ~~owned~~on byUnited ~~Shanghai~~States Baor Aother ~~Management~~foreign ~~Centre~~laws ~~(Limited~~against ~~Partnership),~~us and 0our management.~~77%~~ ~~owned~~See by“Directors, ~~Fang~~Executive ~~Ken~~Officers ~~Management~~and ~~Centre~~Corporate ~~(Limited Partnership),~~Governance”

●

Chinese regulation of loans to, and direct investment in, Chinese entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from making loans or additional capital contributions to our Chinese subsidiaries, which may materially and adversely affect our liquidity and our ability to fund and expand our business.

●

Regulations regarding acquisitions may impose significant regulatory approval and review requirements, which could make it more difficult for us to pursue growth through acquisitions.

●

The PRC government may intervene or influence operations at any time, which could result in a material change in our operations and or the value of our securities. See “Risk Factors - There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.”

●

The PRC government has significant oversight and discretion to exert control over offerings of our securities conducted outside of China and foreign investment in China-based issuers and may limit or completely hinder our ability to offer securities to investors, which may cause the value of such securities to significantly decline or be worthless.

For a more complete discussion of the above summary of risk factors, please see “Risk Factors – Risks Relating to the Peoples Republic of China.

General Business Description

SRRE went through a series of transactions leading to the completion of a reverse merger on October 5, 2004. Prior to the closing of the exchange agreements described in “Corporate History” above, SRRE was an inactive “shell” company. Following the closing, SRRE, through its two wholly owned subsidiaries, CY-SRRE and LRY, has engaged in the property development, property leasing services and property management services in the PRC.

The Company recognizes that in order to differentiate itself from the market, it should avoid direct competition with large-scale property developers who have their own marketing departments. Our objective is to develop a niche position with marketing alliances with mid-sized and smaller developers and become their outsourcing marketing and sales agents. This strategic plan is designed to expand our activities beyond our existing revenue base, enabling us to assume higher investment risk and giving us flexibility in collaborating with partnering developers. The plan was aimed at improving our capital structure, diversifying our revenue base, and creating higher values and equity returns.

SRRE operates through its wholly owned subsidiaries, CY-SRRE and LRY. CY-SRRE and LRY do not have operations themselves but conduct operations in Mainland China through their respective subsidiaries that are based in the PRC. CY-SRRE operates through its wholly owned subsidiary, SHXJY. LRY operates through its wholly owned subsidiaries, SHSY. SHXJY and SHSY are property agency business earning commission revenue from marketing and sales services to developers. Our company organization chart is as follows:

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b.Figure ~~The~~1: ~~financial~~Company ~~information~~Organization of Zhong Ji Pu Fa Real Estate Co., Ltd. (“SHGXL”) is consolidated into the SRRE’s financial statements because SRRE controls the development rights and is the beneficiary of the revenue that SHGXL generates. SHGXL conducts real estate management and contributed $411,660 (approximately 0.51% of SRRE’s total operating revenue); Chart

c1. ~~Shanghai~~It ~~Shang Yang Investment Management and Consultation Company Limited (“SHSY”) has limited business operations. In 2021, SHSY’s revenue~~ was ~~mostly~~previously ~~rental~~known ~~income,~~as ~~interest~~Shanghai ~~income~~Shang ~~and other minor revenue, and it contributed $599,199 (approximately 0.75% of SRRE’s total operating revenue in 2021). SHSY is 100% owned by Lin Ray~~ Yang ~~Enterprise Ltd. (“LRY”), which is 100% owned by SRRE. Suzhou Xin Ji Yang~~ Real Estate Consultation ~~Company~~Co., Limited. ~~(“SZXJY”),~~The incompany ~~which~~changed ~~SRRE has a 75% indirect ownership interest through~~ its ~~subsidiary~~name to Shanghai ~~Xin~~Shang Ji Yang ~~Real~~Investment ~~Estate~~Management ~~Consultation~~and Consulting Company Limited ~~(“SHXJY”),~~on ~~conducts~~May ~~real estate sales and contributed $69~~28,~~252~~ ~~(approximately 0~~2013.~~09% of SRRE’s total operating revenue in 2021). SZXJY is 75% owned by SHXJY, and 25% owned by Jacky Pan Investment Inc.~~

~~For~~2. ~~the~~Zhong ~~fiscal~~Ji ~~year~~Pu ~~ended~~Fa ~~December~~Real ~~31,~~Estate ~~2022~~Co., ~~none~~Ltd. of(“SHGXL”) ~~our~~is ~~net~~consolidated ~~revenue~~into ~~was~~the ~~generated~~Company’s ~~from~~financials ~~our~~because ~~brokerage~~the ~~operations.~~Company ~~For~~controls ~~these~~the ~~services,~~development werights ~~earned~~and ais ~~commission~~beneficiary ~~fee~~of ~~calculated~~the asrevenue athat ~~percentage~~SHGXL ofgenerates. Given the ~~sales~~inability ~~prices.~~of Wecompanies ~~have~~to ~~focused~~buy ~~our~~and ~~sales~~sell onland ~~the~~rights ~~entire~~from ~~China~~another ~~market~~company in China, proceeding with aSHGXL’s ~~particular~~project ~~focus~~required onprofit-sharing agreements. According to the ~~second-tier~~terms ~~cities.~~of Tothe ~~expand~~contract, our ~~business~~subsidiary ~~agencies,~~pays wethe ~~have~~cost ~~established~~of ~~subsidiaries~~the ~~and~~land, ~~branches~~invests in ~~Shanghai~~development, ~~Suzhou~~sales, and ~~Wuhan~~taxation, and ultimately retains all profits obtained. Neither SHGXL nor any of our subsidiaries are VIEs.

~~Since~~3. weThe ~~started~~Company ~~our~~and ~~agency~~a ~~sales~~shareholder ~~operations~~of ~~in 2001~~LYSY, wewhich ~~have~~holds ~~established~~46% aequity ~~reputation~~interest asin aLYSY, ~~sales~~entered ~~and~~into ~~marketing~~a ~~agency~~voting ~~for~~agreement ~~new~~that ~~projects.~~the ~~With~~Company ~~our~~is ~~accumulated~~entitled ~~expertise~~to ~~and~~exercise ~~experience,~~the wevoting ~~intend~~rights toin ~~take~~respect aof ~~more~~her ~~aggressive~~46% ~~role~~equity byinterest ~~participating~~ in ~~property investments~~LYSY. WeThe ~~plan~~Company toeffectively ~~select~~holds ~~property~~80% ~~developers~~voting ~~with~~rights ~~outstanding~~in ~~qualifications~~LYSY asand ~~our~~therefore ~~strategic~~considers ~~partners,~~LYSY ~~and~~a ~~continue~~subsidiary toof ~~build~~the ~~strength~~Company. inOn ~~design~~May 27, ~~planning~~2020, ~~positioning~~LYRL ~~and~~received ~~marketing~~10% ~~services.~~of Wethe ~~subsequently~~issued ~~phased~~and ~~out~~outstanding shares of ~~the~~LYSY ~~agency~~from ~~sales~~Nanjing ~~operations~~Longchang ~~where~~Real weEstate noDevelopment ~~longer~~Group. ~~have~~LYRL ~~this~~owned ~~business~~34% ~~unit~~of LYSY following the purchase.

SHDEW was established in June 2013 as a skincare and cosmetic company. We own 19.91% of the common stock of SHDEW through our subsidiaries SHSY and LYRL. As the Company does not have significant influence in SHDEW and the change of ownership to 19.91% from 20.38% due to certain SHDEW employee stock bonus having vested in December 2019, we changed our accounting method for the SHDEW investment from the equity method to the alternative measurement. The company has made progress in its operations, becoming an ecommerce business with its own app. SHDEW is developing its own skincare products as well as solidifying its position in the ecommerce platform.

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Our major business is real estate investments, property leasing services, property management services, and real estate development in the PRC. Additionally, we have expanded our business to financial activities such as entity investment, fund management, and financial services. The chart and accompanying narrative below provides the specific entities that conduct operations, as well as the approximate percentage of revenues generated by such entities:

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Lin Ray Yang Enterprise Ltd.

Holding company

British Virgin Islands

Sunrise Real Estate Group Inc.

USA

100

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Sunrise Real Estate Development Group Inc.

Holding company

Cayman Islands

Sunrise Real Estate Group Inc.

USA

100

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Shangyang International PTE. LTD.

Holding company

Singapore

Sunrise Real Estate Group Inc.

USA

100

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Shanghai Xin Ji Yang Real Estate Consultation Co., Ltd

Consultation service

China

Sunrise Real Estate Development Group Inc.

Cayman Islands

100

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Shanghai Shangyang Investment Management and Consulting Co., Ltd

Consultation service

2.38% (USD591,551)

China

Lin Ray Yang Enterprise Ltd.

British Virgin Islands

100

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Zhong Ji Pu Fa Real Estate Co., Ltd

Property Development

2.3% (USD571,437)

China

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Huai’an Zhan Bao Property Investment Co., Ltd

Holding Company

(0%)

China

Lin Ray Yang Enterprise Ltd.

British Virgin Islands

78.46

Zhan Li (HK) Ltd.

Hong Kong

Beijing Zuitaoran Fashion Ltd.

China

Shanghai Ba A Management Centre (Limited Partnership)

China

0.77

Fang Ken Management Centre (Limited Partnership)

China

0.77

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Huai’an Tianxi Real Estate Development Co., Ltd

Property Development

95.07% (USD23,610,056) (

China

Huai’an Zhan Bao Property Investment Co., Ltd

China

100

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Shanghai Ruijian Design Co., Ltd

Consultation service

China

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

100

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Linyi Ruilin Design Co., Ltd

Consultation service

China

Shanghai Ruijian Design Co., Ltd

China

100

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Place of
Organization
or Citizenship

Linyi Shangyang Real Estate Development Co., Ltd

Property development

China

Zhang Shu Qing

Taiwan

Linyi Ruilin Design Co., Ltd

China

Chen Jia Wei

Taiwan

Huang Xin Hua

Taiwan

Guo Wei Chun

Taiwan

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Suzhou Xin Ji Yang Real Estate Consultation Co., Ltd

Consultation service,

0.25%(USD60,819)

China

Shanghai Xin Ji Yang Real Estate Consultation Co., Ltd

China

Jacky Pan Investment Inc

British Virgin Islands

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Suzhou Shang Yang Real Estate Consultation Co., Ltd

Consultation service,

Suzhou Xin Ji Yang Real Estate Consultation Co., Ltd

China

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Shanghai Xin Ji Yang Real Estate Consultation Co., Ltd

China

Jacky Pan Investment Inc

British Virgin Islands

12.5

Sunrise Real Estate Development Group Inc.

Cayman Islands

12.5

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Shanghai Xin Ji Yang Real Estate Brokerage Co., Ltd

Consultation service,

China

Suzhou Xin Ji Yang Real Estate Consultation Co., Ltd

China

Jacky Pan Investment Inc

British Virgin Islands

Sunrise Real Estate Development Group Inc.

Cayman Islands

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Sanya Shang Yang Real Estate Consultation Co., Ltd

Consultation service,

China

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

100

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Wuhan Yuan Yu Long Real Estate Dev. Co., Ltd.

Property development

China

Sanya Shang Yang Real Estate Consultation Co., Ltd

China

Wang Zhi Qing

China

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Shanghai Huitian Wealth Mgmt. Co., Ltd

Consultation service,

China

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

Pan Jian

China

Wang Zhan

China

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Shanghai Daerwei Trading Co., Ltd

Sales & wholesale.

China

Shanghai Guangpeng Investment & Managament Co., Ltd

China

35.18

Shanghai Shenji Biological Tech. Co., Ltd

China

31.86

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

12.61

Linyi Ruilin Design Co., Ltd

China

7.3

Beijing Zuitaoran Clothes Co., Ltd

China

4.7

Xiamen Ruixu Investment Partnership (Limited Partnership)

China

2.37

Tao Hong

China

1.93

Kuang Gui Yuan

China

1.24

Xiamen Xuyao Investment Partnership (Limited Partnership)

China

1.13

Wang Wenhua

China

0.74

Shanghai YuanChong Managment & Consulting Partnership (Limited Partnership)

China

0.56

Shanghai Xuhao Management & Consulting Partnership (Limited Partnership)

China

0.39

Company

Operation

% of Rev Based
on 2023

Place of
Organization

Shareholder(s)

Place of
Organization
or Citizenship

%
Ownership

Shanghai Daerwei Industry Co., Ltd

Sales & wholesale.

China

Zhan Li (HK) Ltd.

Hong Kong, China

41.91

Shanghai Tingran Tech. Development Co., Ltd

China

Shanghai Shangyang Investment Management and Consulting Co., Ltd

China

19.58

Shanghai Tingyang Commercial Consulting Partnership (Limited Partnership)

China

0.95

Shanghai Huotiancao Info. Tech. Co., Ltd.

China

0.79

Shanghai Fangken Management Central Partnership (Limited Partnership)

China

0.77

We started our agency sales operations in 2001 but have phased out of the agency sales operations where we no longer have this business unit. We are currently focused on real estate development and property management.

SHDEW was established in June 2013 as a skincare and cosmetic company. We own 19.91% of the common stock of SHDEW. As the Company does not have significant influence in SHDEW and the change of ownership to 19.91% from 20.38% due to certain SHDEW employee stock bonus having vested in December 2019, we changed our accounting method for the SHDEW investment from the equity method to the alternative measurement.

Business Activities

Our main operating subsidiary, SHSY, has real estate developments for residential properties as well as property management and leasing. We also have developed a network of landowners and developers, allowing us to explore opportunities in property investments.

In October 2011, we established LYSY and own 34% of the company. During the first quarter of 2012, we acquired approximately 103,385 square meters for the purpose of developing villa-style residential housing. The LYSY project has divided into three phases at this moment. Phase 1 has completed construction of 121 units in May 2015 and sold 119 units out of all 121 units at March 15, 2023. Phase 2 was divided into north and south area and completed construction of 84 units at the end of 2020. All 84 units have been sold during phase 2 at March 15, 2023. Phase 3 began construction in the first quarter of 2021 and pre-sold 23 units out of 51 units at March 15, 2023. In September 2020, the Company expanded the Linyi project by purchasing an additional 54,312 square meters for 228 million RMB for future development.9

Real Estate Development

In October 2011, we established LYSY and own 34% of the company. During the first quarter of 2012, we acquired approximately 103,385 square meters for the purpose of developing villa-style residential housing. The LYSY project has divided into three phases at this moment. Phase 1 has completed construction of 121 units in May 2015 and sold 119 units out of all 121 units at March 15, 2023. Phase 2 was divided into north and south area and completed construction of 84 units at the end of 2020. all 88 units have been sold during phase 2 at March 15, 2023. Phase 3 began construction in first quarter of 2021, and pre-sold 23 units out of 51 units in Phase 3 as of March 15, 2023. In September 2020, the Company expanded the Linyi project by purchasing additional 54,312 square meters in the amount of 228 million RMB for future development.

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~~purchased~~Real ~~100%~~Estate of HATX and its land usage rights to the Huai’an property. The Huai’an project, named Tianxi Times, started its first phase development in early 2019 with a gross floor area (“GFA”) of 82,218 sqm totaling 679 units, and started its second phase in 2020 with a GFA of 99,123 sqm totaling 873 units. As of March 31, 2023, the Company sold 669 units, respectively, out of 679 units of the first phase and sold and pre-sold 177 and 266 units out of 873 of the second phase.Development

In October 2011, we established LYSY and own 34% of the company. During the first quarter of 2012, we acquired approximately 103,385 square meters for the purpose of developing villa-style residential housing. The LYSY project has divided into three phases at this moment. Phase 1 has completed construction of 121 units in May 2015 and sold 119 units out of all 121 units. As of March 28, 2024. Phase 2 was divided into north and south area and completed construction of 84 units at the end of 2020. All 84 units have been sold during phase 2 as of March 28, 2024. Phase 3 began construction in the first quarter of 2021 and pre-sale 24 units out of 51 units. As of March 28, 2024. In September 2020, the Company expanded the Linyi project by purchasing an additional 54,312 square meters for 228 million RMB for future development.

In October 2018, HATX purchased the property in Huai’an, Qingjiang Pu district with an area of 78,030 square meters (“sqm”). In December 2018, we established HAZB with a 78.46% ownership for the purpose of real estate investment, and in March 2019, HAZB purchased 100% of HATX and its land usage rights to the Huai’an property. The Huai’an project, named Tianxi Times, started its first phase development in early 2019 with a gross floor area (“GFA”) of 82,218 sqm totaling 679 units, and started its second phase in 2020 with a GFA of 99,123 sqm totaling 873 units. As of March 28, 2024, the Company sold 665 units, respectively, out of 679 units of the first phase and sold 498 units out of 873 of the second phase.

Property Management and Leasing

The Company has two floors of office space encompassing 5,152 square meters in Huilong Tower in Suzhou. We manage these two floors to lease out to prospective tenants.

We ~~also~~ do leasing for the unsold units of the GXL project as stated above. Total leasing area for the GXL building is 3,611 square meters.

We also do leasing for the unsold commercial property of the HATX project. Total leasing area for the property is 8,268 square meters.

Mainland China’s Property Sector

The industry’s macro environment is improving, and the property sector is gradually becoming a more regulated market. Stable economic growth provides a solid and secure base for investment returns in the property sector.

GDP Growth of PRC for the period of ~~2018~~2019 through ~~2022~~2023:


	GDP GROWTH
2018		6.6	%
2019		6.1	%
2020		2.3	%
2021		8.4	%
2022		3.0	%
2023		5.2	%

Source: National Bureau of Statistics of China

Government Regulation

Regulations on Foreign-Invested Real Estate Enterprise

Industrial Restriction

Pursuant to the Special Administrative Measures on the Access of Foreign Investment (Negative List) (2021 Edition), or the 2021 Negative List, jointly issued by the NDRC and the MOFCOM on December 27, 2021 and enforced on January 1, 2022, the foreign investment related to real estate development does not fall within the category of industries in which foreign investment is restricted or prohibited. The 2020 Negative List enumerates the restricted industries and the prohibited industries in relation to foreign investment, and the industries, such as real estate development industry, which do not fall within the 2021 Negative List, shall be administered under the principle of equal treatment to domestic and foreign investment. On March 15, 2019, the Foreign Investment Law of the People’s Republic of China, or the “FIL”, was issued by SCNPC and took effect on January 1, 2020, which also provides that the industries in which foreign investment is not restricted and prohibited shall be administered under the principle of equal treatment to domestic investment, however, where verification and record-filing of a foreign investment are required, relevant provisions of the State shall still be followed.

Considering the increasing foreign investment in the real estate industry in recent years, the MOHURD, the MOFCOM, the NDRC, the PBOC, the SAIC, and the SAFE jointly implemented the Opinions on Regulating the Entry and Administration of Foreign Investment in the Real Estate Market, or Circular No. 171, on July 11, 2006 and amended on August 19, 2015, which may impact foreign investment in the real estate industry in the following areas:

● Foreign-invested real estate enterprises, or the FIREEs must have a registered capital in amounts pursuant to and consistent with existing regulations.

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● Upon payment of the land use rights grant premium, the FIREE can apply to the land administration authority for a land use rights certificate. Upon obtaining the land use rights certificate, an FIREE may then obtain a recertification of its existing Foreign-Invested Enterprises Approval Certificate, or FIEAC, and the Business License, with the same validity period as that of such land use rights certificate, following which, the FIREE may apply to the tax administration for tax registration purposes.

● When a foreign investor merges with a domestic real estate enterprise, or acquires an FIREE’s equity or project, the investor is required to submit a guarantee which ensures the compliance with the provisions of the land use rights grant contract, construction site planning permit, construction work planning permit, the land use rights certificate, the modification certification issued by the construction authorities, and the tax payments certification issued by the relevant tax authorities.

● Foreign investors which merge with domestic real estate development enterprises by share transfers or other methods, or which acquire the equity of a PRC party in joint venture enterprises, must allocate their employees appropriately, deal with bank debts and settle the lump sum payment of the transfer price through self-owned funds. However, a foreign investor with an unfavorable record may not be allowed to conduct any of the aforesaid activities.

● FIREEs which have failed to obtain a land use rights certificate, or which have under 35% of the total capital required for the project, will not be allowed to obtain a loan in or outside China, and foreign exchange administration departments will not approve any settlement of foreign loans by such enterprises.

● Any Chinese or foreign investors in an FIREE may not guarantee fixed profit returns or provide other arrangements to the same effect for any party in any form.

Circular No. 50

On May 23, 2007, the MOFCOM and the SAFE issued the Notice on Further Strengthening and Standardizing the Approval and Administration of Foreign Direct Investments in Real Estate Enterprise, or Circular No. 50, and amended on October 28, 2015. Some of the key developments in this area are as follows:

● the local governments/authorities that approve FIREE establishments are now required to file such approvals with the MOFCOM;

● prior to establishing an FIREE, foreign investors are required to obtain land use rights or the ownership of a real estate project, or the investor should have entered into an indicative land grant contract or indicative project purchase agreement with the land administrative department, developer of the land or owner of the property;

● the practice of allowing foreign investors taking over local project companies by way of roundtrip investment is strictly controlled; and

● foreign-invested enterprise that intends to engage in real estate development, or an existing FIREE which intends to undertake a new real estate development project, must first apply to the relevant authorities for such business scope and scale expansion in accordance with laws and regulations on foreign investments.

Circular 122

On August 19, 2015, six PRC regulatory agencies, including the MOHURD and the SAFE, implemented the Notice on Adjusting Policies on Entry and Administration of Foreign Investment in the Real Estate Market, or Circular 122, among other things, according to which the requirement of full payment of its capital contributions of FIREE no longer exists when the FIREE applies to domestic loans, overseas loans and settlement of foreign exchange loans, and the FIREE may directly apply to the bank for the registration of foreign exchange regarding foreign direct investment in accordance with the relevant rules on foreign exchange administration. Similarly, Circular 122 does not de-regulate the Chinese real estate market. The previous material requirements for granting approval under Circular No. 171 and Circular No. 50 still apply.

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Other Regulations

The State Taxation Administration issued the Regulation of Land Value-added Tax Clearing and Administration in May 2009, effective on June 1, 2009. It requires developers to clear the land value-added tax, which have completed development projects and have finished sale, or have sold development projects under construction, to clear the land value-added tax.

In December 2009, the Ministry of Finance, Ministry of Land and Resources, Ministry of Supervision, the Central Government, and five other agencies required issued “Notice Regarding Improving Land Sales and Responsible Management” and required that the initial payment of land purchases be increased to 50% of the purchase price and that the entire purchase price be paid in full within the year. Prior to the announcement, the initial payment was around 20% to 30% of the purchase price.

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On January 1, 2010, the Ministry of Finance and the State Administration of Taxation re-imposed the business tax on total proceeds from the resale of certain residential properties held for less than five years. The China Banking Regulatory Authority withdrew its earlier policy and re-imposed a minimum of 40% down payment requirement for mortgages for second housing units purchased by families. On March 8, 2010, the Ministry of Land and Resources issued a circular to further strengthen the supervision on land supply, requiring a real estate developer to pay at least 50% of the land premium within one month and 100% within one year after the land use right contract is executed. On April 17, 2010, the State Council issued the Circular on Firmly Restraining Soaring Housing Prices in Certain Cities. Pursuant to this circular,

●

A down payment must be no less than 30% of the purchase price for first self-use housing unit purchases by a family with a gross construction area of more than 90 square meters;

● The minimum down payment for the second housing unit purchased by a family is increased from 40% to 50% and the loan interest rate must be no less than 110% of benchmark lending interest rate;

●

Down payment for the third or additional housing unit purchased by any family and the loan interest rate must be further increased significantly based on the rate for the first and second housing units, as determined by commercial banks based on their assessment of the risks;

●

Commercial banks may suspend extending loans to families for their purchases of the third or additional housing units in regions where commercial housing unit prices are too high or have risen too fast or supply of housing units is insufficient. The banks may also suspend extending loans to individuals for their purchase of housing units outside of their registered residence if they cannot furnish evidence of their tax or social insurance premium payment for at least one year locally in the region where the subject housing units are located; and

●

Local governments are allowed to limit the total number of housing units one can purchase in certain period in light of the local situation.

On January 10, 2010, the government established eleven measures to strengthen management of the real estate market to address rising real estate prices. The measures called for an increasing supply of low-cost houses for low-income families and common residential houses, encouraging reasonably priced house buying while limiting purchases for speculation and investment, strengthening real estate project loan risk management and market supervision, speeding up construction of residential housing projects for low-income households, and specifying responsibilities of local governments.

In January 2011, the State Council released an additional eight new measures to put downward pressure on property prices by:

Requiring local governments to set housing price targets in proportion to local income levels for 2011;

Requiring a business tax for housing sales within 5 years of purchase must be levied on total sales value;

Strengthening the management of land supply for housing;

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Imposing purchase restrictions in all large and medium-sized cities. Families already owning a residential property are allowed to buy only one more, while those already owning two or more properties are prohibited from purchasing additional properties;

Accelerating the construction of social security residential housings;

Providing that the down payment ratio for second-home purchases must not be less than 60%, up from 50%, with an interest rate at least 1.1 times of the benchmark rate;

Improving guidance for the media’s housing market coverage;

Providing for implementation & accountability for local governments over the housing price control targets.

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In May 2011, the National Development and Reform Commission (“NDRC”) began the “one house, one price” policy which requires developers to enhance its disclosure of the residential properties’ offering prices and available supply volume. This policy is designed to prevent developers from posting false supply volume and prices to fuel speculative price volatility.

In July 2011, China’s State Council declared that it will continue to implement tightening policies and expand the housing purchase restrictions to second and third-tier cities.

In late February and March 2013, the PRC government issued the “New Five Policies” for administration of the housing market and detailed implementation rules, which signified the PRC government’s strong determination to curb the increase in housing prices by requiring more stringent implementation of the housing price control measures. For example, in the cities where there are existing restrictions on housing sale, if the housing prices are rising fast due to insufficient local housing supply, the local governments are required to take more stringent measures to restrict housing units from being sold to those households that own more than one housing unit. In these cities, the minimum down payment for the second housing unit purchased by a household may be further increased from 60% and the loan interest rate may be raised to be more than 110% of benchmark lending interest rate, as the local housing price control measures require. The New Five Policies also reiterated and emphasized the implementation of the 20% income tax on capital gain generated from housing unit sale. Following the request of the central government, Beijing, Shanghai and other major cities in China have announced detailed regulations to implement the New Five Policies in late March 2013 to further cool down the local real estate markets.

In July 2012, the Ministry of Land and Resources and the Ministry of Housing and Urban-Rural Development jointly issued a notice to further tighten the land use administration and seek stricter enforcement of the existing real estate market regulations, which include, in particular, enhanced control over the floor area and plot ratio of land for housing purpose, closer scrutiny on the qualification of land bidders, and strengthened investigation and punishment on land bidding winners who leave land idle for more than one year.

Such measures and policies by the government have negatively affected the real estate market and caused a reduction in transactions in the real estate market. While these measures and policies remain in effect, they may continue to depress the real estate market, dissuade would-be buyers from making purchases, reduce transaction volume, cause a decline in average selling prices, and prevent developers from raising the capital they need and increase developers’ costs to start new projects.

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Employees

As of December 31, ~~2022~~2023, we had the following number and categories of employees:

		Employees
		Employees
SRRE
SRRE
Executive Dept.		2
Executive Dept.		2
Accounting Dept.		1
Accounting Dept.		1
Investor Relations Dept.		1
Investor Relations Dept.		1


SHXJY
SHXJY
Administration Dept.		1
Administration Dept.		1
Accounting Dept.		1
Accounting Dept.		1
Research & Development Dept.		1
Research & Development Dept.		1


SZXJY
SZXJY
Administration Dept.		6
Administration Dept.		7
Research & Development Dept.		1
Research & Development Dept.		1
Accounting Dept.		2
Accounting Dept.		2
Marketing Dept.		12
Marketing Dept.		14


SHSY
SZSY
Administration Dept.		2
Marketing Dept.		1
Accounting Dept.		2
Research & Development Dept.		1
Development Dept.		4

SHSY
LYSY
Administration Dept.		2
Accounting Dept		2
Accounting Dept.		2
Administration Dept.		4
Development Dept.		4
Construction Dept.		6

Marketing Dept.		2
LYSY
Executive Dept.		1
Accounting Dept		2

Administration Dept.		5
HATX
Construction Dept.		7
Administration Dept.		10
Marketing Dept.		2
Accounting Dept.		3
Executive Dept.		1
Construction Dept.		5

Marketing Dept.		8
HATX

Administration Dept.		4
SHRJ
Accounting Dept.		3
Administration Dept.
Construction Dept.		9
Design Dept.		1
Marketing Dept.		6
Total		78

SHRJ
Administration Dept.
Design Dept.		1
Total		81

None of our employees are represented by a labor union or bound by a collective bargaining unit. We believe that our relationship with our employees is satisfactory.

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ITEM 1A. RISK FACTORS

RISK FACTORS

SRRE has identified a number of risk factors the Company faces. These factors, among others, may cause actual results, events or performance to differ materially from those expressed in this 10-K or in press releases or other public disclosures. You should be aware of the existence of these factors.

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RISKS RELATING TO THE GROUP

SRRE is a holding company and depends on its subsidiaries’ cash flows to meet its obligations.

SRRE is a holding company and it conducts all of its operations through its subsidiaries. As a result, its ability to meet any obligations depends upon its subsidiaries’ cash flows and payment of funds as dividends, loans, advances or other payments. In addition, the payment of dividends or the making of loans, advances or other payments to SRRE may be subject to regulatory or contractual restrictions.

Development of new business may stretch our cash flow and strain our operation efficiency.

Business 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 a need to increase in our financial needs.

Our acquisition of new property may involve risks.

These acquisitions involve several risks including, but not limited to, the following:

The acquired properties may not perform as well as we expect or ever become profitable.

Improvements to the properties may ultimately cost significantly more than we had originally estimated.

Additional acquisitions might harm our business.

As part of our business strategy, we may seek to acquire or invest in additional businesses, products, services or technologies that we think could complement or expand our business. If we identify an appropriate acquisition opportunity, we might be unable to negotiate the terms of that acquisition successfully, finance it, or integrate it into our existing business and operations. We may also be unable to select, manage or absorb any future acquisitions successfully. Furthermore, the negotiation of potential acquisitions, as well as the integration of an acquired business, would divert management time and other resources. We may have to use a substantial portion of our available cash to consummate an acquisition. If we complete acquisitions through exchange of our securities, our shareholders could suffer significant dilution. In addition, we cannot assure that any particular acquisition, even if successfully completed, will ultimately benefit our business.

Our real estate investments are subject to numerous risks.

We are subject to risks that generally relate to investments in real estate. The investment returns available from equity investments in real estate depend in large part on the amount of income earned and capital appreciation generated by the related properties, as well as the expenses incurred. In addition, a variety of other factors affect income from properties and real estate values, including governmental regulations, insurance, zoning, tax and eminent domain laws, interest rate levels and the availability of financing. For example, new or existing real estate zoning or tax laws can make it more expensive and/or time-consuming to develop real property or expand, modify or renovate properties. When interest rates increase, the cost of acquiring, developing, expanding or renovating real property increases and real property values may decrease as the number of potential buyers decrease. Similarly, as financing becomes less available, it becomes more difficult both to acquire and to sell real property. Finally, governments can, under eminent domain laws, take real property. Sometimes this taking is for less compensation than the owner believes the property is worth. Any of these factors could have a material adverse impact on results of our operations or financial condition. In addition, equity real estate investments, such as the investments we hold and any additional properties that we may acquire, are relatively difficult to sell quickly. If our properties do not generate sufficient revenue to meet operating expenses, including debt servicing and capital expenditures, our income will be reduced.

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Competition, economic conditions and similar factors affecting us, and the real estate industry in general, could affect our performance.

Our properties and business are subject to all operating risks common to the real estate industry. These risks include:

Adverse effects of general and local economic conditions;

Increases in operating costs attributable to inflation and other factors; and

Overbuilding in certain property sectors.

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These factors could adversely affect our revenues, profitability, and results of operations.

Our business is susceptible to fluctuations in the real estate market of China, especially in certain areas of eastern China where a significant portion of our operations are concentrated, which may adversely affect our revenues and results of operations.

We conduct our real estate services business in China. Our business depends substantially on the conditions of the PRC real estate market. Demand for private residential real estate in China has grown rapidly in the recent decade but such growth is often coupled with volatility in market conditions and fluctuation in real estate prices. Fluctuations of supply and demand in China’s real estate market are caused by economic, social, political and other factors. To the extent fluctuations in the real estate market adversely affect real estate transaction volumes or prices, our financial condition and results of operations may be materially and adversely affected.

As a significant portion of our operations is concentrated in Shanghai and Jiangsu Province, any decrease in demand or real estate prices or any other adverse developments in these regions may materially and adversely affect our total real estate transaction volumes and average selling prices, which may in turn adversely affect our revenues and results of operations. These economic uncertainties involve, among other things, conditions of supply and demand in local markets and changes in consumer confidence and income, employment levels, increase in mortgage interest rates and government regulations. These risks and uncertainties could periodically have an adverse effect on consumer demand for and the pricing of our homes, which could cause our operating revenues to decline. In addition, builders are subject to various risks, many of them outside the control of the homebuilder including competitive overbuilding, availability and cost of building lots, materials and labor, adverse weather conditions, cost overruns, changes in government regulations, and increases in real estate taxes and other local government fees. A reduction in our revenues could in turn negatively affect the market price of our securities.

Our net income is generated primarily from an investment in one of our unconsolidated affiliates, and we are dependent upon advances and expected distributions from such affiliate to operate and grow our business and satisfy our liabilities.

SHDEW, an unconsolidated affiliate, has generated the majority of our cash receipts through the payment of dividends and advances in the past few years. Any material decline in the business of SHDEW or in its expected ability to pay dividends would materially and adversely affect our business, our ability to service liabilities and to pay dividends on our common stock, unless we obtain other sources of financing, of which there can be no assurance. As of December 31, ~~2022~~2023, we owned 19.91% of SHDEW, but we do not control or have significant influence on its operations, the payment by SHDEW of dividends or other distributions to us. In addition, the payment of dividends or other distributions from SHDEW could be subject to restrictions on, or taxation of, dividends or repatriation of earnings under applicable law, monetary transfer restrictions, currency exchange regulations in jurisdictions in which our subsidiaries operate or any other restrictions imposed by current or future agreements to which SHDEW may be a party, including debt instruments. Events beyond our control, including changes in general business and economic conditions, could adversely impact the value of our investment and the ability of SHDEW to pay dividends or make other distributions to us.

On November 4th, 2022, the MSA of Yuhua District, Shijiazhuang City, a city located within Hebei Province held a hearing regarding the proposed disgorgement of the proceeds of 19 entities and individuals, including SHDEW, Shanghai Shangyang Investment Management and Consulting Co., Ltd. (“SHSY”), Linyi Ruilin Consulting and Design Co., Ltd (“LYRL”), Lin Chi Jung, and Wang Wenhua, regarding SHDEW’s online multi-level marketing program. SHSY and LYRL are our wholly-owned subsidiaries that own our interest in SHDEW. The MSA is evaluating the results of the hearing and has not determined the final amounts, if any, to be disgorged, which could be material. Our counsel believes that the Yu Hua District has no jurisdiction over this case and that the allegations are likely without merit, although there can be no assurance regarding the outcome. None of such individuals or entities have received any formal notification by Yu Hua District’s State Administration for Market Regulation of this action and no final decision has been made

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by the Yuhua District MSA against any party. Should the amount to be disgorged by SHDEW be substantial, the ability of SHDEW to pay us dividends in 2023 and in future years could be adversely affected.

In addition, a significant portion of our assets consist of ownership interests in SHDEW. If we were required to liquidate any of such securities in order to generate funds to satisfy our liabilities, we may be required to sell such securities at a time or times at which we would not be able to realize what we believe to be the long-term value of such assets and there might be a very limited market for such securities.

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Our business may be materially and adversely affected by government measures aimed at China’s real estate industry.

The real estate industry in China is subject to government regulations. Until 2009, the real estate markets in a number of major cities in China had experienced rapid and significant growth. Before the global economic crisis hit all the major economies worldwide in 2009, the PRC government had adopted a series of measures to restrain what it perceived as unsustainable growth in the real estate market. From 2003 to the present, the PRC government introduced a series of specific administrative and credit-control measures including, but not limited to, setting minimum down payment requirements for residential and commercial real estate transactions, limiting availability of mortgage loans, and tightening governmental approval process for certain real estate transactions.

In cities such as Beijing and Shanghai, we have seen the effects of such policies and regulatory measures. The sales volumes for real properties in Beijing and Shanghai decreased significantly after the policy change. The sale prices for certain properties in such cities are also weakened. The PRC government’s policy and regulatory measures on the PRC real estate sector could adversely affect the property purchasers’ ability to obtain mortgage financing or significantly increase the cost of mortgage financing and reduce market demand for properties. These factors may materially and adversely affect our business, financial condition, results of operations and prospects.

Despite the recent government measures aimed at maintaining the long-term stability of the real estate market, there is no assurance that the PRC government will not continue to adopt new measures in the future that may result in short-term downward adjustments and uncertainty in the real estate market.

Our business may be materially and adversely affected as a result of decreased transaction volumes or real estate prices that may follow these adjustments or market uncertainty.

We operate in a highly competitive environment.

Our competitors may be able to adapt more quickly to changes in customer needs or to devote greater resources than we can to developing and expanding our services. Such competitors could also attempt to increase their presence in our markets by forming strategic alliances with other competitors, by offering new or improved services or by increasing their efforts to gain and retain market share through competitive pricing. As the market for our services matures, price competition and penetration into the market will intensify. Such competition may adversely affect our gross profits, margins and results of operations. There can be no assurance that we will be able to compete successfully with existing or new competitors.

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 be able to successfully manage our growth or to integrate and assimilate 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.

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If we fail to successfully manage our planned expansion of operations, our growth prospects will be diminished and our operating expenses could exceed budgeted amounts.

Our ability to offer our services in an evolving market requires an effective planning and management process. We have expanded our operations rapidly since inception, and we intend to continue to expand them in the foreseeable future. This rapid growth places significant demand on our managerial and operational resources and our internal training capabilities. In addition, we have hired a significant number of employees and plan to further increase our total work force. This growth will continue to substantially burden our management team. To manage growth effectively, we must:

Implement and improve our operational, financial and other systems, procedures and controls on a timely basis.

Expand, train and manage our workforce, particularly our sales and marketing and support organizations.

We cannot be certain that our systems, procedures and controls will be adequate to support our current or future operations or that our management will be able to handle such expansion and still achieve the execution necessary to meet our growth expectations. Failure to manage our growth effectively could diminish our growth prospects and could result in lost opportunities as well as operating expenses exceeding the amount budgeted.

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We may be unable to maintain internal funds or obtain financing or renew credit facilities in the future.

Adequate financing is one of the major factors, which can affect our ability to execute our business plan in this regard. We finance our business mainly through internal funds, bank loans or raising equity funds. There is no guarantee that we will always have internal funds available for future developments or we will not experience difficulties in obtaining financing and renewing credit facilities granted by financial institutions in the future. In addition, there may be a delay in equity fundraising activities. Although in August and November 2014 we issued 40,000,000 shares of stock of the Company in aggregate for cash of approximately $3,400,000 to Ace Develop, with Lin Chi-Jung, our director and the sole shareholder of Ace Develop, our access to obtain debt or equity financing depends on the bank’s 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. If we cannot raise additional capital on acceptable terms, we may not be able to develop or enhance our services, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements. To fully realize our business objectives and potential, we may require additional financing. If we are unable to obtain any necessary additional financing, we will be required to substantially curtail our approach to implementing our business objectives. Additional financing may be debt, equity or a combination of debt and equity. If equity is used, it could result in significant dilution to our shareholders.

We require substantial capital resources to fund our land use rights acquisition and property developments, which may not be available.

Property development is capital intensive. Our ability to secure sufficient financing for land use rights acquisition and property development depends on a number of factors that are beyond our control, including market conditions in the capital markets, the PRC economy and the PRC government regulations that affect the availability and cost of financing for real estate companies.

In order to strengthen liquidity management and regulate money and credit supply, the People’s Bank of China raised the RMB reserve requirement ratio for depository financial institutions. In 2020, the People’s Bank of China lowered the reserve requirement ratio by 0.5% to 12.5% and 10.5% for large and small financial institutions, respectfully. The reserve requirement ratio refers to the amount of funds that banks must hold in reserve against deposits made by their customers. These increases in the reserve requirement ratio have reduced the amount of commercial bank credit available to businesses in China, including us.

Our operations and growth prospects may be significantly impeded if we are unable to retain our key personnel or attract additional key personnel, particularly since experienced personnel and new skilled personnel are in short supply.

Competition for key personnel is intense. As a small company, our success depends on the service of our executive officers, and other skilled managerial and technical personnel, and our ability to attract, hire, train and retain personnel. There is always the possibility that certain of our key personnel may terminate their employment with us to work for one of our competitors at any time for any reason. There can be no assurance that we will be successful in attracting and retaining key personnel. The loss of services of one or more key personnel could have a material adverse effect on us and would materially impede the operation and growth of our business.

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If our partnering developers experience financial or other difficulties, our business and revenues could be adversely affected.

As a service-based company, we greatly depend on the working relationships and agency contracts with its partnering developers. We are exposed to the risks that our partnering developers may experience financial or other difficulties, which may affect their ability or will to carry out any existing development projects or resell contracts, thus delaying or canceling the fulfillment of their agency contracts with us. Any of these factors could adversely affect our revenues, profitability and results of operations.

Our partnering developers are subject to extensive government regulation which could make it difficult for them to obtain adequate funding or additional funding. Various PRC regulations restrict developers’ ability to raise capital through external financings and other methods, including, but not limited to, the following:

●

developers cannot pre-sell uncompleted residential units in a project prior to achieving certain development milestones specified in related regulations;

●

PRC banks are prohibited from extending loans to real estate companies to fund the purchase of land use rights;

●

developers cannot borrow from a PRC bank for a particular project unless we fund at least 35% of the total investment amount of that project using our own capital;

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developers cannot borrow from a PRC bank for a particular project if we do not obtain the land use right certificate for that project;

●

property developers are strictly prohibited from using the proceeds from a loan obtained from a local bank to fund property developments outside of the region where the bank is located; and

●

PRC banks are prohibited from accepting properties that have been vacant for more than three years as collateral for a loan.

We may fail to obtain, or may experience material delays in obtaining necessary government approvals for any major property development, which will adversely affect our business.

The real estate industry is strictly regulated by the PRC government. Property developers in China must abide by various laws and regulations, including implementation rules promulgated by local governments to enforce these laws and regulations. Before commencing, and during the course of, development of a property project, we need to apply for various licenses, permits, certificates and approvals, including land use rights certificates, construction site planning permits, construction work planning permits, construction permits, pre-sale permits and completion acceptance certificates. We need to satisfy various requirements to obtain these certificates and permits. To date, we have not encountered serious delays or difficulties in the process of applying for these certificates and permits, but we cannot guarantee that we will not encounter serious delays or difficulties in the future. In the event that we fail to obtain the necessary governmental approvals for any of our major property projects, or a serious delay occurs in the government’s examination and approval progress, we may not be able to maintain our development schedule and our business and cash flows may be adversely affected.

We may be unable to complete our property developments on time or at all.

The progress and costs for a development project can be adversely affected by many factors, including, without limitation:

●

delays in obtaining necessary licenses, permits or approvals from government agencies or authorities;

●

shortages of materials, equipment, contractors and skilled labor;

●

disputes with our third-party contractors;

●

failure by our third-party contractors to comply with our designs, specifications or standards;

●

difficult geological situations or other geotechnical issues;

●

on-site labor disputes or work accidents; and natural catastrophes or adverse weather conditions.

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Any construction delays, or failure to complete a project according to our planned specifications or budget, may delay our property sales, which could harm our revenues, cash flows and our reputation.

If we fail to establish and maintain strategic relationships, the market acceptance of our services, and our profitability, may suffer.

To offer services to a larger customer base, our direct sales force depends on strategic partnerships, marketing alliances, and partnering developers to obtain customer leads and referrals. If we are unable to maintain our existing strategic relationships or fail to enter into additional strategic relationships, we will have to devote substantially more resources to the marketing of our services. We would also lose anticipated customer introductions and co-marketing benefits. Our success depends in part on the success of our strategic partners and their ability to market our services successfully. In addition, our strategic partners may not regard us as significant for their own businesses. Therefore, they could reduce their commitment to us or terminate their respective relationships with us, pursue other partnerships or relationships, or attempt to develop or acquire services that compete with our services. Even if we succeed in establishing these relationships, they may not result in additional customers or revenues.

We are subject to the risks associated with projects operated through joint ventures.

Some of our projects are operated through joint ventures in which we have controlling interests. We may enter into similar joint ventures in the future. Any joint venture investment involves risks such as the possibility that the joint venture partner may seek relief under Chinese insolvency laws, or have economic or business interests or goals that are inconsistent with our business interests or goals. While the bankruptcy or insolvency of our joint venture partner generally should not disrupt the operations of the joint venture, we could be forced to purchase the partner’s interest in the joint venture, or the interest could be sold to a third party. Additionally, we may enter into joint ventures in the future in which we have non-controlling interests. If we do not have control over a joint venture, the value of our investment may be affected adversely by a third party that may have different goals and capabilities than ours. It may also be difficult for us to exit a joint venture that we do not control after an impasse. In addition, a joint venture partner may be unable to meet its economic or other obligations, and we may be required to fulfill those obligations.

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the bankruptcy or insolvency of our joint venture partner generally should not disrupt the operations of the joint venture, we could be forced to purchase the partner’s interest in the joint venture, or the interest could be sold to a third party. Additionally, we may enter into joint ventures in the future in which we have non-controlling interests. If we do not have control over a joint venture, the value of our investment may be affected adversely by a third party that may have different goals and capabilities than ours. It may also be difficult for us to exit a joint venture that we do not control after an impasse. In addition, a joint venture partner may be unable to meet its economic or other obligations, and we may be required to fulfill those obligations.

We are subject to risks relating to acts of God, terrorist activity and war.

Our operating income may be reduced by acts of God, such as natural disasters or acts of terror, in locations where we own and/or operate significant properties and areas from which we draw customers and partnering developers. Some types of losses, such as from earthquake, hurricane, pandemic, terrorism and environmental hazards, may be either uninsurable or too expensive to justify insuring against. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in any particular property, as well as any anticipated future revenue from such property. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. Similarly, wars (including the potential for war), terrorist activity (including threats of terrorist activity), political unrest and other forms of civil strife as well as geopolitical uncertainty have caused in the past, and may cause in the future, our results to differ materially from anticipated results.

A pandemic, epidemic or outbreak of an infectious disease in the markets in which we operate or that otherwise impacts our facilities or advisors could adversely impact our business and/or our ability to complete financial reports to enable us to comply with our reporting obligation under the Exchange Act.

If a pandemic, epidemic, or outbreak of an infectious disease including the recent outbreak of respiratory illness caused by a novel coronavirus (COVID-19) or other public health crisis were to affect our markets or facilities or those of our suppliers or accountants or advisors, our business could be adversely affected. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our employees and professional advisors. These factors may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

We have limited business insurance coverage in China.

The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products. As a result, we do not have any business liability or disruption insurance coverage for our operations in China. Any business disruption, litigation or natural disaster might result in substantial costs and diversion of resources.

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We may be affected by global climate change or by legal, regulatory, or market responses to such change.

There is a growing concern in regards to the global warming issues affecting the world. The changing weather patterns and abnormal conditions may affect the construction and logistics of developers and this may indirectly cause inverse effect to our operation. Extreme weather conditions may delay in construction of properties; this then may delay the sale of these properties and therefore delaying our future revenue stream. There may be regulations in manufacturing materials for property construction and new building codes in response to global warming that may delay construction and/or create further expenses to the developers. These possible changes may indirectly affect our business.

Our real estate development operating results may not achieve our goals.

As there are many variables to developing a real estate project, we face the risk of running out of funds mid construction and may have to delay or be unable to continue developing the project. We may also run into market downturn and not be able to sell any of the housings we’ve developed. If any of the above happens, we may face an extreme cash shortage and will directly affect our business.

The staff of our accounting department lack training and experience in the accounting principles generally accepted in the United States (the “U.S. GAAP”), which may result in accounting errors in the financial statements that we file with the Securities and Exchange Commission (the “SEC”).

Our executive offices are located in the PRC. Our entire bookkeeping and accounting staff is located there. Our books and records are maintained in Chinese, using Chinese accounting principles. Chinese accounting principles vary in many important respects from U.S. GAAP. To file our Company’s financial statements with the SEC, our accounting staff must convert the financial statements from Chinese accounting principles to U.S. accounting principles. However, none of the members of our accounting staff has extensive experience or training in the preparation of financial statements under U.S. accounting principles. Neither do we have any employee who has previous experience in accounting for a U.S. public company. This situation creates a risk that the financial statements we file with the SEC will fail to present our financial condition and/or results of operations as required by SEC rules and U.S. GAAP.

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Chinese accounting principles to U.S. accounting principles. However, none of the members of our accounting staff has extensive experience or training in the preparation of financial statements under U.S. accounting principles. Neither do we have any employee who has previous experience in accounting for a U.S. public company. This situation creates a risk that the financial statements we file with the SEC will fail to present our financial condition and/or results of operations as required by SEC rules and U.S. GAAP.

We have identified material weaknesses in our internal control over financial reporting. If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results and prevent fraud. As a result, current and potential stockholders could lose confidence in our financial statements, which would harm the trading price of our common stock.

Companies that file reports with the SEC, including us, are subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404. SOX 404 requires management to establish and maintain a system of internal control over financial reporting and annual reports on Form 10-K filed under the Exchange Act to contain a report from management assessing the effectiveness of a company’s internal control over financial reporting. A report of our management is included under Item 9A. “Controls and Procedures” of this report. We are a smaller reporting company and, consequently, are not required to include an attestation report of our auditor in this annual report. However, if and when we become subject to the auditor attestation requirements under SOX 404, we can provide no assurance that we will receive an unqualified report from our independent auditors.

During its evaluation of the effectiveness of internal control over financial reporting as of December 31, ~~2022~~2023, management identified a material weakness relating to our lack of sufficient accounting personnel with an appropriate understanding of U.S. GAAP and SEC reporting requirements.

We are undertaking remedial measures, which measures will take time to implement and test, to address the material weakness. There can be no assurance that such measures will be sufficient to remedy the material weakness identified or that additional material weaknesses or other control or significant deficiencies will not be identified in the future. If we continue to experience material weaknesses in our internal controls or fail to maintain or implement required new or improved controls, such circumstances could cause us to fail to meet our periodic reporting obligations or result in material misstatements in our financial statements, or adversely affect the results of periodic management evaluations and, if required, annual auditor attestation reports. Each of the foregoing results could cause investors to lose confidence in our reported financial information and lead to a decline in our stock price. See Item 9A. “Controls and Procedures” for more information.

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Concerns about global warming could adversely affect our business.

There is a growing concern regarding global warming. The changing weather patterns and abnormal conditions may affect the construction and logistics of developers and this may indirectly have adverse effect on our operations. Extreme weather conditions may cause delay in construction of properties, which may in turn delay the sale of these properties and our future revenue stream.

RISKS RELATING TO OUR SECURITIES

Our controlling shareholders could take actions that are not in the public shareholders’ best interests.

As of ~~April~~March 1528, ~~2023~~2024, Ace Develop Properties directly controls 64.80% of our outstanding common stock and Lin Chi-Jung, our director, is the sole shareholder of Ace Develop. As of ~~April~~March 28, ~~2023~~2024, Robert Lin Investments directly controls 4.87% of our outstanding common stock and Lin Chao Chun, one of our directors, is the principal and controlling shareholder of Robert Lin Investments. Accordingly, pursuant to our Articles of Incorporation and bylaws, Ace Develop Properties and Lin Chi-Jung, and Robert Lin Investments and Lin Chao Chun, by virtue of their controlling ownership of share interests, will be able to exercise substantial influence 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:

Election of directors and officers;

The amount and timing of dividends and other distributions;

Acquisition of or merger with another company; and

Any proposed amendments to our Articles of Incorporation.

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Future sales of our common stock could adversely affect our stock price.

If our shareholders sell substantial amounts of our common stock in the public market, the market price of our common stock could be adversely affected. In addition, the sale of these shares could impair our ability to raise capital through the sale of additional equity securities.

We are traded on the OTC Pink, which can be a volatile market.

Our common stock is quoted on the OTC Pink a quotation system for equity securities. It is a more limited trading market than the Nasdaq Capital Market, and timely and accurate quotations of the price of our common stock may not always be available. Investors may expect trading volume to be low in such a market. Consequently, the activity of only a few shares may affect the market and may result in wide swings in price and in volume.

We may be subject to exchange rate fluctuations.

A majority of our revenues are received, and a majority of our operating costs are incurred, in Renminbi. Because our financial statements are presented in U.S. Dollars, any significant fluctuation in the currency exchange rates between the Renminbi and the U.S. Dollar will affect our reported results of operations. We do not currently engage in currency-hedging transactions.

Trading of our common stock is limited, which may make it difficult for investors to sell their shares at times and prices that investors feel appropriate.

Trading of our common stock has been extremely limited. This adversely effects the liquidity of our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of us. This may result in lower prices for our common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock.

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There is a limited market for our common stock and an active trading market for our common stock may never develop.

Trading in our common stock has been limited and has been characterized by wide fluctuations in trading prices, due to many factors that may have little to do with a company’s operations or business prospects.

Because it may be a “penny stock,” it will be more difficult for shareholders to sell shares of our common stock.

In addition, our common stock may be considered a “penny stock” under SEC rules because it has been trading on the OTC Bulletin Board at prices lower than $5.00. Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny-stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement for the purchaser. Broker-dealers also must provide customers that hold penny stocks in their accounts with such broker-dealers a monthly statement containing price and market information relating to the penny stock. If a penny stock is sold to investors in violation of the penny stock rules, investors may be able to cancel the purchase and get the money back. The penny stock rules may make it difficult for investors to sell their shares of our stock, and because of these rules, there is less trading in penny stocks. Moreover, many brokers simply choose not to participate in penny-stock transactions. Accordingly, investors may not always be able to resell shares of our common stock publicly at times and at prices that investors feel are appropriate.

Our stock price is, and we expect it to remain, volatile, which could limit investors’ ability to sell stock at a profit.

Since the completion of the SRRE /CY-SRRE/LRY share exchange transactions the market price of our common stock has ranged from a high of $0.4853 per share to a low of $0.1618 per share in ~~2022~~2023. The volatile price of our stock makes it difficult for investors to predict the value of our investment, to sell shares at a profit at any given time, or to plan purchases and sales in advance. A variety of factors may affect the market price of our common stock. These include, but are not limited to:

Announcements of new technological innovations or new commercial services by our competitors or us;

Developments concerning proprietary rights;

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Regulatory developments in Mainland China and foreign countries;

Period-to-period fluctuations in our revenues and other results of operations;

Economic or other crises and other external factors;

Changes in financial estimates by securities analysts; and

Sales of our common stock.

We will not be able to control many of these factors, and we believe that period-to-period comparisons of our financial results will not necessarily be indicative of our future performance.

The stock market in general has experienced extreme price and volume fluctuations that may have been unrelated and disproportionate to the operating performance of individual companies. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

Because we do not pay cash dividends on a regular basis, investors will not realize any income from an investment in our common stock unless and until investors sell their shares at profit.

We paid a cash dividend of $0.15 per share on our common stocks on April 5, 2023. Investors should not rely on an investment in our stock if they require dividend income. Further, investors will only realize income on an investment in our stock in the event they sell or otherwise dispose of their shares at a price higher than the price they paid for their shares. Such a gain would result only from an increase in the market price of our common stocks, which is uncertain and unpredictable.

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We intend to retain all of our earnings for use in our business and do not anticipate paying any cash dividends in the near future.

The payment of any future dividends will be at the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, the success of our business activities, general financial condition, future prospects, general business conditions and such other factors as our Board of Directors may deem relevant.

RISKS 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 is at a developing one.

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 level of uncertainty is increased by the limited availability of accurate financial and market information as well as the overall low level of transparency in the PRC.

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 an 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. The lack of a liquid secondary market for residential property may discourage investors from acquiring new properties. The limited amount of property mortgage financing available to PRC individuals may further inhibit demand for residential developments.

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Local government may issue further restrictive measures.

In January 2011, the Shanghai municipal government put forward a local restrictive policy. The policy prohibits residential housing purchases for (1) non-local residents, who are not able to provide a local tax payment or social security payment certificate over one year within the most recent two years, (2) local resident, who is already in possession of two residential units. The policy also limits residential housing purchases for (1) non-local residents, who are able to provide local tax payment certificate over one year, to only one unit, (2) local residents, who are already in possession of only one residential unit, to one additional residential unit.

In 2017, the Shanghai Municipal Construction and Construction Commission issued the Opinions on the Clarification of Commercial and Office Project (Document 2017 No. 400). This new regulation requires all commercial and office buildings be used in accordance to what it was originally intended when the project registered its plans. Our GXL project was inspected by the government and was found to be in accordance with our originally registered plan. However, as of today, we are waiting for the proper authority to allow continued selling of the units.

We cannot assure you that the local government in Shanghai or Jiangsu Province will not issue further restrictive measures in the future. The local government’s restrictive regulations and measures could increase our operating costs in adapting to these regulations and measures, limit our access to capital resources or even restrict our business operations, which could further adversely affect our business and prospects.

We face increasing competition, which may adversely affect our revenues, profitability and results of operations.

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 these property companies may have better track records 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 the changes in the market conditions more swiftly or effectively than our competitors do, our business and financial position will be adversely affected.

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in Yangtze Delta and elsewhere in the PRC is rapidly changing. If we cannot respond to the changes in the market conditions more swiftly or effectively than our competitors do, our business and financial position will be adversely affected.

If the availability or attractiveness of mortgage financing were significantly limited, many of our prospective customers would not be able to purchase the properties, thus adversely affecting our business and financial position.

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 requirements and imposed certain other conditions that make mortgage financing unavailable or unattractive for some potential property purchasers. There is no assurance that the down payment requirements and other conditions will not be further revised. If the availability or attractiveness of mortgage financing is further 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.

Our future prospects are heavily dependent on the performance of property sectors in specific geographical areas.

The properties we resell and intend to invest in are mainly based in Yangtze Delta. 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 our other markets will continue at this level in the future or that we will be able to benefit from the future growth of these property markets.

Our revenues and operating income could be reduced by adverse conditions specific to our property locations.

The properties we resell and intend to invest in are concentrated geographically and are located predominately in Yangtze Delta. As a result, our business and our financial operating results may be materially affected by adverse economic, weather or business conditions in this area. Adverse conditions that affect these areas such as economic recession, changes in extreme weather conditions and natural disasters, may have an adverse impact on our operations.

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RISKS RELATING TO THE PEOPLES REPUBLIC OF CHINA (“PRC”)

All of our current prospects and deals are generated in Mainland China; thus, all of our revenues are derived from our operations in the PRC. Accordingly, our business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and legal developments in the PRC.

PRC economic, political policies and social conditions could adversely affect our business.

The economy of PRC differs from the economies of most developed countries in a number of respects, including the amount of government involvement, level of development, growth rate and 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 pay dividends and could adversely affect 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 common stock.

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 U.S. Dollars has generally been stable, and in 2005 the official exchange rate between U.S. Dollars and Renminbi had a little fluctuation. However, we cannot give any assurance that the value of the Renminbi will continue to remain stable against the U.S. Dollar or any 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.

~~Changes~~Our inoperations ~~social~~could ~~conditions,~~be adversely affected by changes in the political and economic ~~policies~~conditions ofin the PRC. ~~government~~The ~~may~~PRC ~~affect~~is our ~~business~~main market and accounted for all of our revenue. Therefore, ~~financial~~we ~~condition~~face risks related to conducting business in the PRC. Changes in the social, economic and ~~results~~political conditions of ~~operations~~the ~~and~~PRC may ~~result~~adversely inaffect our ~~inability~~business. toUnfavorable ~~sustain~~changes ~~our~~in ~~growth~~government policies, political unrest and ~~expansion~~economic ~~strategies~~developments may also have a negative impact on our operations.

~~Our~~Since ~~results~~the adoption of ~~operations,~~the ~~financial~~“open ~~condition~~door ~~and~~policy” ~~prospects~~in ~~are~~1978 ~~influenced~~and bythe ~~social,~~“socialist ~~economic,~~market ~~political~~economy” ~~and~~in ~~legal~~1993, ~~developments~~the inPRC ~~China.~~government ~~China’s~~has ~~economy~~been ~~differs~~reforming ~~from~~and ~~the~~is ~~economies~~expected ofto ~~most~~continue ~~developed~~to ~~countries~~reform inits ~~many~~economic ~~respects,~~and ~~including~~political ~~with~~systems. ~~respect~~Any tochanges in the ~~framework~~political and ~~style~~economic policies of ~~government~~the ~~supervision,~~PRC ~~level~~government ofmay ~~development,~~lead ~~growth~~to ~~rate,~~changes ~~control~~in ofthe ~~foreign~~laws ~~exchange~~ and ~~allocation~~regulations ofor ~~resources.~~the ~~Although~~interpretation of the ~~PRC~~same, ~~government~~as ~~has~~well ~~implemented~~as ~~measures~~changes ~~emphasizing~~in the ~~utilization~~foreign ofexchange ~~market~~regulations, ~~forces~~taxation ~~for~~and ~~economic~~import ~~reform~~and export restrictions, ~~the~~which ~~reduction~~may, ofin ~~state~~turn, ~~ownership~~adversely ofaffect ~~productive~~our ~~assets,~~financial ~~and~~performance. While the ~~establishment~~current policy of ~~improved~~the ~~corporate~~PRC ~~governance~~government inseems ~~business~~to ~~enterprises,~~be aone ~~substantial~~of ~~portion~~imposing ofeconomic ~~productive~~reform ~~assets~~policies into ~~China~~encourage isforeign ~~still~~investments ~~owned~~and bygreater ~~the~~economic ~~government.~~decentralization, ~~The~~we ~~PRC~~cannot ~~government~~assure ~~also~~that ~~exercises~~such ~~significant~~a policy will continue to prevail in the future.

23The 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 value as precedents. 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 years has significantly enhanced the protections afforded to various forms of foreign investment in Mainland China. Our PRC operating subsidiaries, wholly foreign-owned enterprises (“WFOEs”), are subject to laws and regulations applicable to foreign investment in the PRC in general and laws and regulations

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~~control~~applicable ~~over~~to ~~China's~~WFOEs ~~economic~~in ~~growth~~particular. ~~through strategically allocating resources~~However, ~~controlling~~these ~~the payment of foreign currency denominated obligations~~laws, ~~setting~~regulations ~~monetary policy~~ and ~~providing~~legal ~~preferential~~requirements ~~treatment~~are toconstantly ~~particular industries or companies. While the Chinese economy has experienced significant growth over the past decades~~changing, ~~growth~~and ~~has~~their ~~been~~interpretation ~~uneven, both geographically~~ and ~~among~~enforcement ~~various~~involve ~~sectors of the economy~~uncertainties. ~~The~~These ~~Chinese~~uncertainties ~~government~~could ~~has~~limit ~~implemented~~the ~~various~~legal ~~measures~~protections available to ~~encourage~~us ~~economic growth~~ and ~~guide~~other ~~the~~foreign ~~allocation of resources~~investors. ~~Some~~In ofaddition, ~~these~~we ~~measures~~cannot ~~may~~predict ~~benefit~~ the ~~overall Chinese economy, but may have a negative~~ effect onof ~~us.~~future ~~The~~developments ~~growth~~in ~~rate of~~ the ~~Chinese~~PRC ~~economy~~legal ~~has gradually slowed since 2010~~system, ~~and~~including the ~~impact~~promulgation of ~~COVID-19~~new ~~on the Chinese economy in 2020~~laws, ~~2021~~changes ~~and 2022 is reported~~ to beexisting ~~severe.~~laws ~~Any~~or ~~prolonged slowdown in~~ the ~~Chinese~~interpretation ~~economy~~or ~~may~~enforcement ~~reduce~~thereof, or the ~~demand~~pre-emption ~~for~~of ~~our~~local ~~property~~regulations ~~and~~by ~~materially~~national ~~and adversely affect our business and results of operations~~laws.

Changes in social conditions, political and economic policies of the PRC government may affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.

Our results of operations, financial condition and prospects are influenced by social, economic, political and legal developments in China. China’s economy differs from the economies of most developed countries in manm, y respects, including with respect to the framework and style of government supervision, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. The PRC government also exercises significant control over China’s economic growth through strategically allocating resources, controlling the payment of foreign currency denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. The growth rate of the Chinese economy has gradually slowed since 2010, and the impact of COVID-19 on the Chinese economy in 2020, 2021 and 2022 is reported to be severe. Any prolonged slowdown in the Chinese economy may reduce the demand for our property and materially and adversely affect our business and results of operations.

The new, stricter regulations or interpretations of existing regulations imposed by the central or local governments may require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations, and if relevant regulations are issued and become effective in a short notice, we may not be able to take the required actions in a timely manner without allocating significant resource. Therefore, we cannot predict whether changes in the PRC economic, political and social conditions, laws, regulations and policies will have any adverse effect on our current or future business, financial condition or results of operations.

We may be subject to fines or penalties if we fail to comply with any applicable laws, regulations or rules.

Historically, we experienced certain non-compliance incidents as some of our project companies commenced construction before obtaining construction work permits or construction work planning permits. We believe these non-compliances did not have a material operational and financial impact on us. There is no assurance that our internal control measures will be effective and there will not be any non-compliance incidents in the future.

In addition, PRC laws, regulations or rules governing our industry have been evolving rapidly. We cannot assure you that we will not be subject to fines or penalties arising from non-compliance incidents if we fail to adapt to the new regulatory regime in a timely manner, or at all, which may have a material adverse effect on our business, financial condition and results of operation.

There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.

Our core business is conducted within China and is governed by PRC laws and regulations. Our PRC subsidiaries are subject to laws, rules and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value.

In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investment in China. However, China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to significant degrees of interpretation by PRC regulatory agencies. In particular, because these laws, rules and regulations are relatively new, and because of the limited number of published decisions and the nonbinding nature of such decisions, and because the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable. In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until after the occurrence of the violation.

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government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until after the occurrence of the violation.

Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business, financial condition and results of operations.

In addition, the PRC government has significant oversight and discretion over the conduct of our operations and may intervene or influence our operations as the government deems appropriate to further regulatory, political and social goals. The PRC government has recently published new policies that significantly affected certain industries such as the internet industries and private education industries, and we cannot rule out the possibility that it will in the future release regulations or policies or take regulatory actions regarding our industry that could adversely affect our business, financial condition and results of operations.

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We may fail to obtain or maintain, or may experience material delays in obtaining, necessary government approvals for any major property development, which will adversely affect our business.

The real estate industry in China is strictly regulated by the PRC government. Property developers in China must abide by various laws and regulations, including implementation rules implemented by local governments to enforce these laws and regulations. Before commencing, and during the course of, development of a property project, we need to apply for or renew various licenses, permits, certificates and approvals, including but not limited to, land use rights certificates, construction site planning permits, construction work planning permits, construction permits, pre-sale permits and completion acceptance certificates. We need to satisfy various requirements to obtain these approval certificates and permits, and to meet specific conditions in order for the government authorities to renew relevant approval certificates and permits. We cannot guarantee that we will not encounter serious delays or difficulties in the future. Some of our subsidiaries were not in compliance with certain construction or pre-sale PRC laws and regulations, such as commencing construction works and pre-sale before obtaining the requisite approvals or permits. Although we have improved our internal control procedures, we cannot guarantee that we will be able to adapt to new rules and regulations that may come into effect from time to time with respect to the property industry or that we will not encounter material delays or difficulties in fulfilling the necessary conditions to obtain and/or renew all necessary certificates or permits for our operations in a timely manner, or at all, in the future. In the event that we fail to obtain the necessary governmental approvals for any of our major property projects, or a serious delay occurs in the government’s examination and approval process, we may not be able to maintain our development schedule and our business and cash flows may be adversely affected.

Moreover, as the real estate industry is closely monitored by the PRC government, we anticipate that new policies will be promulgated from time to time in relation to the conditions for issuance or renewal of such approvals, licenses or permits. We cannot guarantee that such new policies will not present unexpected obstacles toward our ability to obtain or renew the required permits, licenses and certificates or that we will be able to overcome these obstacles in a timely manner, or at all. Loss of or failure to renew our permits, licenses and certificates may stall the progress of our major property development projects.

We may suffer a penalty or even forfeit land to the PRC government if we fail to comply with procedural requirements applicable to land grants from the government or the terms of the land use rights grant contracts.

According to the relevant PRC laws and regulations, if we fail to develop a property project according to the terms of the land use rights grant contract, including those relating to the payment of land premiums, specified use of the land and the time for commencement and completion of the property development, the PRC government may issue a warning, may impose a penalty or may order us to forfeit the land. Specifically, under current PRC laws and regulations, if we fail to pay land premiums in accordance with the payment schedule set forth in the relevant land use rights grant contract, the relevant PRC land bureau may issue a warning notice to us, impose late payment penalties or even require us to forfeit the related land to the PRC government. The late payment penalties are usually calculated based on the overdue days for the land premium payments. Furthermore, if we fail to commence development within one year after the commencement date stipulated in the land use rights grant contract, the relevant PRC land bureau may issue a warning notice to us and impose an idle land fee on the land of up to 20% of the land premium. If we fail to commence development within two years, the land will be subject to forfeiture to the PRC government without any compensation, unless the delay in development is caused by government actions or force majeure. Even if the commencement of the land development is compliant with the land use rights grant contract, if the developed GFA on the land is less than one-third of the total GFA of the project that should have been under construction and development or the total capital invested is less than one-fourth of the total investment of the project and the suspension of the ~~development of the land continues for more than one year without government approval, the land will also be treated as idle land and be subject to penalty or forfeiture.~~

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development of the land continues for more than one year without government approval, the land will also be treated as idle land and be subject to penalty or forfeiture.

We cannot assure you that circumstances leading to significant delays in our own land premium payments or development schedules or forfeiture of land will not arise in the future. If we pay a substantial penalty, we may not be able to meet pre-set investment targeted returns for a given project and our financial conditions could be adversely affected. If any of our land is forfeited, we will not only lose the opportunity to develop the property projects on such land, but may also lose a significant portion of the investment in such land, including land premium deposits and the development costs incurred.

Any non-compliant GFA of our uncompleted and future property developments will be subject to governmental approval and additional payments or even revocation of qualification certificate.

The local government authorities inspect property developments after their completion and issue the completion acceptance certificates if the developments are in compliance with the relevant laws and regulations. If the total constructed GFA of a property development exceeds the GFA originally authorized in the relevant land grant contracts or construction permit, or if the completed property contains built-up areas that do not conform with the plan authorized by the construction permit, the property developer may be required to pay additional amounts or take corrective actions with respect to such non-compliant GFA before a completion acceptance certificate can be issued to the property development. Furthermore, if the total constructed GFA of a property development exceeds the constructed GFA limitation specified in the real estate development qualification obtained by the property developer, the property developer may be fined up to RMB100,000, or even have its qualification certificate and business license revoked.

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exceeds the GFA originally authorized in the relevant land grant contracts or construction permit, or if the completed property contains built-up areas that do not conform with the plan authorized by the construction permit, the property developer may be required to pay additional amounts or take corrective actions with respect to such non-compliant GFA before a completion acceptance certificate can be issued to the property development. Furthermore, if the total constructed GFA of a property development exceeds the constructed GFA limitation specified in the real estate development qualification obtained by the property developer, the property developer may be fined up to RMB100,000, or even have its qualification certificate and business license revoked.

We obtained completion acceptance certificates for all of our completed properties as of December 31, 2021. However, we cannot be certain that local government authorities will not determine that the total constructed GFA upon completion of our existing projects under development or any future property developments exceed the relevant authorized GFA. Any such non-compliance could lead to additional payments or penalty, which would adversely affect our financial condition. We have not incurred material amounts of any such payments or penalties since the founding of our company.

We may not be able to continue obtaining qualification certificates, which will adversely affect our business.

Real estate developers in the PRC must obtain a formal qualification certificate in order to carry on a property development business in the PRC. According to the PRC regulations issued on the qualifications of property developers, a newly established property developer must first apply for a temporary qualification certificate with a one-year validity, which can be renewed for not more than two years. If, however, the newly established property developer fails to commence a property development project within the one-year period during which the temporary qualification certificate is in effect, it will not be allowed to renew its temporary qualification certificate. All qualification certificates are subject to inspection on an annual basis and shall be renewed upon expiration. Under government regulations, developers must fulfill all statutory requirements before they may obtain or renew their qualification certificates. In accordance with the provisions of the rules on the administration of qualifications, the real estate developer qualifications are classified into four classes and the approval system for each class is tiered. A real estate developer may only engage in the development and sale of real estate within the scope of its qualification certificate.

There can be no assurance that some of our project companies that are in the process of applying for or renewing proper qualification certificates will be able to obtain such certificates on a timely basis to commence their planned real estate projects development on schedule. There can be no further assurance that we and our project companies will continue to be able to extend or renew the qualification certificates or be able to successfully upgrade the current qualification class to a higher qualification. If we or our project companies are unable to obtain or renew qualification certificates, the PRC government will refuse to issue pre-sale and other permits necessary for the conduct of the property development business, and our results of operations, financial condition and cash flows will be adversely affected. In addition, if any of our project companies engages in the development and sale of real estate outside the scope of its qualification certificate, it may be ordered to rectify such conduct within a prescribed period, be fined up to RMB100,000, or even have its qualification certificate and business license revoked.

Our failure to assist our customers in applying for property ownership certificates in a timely manner may lead to compensatory liabilities to our customers and our reputation and results of operations may be thus adversely affected.

We are statutorily required to assist our customers in their application process for property ownership certificates within 90 days after delivery of property, or such other period contracted with our customers, including in the way of submitting required materials to the real estate administration of the place where the house is located within 60 days from the day of delivery, passing various governmental clearances, formalities and procedures. If we failed to submit required materials for property right registration within such period, we may be given a disciplinary warning and be ordered to take remedial measures within specified time limit, or be fined not less than RMB20,000 but not more than RMB30,000. Besides, under our typical sales contract, we are liable for any delay in the submission of the required documents as a result of our failure to meet such requirements, and are required to compensate our customers for delays. In the case of delays of submission of required documents, we are required under contracts with our customers to pay compensation to our customers and our reputation and results of operations may be adversely affected.

~~We are subject to PRC restrictions on currency exchange.~~27

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~~payment~~clearances, offormalities ~~dividends~~and toprocedures. ~~us,~~If ~~without~~we ~~the~~failed ~~approval~~to ofsubmit ~~the~~required ~~SAFE~~materials byfor ~~complying~~property ~~with~~right ~~certain~~registration ~~procedural~~within ~~requirements.~~such ~~However~~period, ~~the~~we ~~relevant~~may ~~PRC~~be ~~governmental~~given ~~authorities~~a ~~may~~disciplinary ~~limit~~warning orand ~~eliminate~~be ~~our~~ordered ~~ability~~ to ~~purchase~~take ~~foreign~~remedial ~~currencies~~measures inwithin ~~the~~specified ~~future~~time ~~for~~limit, ~~current~~or ~~account~~be ~~transactions.~~fined ~~Foreign~~not ~~exchange~~less ~~transactions~~than ~~under~~RMB20,000 ~~the~~but ~~capital~~not ~~account~~more ~~remain~~than ~~subject~~RMB30,000. toBesides, ~~limitations~~under ~~and~~our ~~require~~typical ~~approvals~~sales ~~from~~contract, orwe ~~registration~~are ~~with,~~liable ~~the~~for ~~SAFE~~any ~~and~~delay ~~other~~in ~~relevant~~the ~~PRC~~submission ~~governmental~~of ~~authorities.~~the ~~Since~~required adocuments ~~significant~~as ~~amount~~a result of our ~~future~~failure ~~revenues~~to ~~and~~meet ~~cash~~such ~~flow will be denominated in Renminbi~~requirements, ~~any existing~~ and ~~future~~are ~~restrictions~~required ~~on currency exchange may limit our ability~~ to ~~utilize~~compensate ~~cash generated in Renminbi to fund~~ our ~~business~~customers ~~activities~~for ~~outside~~delays. ofIn the ~~PRC~~case orof ~~pay~~delays ~~dividends~~of insubmission ~~foreign~~of ~~currencies~~required ~~to our shareholders~~documents, ~~and~~we ~~may~~are ~~limit~~required ~~our~~under ~~ability~~contracts ~~service~~with our ~~foreign~~customers ~~currency-denominated~~to ~~indebtedness~~pay ~~and~~compensation to ~~obtain~~our ~~foreign~~customers ~~currency~~and ~~through~~our ~~debt~~reputation orand ~~equity~~results ~~financing~~of ~~for~~operations ~~our~~may ~~PRC~~be ~~subsidiaries~~adversely affected.

~~PRC~~We ~~regulations~~are ~~relating to investments in offshore companies by PRC residents may~~ subject ~~our PRC-resident beneficial owners or our PRC subsidiaries~~ to ~~liability or penalties or otherwise limit our~~ PRC ~~subsidiaries'~~restrictions ~~ability~~on tocurrency ~~increase their registered capital or distribute profits to us or otherwise adversely affect us~~exchange.

We currently receive all of our revenues from operations in the PRC and such revenues are denominated in Renminbi. The Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our PRC subsidiaries. Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of the SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, the SAFE and other relevant PRC governmental authorities. Since a significant amount of our future revenues and cash flow will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our ability to utilize cash generated in Renminbi to fund our business activities outside of the PRC or pay dividends in foreign currencies to our shareholders, and may limit our ability service our foreign currency-denominated indebtedness and to obtain foreign currency through debt or equity financing for our PRC subsidiaries.

PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiaries to liability or penalties or otherwise limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us or otherwise adversely affect us.

On July 4, 2014, the SAFE issued the Circular of the State Administration of Foreign Exchange on Issues Concerning the Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles, or the SAFE Circular 37, which replaced the former circular commonly known as “Circular 75” implemented on October 21, 2005. The SAFE Circular 37 requires PRC residents to register with the competent local SAFE branch in connection with their direct establishment or indirect overseas investment activities. Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, are required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its registration with the local branch of SAFE with respect to that SPV, to reflect any material change. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration with the local branch of SAFE to reflect any material change. If any PRC resident shareholder of such SPV fails to make the required registration or to update the registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiaries in China. In February 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound direct investments, including those required under SAFE Circular 37, must be filed with qualified banks instead of SAFE. Qualified banks should examine the applications and accept registrations under the supervision of SAFE.

As there is uncertainty concerning the reconciliation of these notices with other approval or registration requirements and their interpretation and implementation has been constantly evolving, it remains unclear how these regulations, and any future legislation concerning offshore or cross-border investments and transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, as a publicly traded company in the United States, we may not at all times know of the identities of all of our beneficial owners, who are PRC citizens or residents, and we may have little control over either our present or prospective direct or indirect PRC resident beneficial owners or the outcome of such registration procedures. We cannot assure you that we have complied or will be able to comply with all applicable foreign exchange and outbound investment related regulations. The failure or inability of these PRC resident beneficial owners to comply with applicable SAFE registration requirements may subject us to the sanctions described above, including sanctions which may impede our ability to contribute the additional capital from our proceeds of any future offerings to our PRC subsidiaries, and our PRC subsidiaries'’ ability to pay dividends or distribute profits to us. Furthermore, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

If the Chinese government were to impose new requirements for approval from the PRC Authorities to issue our common stocks to foreign investors or list on a foreign exchange, such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.28

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~~emphasized~~to ~~the~~us. ~~need~~Furthermore, toif ~~strengthen~~we ~~the~~decide ~~administration~~to ~~over~~acquire ~~illegal~~a ~~securities~~PRC ~~activities~~domestic company, ~~and~~we ~~the~~cannot ~~need~~assure toyou ~~strengthen~~that we or the ~~supervision~~owners ~~over~~of ~~overseas~~such ~~listings~~company, byas ~~Chinese~~the ~~companies.~~case ~~Effective~~may ~~measures~~be, ~~such~~will asbe ~~promoting~~able to obtain the ~~construction~~necessary ofapprovals ~~relevant~~or ~~regulatory~~complete ~~systems~~the ~~will~~necessary befilings ~~taken~~and toregistrations ~~deal~~required ~~with~~by the ~~risks~~foreign ~~and~~exchange ~~incidents~~regulations. ofThis ~~China-concept~~may ~~overseas~~restrict ~~listed~~our ~~companies,~~ability ~~and~~to ~~cybersecurity~~implement our acquisition strategy and ~~data~~could ~~privacy~~adversely ~~protection~~affect ~~requirements~~our business and ~~similar matters~~prospects.

While we do not currently plan to conduct any offerings of our securities in the U.S., the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters.

On February 17, 2023, the CSRC released the Trial Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises, which came into effect on March 31, 2023. The Rules Regarding Overseas Listing lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect overseas listing in overseas market.

The Rules Regarding Overseas Listing stipulate that the Chinese-based companies, or the issuer, shall fulfill the filing procedures within three working days after the issuer makes an application for initial public offering and listing in an overseas market. The required filing materials for an initial public offering and listing should include at least the following: record-filing report and related undertakings; regulatory opinions, record-filing, approval and other documents issued by competent regulatory authorities of relevant industries (if applicable); and security assessment opinion issued by relevant regulatory authorities (if applicable); PRC legal opinion; and prospectus.

In addition, an overseas offering and listing is prohibited under any of the following circumstances: (1) if the intended securities offering and listing is specifically prohibited by national laws and regulations and relevant provisions; (2) if the intended securities offering and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council in accordance with law; (3) if there are material ownership disputes over the equity, major assets, and core technology, etc. of the issuer; (4) if, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (5) if, in past three years, directors, supervisors, or senior executives have been subject to administrative punishments for severe violations, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (6) other circumstances as prescribed by the State Council. The Administration Provisions defines the legal liabilities of breaches such as failure in fulfilling filing obligations or fraudulent filing conducts, imposing a fine between RMB 1 million and RMB 10 million, and in cases of severe violations, a parallel order to suspend relevant business or halt operation for rectification, revoke relevant business permits or operational license.

Although the Rules Regarding Overseas Listing have gone into effect, it may subject us to additional compliance requirement in the future, and we cannot assure you that we will be able to get the clearance of filing procedures under the Rules Regarding Overseas List on a timely basis, or at all. If we do not receive any required approvals or record-filing or if we incorrectly conclude that approvals or record-filing are not required or if the CSRC or other regulatory agencies promulgate new rules, explanations or interpretations requiring that we obtain their prior approvals or ex-post record-filing for any follow-on offering, we may be unable to obtain such approvals and record-filing which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors.

Furthermore, the PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers like us. Such actions taken by the PRC government authorities may intervene or influence our operations at any time, which are beyond our control. Therefore, any such action may adversely affect our operations and significantly limit or hinder our ability to offer or continue to offer securities and reduce the value of such securities.

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As of the date of this report, we and our PRC subsidiaries have not been involved in any investigations on cybersecurity review initiated by the Cyber Administration of China or related governmental regulatory authorities, and have not received any requirements to obtain permissions from any PRC authorities to issue our common stocks to foreign investors or were denied such permissions by any PRC authorities. However, given the current PRC regulatory environment, it is uncertain when and whether we or our PRC subsidiaries, will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded.

We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC or other PRC governmental authorities required for overseas listings. As of the date of this report, except for the potential uncertainties disclosed above, we have not received any inquiry, notice, warning, sanctions or regulatory objection from the CSRC or other PRC governmental authorities. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities.

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If the Chinese government chooses to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors outside of China and, as a result, cause the value of such securities to significantly decline or be worthless.

While we do not currently intend to conduct any offerings of our securities outside of China or obtain any foreign investment, recent statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted outside of China and/or foreign investments in China based issuers. The PRC has recently promulgated new rules that require companies collecting or holding large amounts of data to undergo a cybersecurity review prior to listing in foreign countries, a move that will significantly tighten oversight over China-based internet giants. The Measures for Cybersecurity Review (2021 version) was promulgated on December 28, 2021 and became effective on February 15, 2022. These measures specify that any “online platform operators” controlling the personal information of more than one million users which seek to list on a foreign stock exchange are subject to prior cybersecurity review.

As our business belongs to the real estate industry in China, and our business does not involve the collection of user data or involve any other type of restricted industry, our business is generally outside the scope of the Measures for Cybersecurity Review. Based on the advice of counsel and our understanding of currently applicable PRC laws and regulations, any offering in the U.S. is ~~not~~ subject to the review or prior approval of the CAC or the CSRC. Uncertainties still exist, however, due to the possibility that laws, regulations or policies in the PRC could change or rapidly evolve in the future. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.

Recent joint statement by the SEC and the PCAOB, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to the continued trading “over the counter” or future offerings of our securities in the U.S.

On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in “Restrictive Market,” (ii) adopt a new requirement relating to the qualification of management or board of director for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors. On October 4, 2021, the SEC approved Nasdaq’s revised proposal for the rule changes.

On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved ~~the Holding Foreign Companies Accountable Act. On December 18, 2020, the Holding Foreign Companies Accountable Act was signed into law.~~

~~On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the Holding Foreign Companies Accountable Act.~~30

On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two.

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~~Act, whether~~ the ~~board~~Holding ofForeign ~~directors~~Companies ofAccountable aAct. ~~company~~On isDecember ~~unable~~18, to2020, ~~inspect~~the orHolding ~~investigate~~Foreign ~~completely~~Companies ~~registered~~Accountable ~~public~~Act ~~accounting~~was ~~firms~~signed ~~located~~into ~~in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction~~law.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the Holding Foreign Companies Accountable Act.

On June 22, 2021, the U.S. Senate passed a bill and the U.S. House of Representatives then signed into law, the Consolidated Appropriations Act of 2023, which amended the Holding Foreign Companies Accountable Act to decrease the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two years.

On September 22, 2021, the PCAOB adopted a final rule implementing the Holding Foreign Companies Accountable Act, which provides a framework for the PCAOB to use when determining, as contemplated under the Holding Foreign Companies Accountable Act, whether the board of directors of a company is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies Accountable Act.

On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by PRC and Hong Kong authorities in those jurisdictions.

The lack of access to the PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China. As a result, the investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors to lose confidence in the audit procedures and reported financial information and the quality of the financial statements of those companies who have China-based auditors.

On December 15, 2022, the PCAOB determined that it has secured complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. The PCAOB has voted to vacate the previous determinations to the contrary.

Our auditor, RH CPA, is an independent registered public accounting firm with the PCAOB, and as an auditor of publicly traded companies in the U.S., is subject to laws in the U.S. pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. The PCAOB currently has access to inspect the working papers of our auditor and our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. However, the recent developments would add uncertainties to our future offerings in the U.S., and we cannot assure you whether regulatory authorities would apply additional and more stringent criteria to us since and the majority of our operations are conducted in China. Furthermore, the Holding Foreign Companies Accountable Act, which requires that the PCAOB be permitted to inspect an issuer’s public accounting firm within three years, may result in the prohibition of trading in our common stocks in the future if the PCAOB is unable to inspect our accounting firm at such future time. The Accelerating Holding Foreign Companies Accountable Act, if passed by the U.S. House of Representatives and signed into law, would reduce the period of time for foreign companies to comply with PCAOB audits to two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading.

~~You~~Dividends ~~may~~and ~~experience~~Cash difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign law against us or our management named in the annual report.Transfers

We ~~are~~transfer ~~incorporated~~cash inamongst ~~Texas~~our subsidiaries and ~~conduct~~SRRE ~~substantially~~through ~~all~~the ofgeneral ~~our~~banking ~~operations~~system inas ~~China~~regulated ~~through~~by ~~our~~the ~~wholly-owned~~Chinese ~~subsidiaries in China~~government. ~~All~~We ofhave ~~our~~been ~~assets~~able ~~are~~to ~~located~~transfer incash ~~China.~~from Inour ~~addition,~~subsidiaries ~~many~~to ofSRRE ~~our directors~~ and ~~senior~~distribute ~~executive~~dividends ~~officers~~to ~~reside~~our ~~within~~shareholders ~~China~~in ~~and~~compliance ~~some~~with orChinese ~~all~~government ofrestrictions ~~the~~on ~~assets~~currency ofexchange ~~those~~and ~~persons~~regulations. ~~are~~Chinese ~~located~~regulations ~~outside~~generally ofrestrict ~~the~~cross ~~United~~border ~~States.~~fund ~~Even~~transfers ifto ~~you~~dividend ~~are~~payments ~~successful~~to inupstream ~~bringing~~companies, ansuch ~~action~~as ~~of this kind~~SRRE, ~~the~~or ~~respective~~a ~~laws~~return of ~~the~~invested ~~United~~funds. ~~States~~Chinese ~~and~~companies ~~China~~can ~~may~~only ~~render~~transfer ~~you~~funds ~~unable~~ to ~~enforce~~their aoverseas ~~judgment~~parent ~~against~~companies ~~our~~through ~~assets~~profit ordistribution ~~the~~and ~~assets~~a withdrawal of ~~our directors and officers~~investments. ~~The~~Before ~~PRC~~distributing ~~does~~earnings ~~not~~overseas ~~have~~to ~~treaties~~SRRE, ~~with~~a ~~the~~subsidiary ~~United~~needs ~~States~~to orprovide ~~many~~verification ~~other~~of ~~countries~~its ~~providing~~earnings, ~~for~~which ~~the~~usually ~~reciprocal~~involves ~~recognition~~an ~~and~~auditor ~~enforcement~~issuing ofan ~~judgments~~audit ~~of courts. Therefore~~report, ~~recognition~~ and ~~enforcement~~the insubsidiary ~~China~~must ofpay ~~judgments~~the ofrelevant aincome ~~court~~tax. inProfit ~~any~~distributions ofrequire ~~these~~payment ~~non-PRC~~of ~~jurisdictions~~a incapital ~~relation~~gains totax, ~~any~~typically ~~matter~~at ~~not subject to~~ a ~~binding~~rate ~~arbitration~~of ~~provision may be difficult or impossible~~10%.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not Applicable.

ITEM 2. PROPERTY

Our headquarter office space is located at 18 Panlong Road, Qingpu District, Shanghai, PRC. We also rent regional field support offices in various cities in China, including Shanghai, Suzhou, Linyi and Wuhan. We lease the facilities that house our regional field support offices. The terms of the leases do not contain rent escalation, contingent rent, renewal, or purchase options.

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The Company also owns two floors and four units of the Sovereign Building in Suzhou, PRC. One floor is held for the Company’s own use, and the remaining properties are held for long term investment purposes.

ITEM 3. LEGAL PROCEEDINGS

In 2021, the Market Supervisions Administration (“MSA”) of Baokang County, a county located within Hubei Province, investigated the business practices of SHDEW, a company in which we own a 19.91% interest, and some of its affiliates. SHDEW sells cosmetics and other consumer goods online. In September 2021, the MSA fined SHDEW 21 million RMB (approximately $3 million) for business practices that did not conform to government standards. The MSA required SHDEW to change its business model for the collection of commissions from downline distributors, which was found to resemble an unacceptable multi-level marketing program. Accordingly, SHDEW subsequently paid the fine and changed its business practices. We are not related to this investigation, and we do not have any control or influence over the business practices of SHDEW. We are unable to evaluate the merits of any allegations or conclusions by the MSA.

On November 4th, 2022, the MSA of Yuhua District, Shijiazhuang City, a city located within Hebei Province held a hearing regarding the proposed disgorgement of the proceeds of 19 entities and individuals including SHDEW, Shanghai Shangyang Investment Management and Consulting Co., Ltd. (“SHSY”), Linyi Ruilin Consulting and Design Co., Ltd (“LYRL”), Lin Chi Jung, and Wang Wenhua, regarding SHDEW’s online multi-level marketing program. SHSY and LYRL are our wholly-owned subsidiaries that own our interest in SHDEW. The MSA is evaluating the results of the hearing and has not determined the final amounts, if any, to be disgorged, which could be material. Our counsel believes that the Yu Hua District has no jurisdiction over this case and that the allegations are likely without merit, although there can be no assurance regarding the outcome. None of such individuals or entities have received any formal notification by Yu Hua District’s State Administration for Market Regulation of this action and no final decision has been made by the Yuhua District MSA against any party.

We do not know how any change in SHDEW’s business practices will affect its revenue and ability to pay a dividend, which has been a significant source of our revenue in recent years. While SHDEW is not required to pay any dividends, any material decline in the dividend could have a material adverse effect on our business. At this stage, we are also unable to evaluate the impact on our future cash flow resulting from this investigation.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the OTC Market system under the symbol “SRRE.” The following table sets forth the high and low quotations of our common stock reported by the OTC Market system for the periods indicated. Effective in March, 2011, quotations for our common stock were reported by the OTC Market system.

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 U.S. Dollars based on Yahoo Finance)


	2022					2021
	High		Low			High		Low
First quarter	$	0.21	$	0.16	First quarter	$	0.86	$	0.34
Second quarter	$	0.26	$	0.17	Second quarter	$	0.60	$	0.30
Third quarter	$	0.24	$	0.17	Third quarter	$	0.45	$	0.07
Fourth quarter	$	0.48	$	0.17	Fourth quarter	$	0.22	$	0.15

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AsWhile no dividends or distributions were made to the shareholders of SRRE during the fiscal year ended December 31, 2022, wein ~~have~~November ~~approximately~~2022, ~~604~~SHSY ~~record~~paid ~~holders~~a dividend to LRY in the amount of ~~our~~200 ~~common~~million ~~stock~~RMB. This dividend resulted in a capital gains tax of 20 million RMB. As a result, LRY received 180 million RMB ($25,375,686) net of taxes. On ~~December 31~~March 2023, ~~2022~~LRY transferred $10,303,789 ~~the~~to ~~closing~~SRRE ~~price~~to ofpay a dividend to our ~~common~~shareholders, ~~stock~~which ~~was~~funds $0initially came from SHSY.23 There are no Chinese tax consequences to pay dividends to United States investors.

~~The~~You ~~Company~~may ~~did~~experience ~~not~~difficulties ~~repurchase~~in ~~any~~effecting service of ~~its~~legal ~~outstanding~~process, ~~equity~~enforcing ~~securities~~foreign ~~nor~~judgments ~~have~~or ~~any~~bringing ~~sales~~original ofactions ~~unregistered~~in ~~securities~~China ~~during~~based ~~the~~on ~~year~~United ~~ended~~States ~~December 31,~~or ~~2022~~other foreign law against us or our management named in the annual report.

We are incorporated in Texas and conduct all of our operations in China through our wholly-owned subsidiaries in China. All of our assets are located in China. In addition, all of our directors and senior executive officers reside within China and some or all of the assets of those persons are located outside of the United States. As a result, it may be difficult or impossible to effect service of process within the United States or elsewhere outside China upon us, our directors and executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Even if you obtain a judgment against us, our directors, executive officers or the expert named in this prospectus in a U.S. court or other court outside China, you may not be able to enforce such judgment against us or them in China. China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts in the United States, the United Kingdom, Japan or most other western countries and regions. Therefore, recognition and enforcement in China of judgments of a court in any of these non-PRC jurisdictions may be difficult or impossible. In addition, you may not be able to bring original actions in China based on the U.S. or other foreign laws against us, our directors, executive officers or the expert named in this prospectus. As a result, shareholder claims that are common in the United States, including class actions based on securities law and fraud claims, are difficult or impossible to pursue as a matter of law and practicality in China. Although the local authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such regulatory cooperation with the securities regulatory authorities in the Unities States have not been efficient in the absence of mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas parties. While detailed interpretation of or implementation rules under Article 177 of the PRC Securities Law is not yet available, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by investors in protecting your interests. Therefore, you may not be able to effectively enjoy the protection offered by the U.S. laws and regulations that are intended to protect public investors.

~~ITEM~~The 6.approval ~~SELECTED~~or ~~FINANCIAL~~record ~~DATA~~filing of the CSRC, or other PRC government authorities may be required in connection with future capital raising activities under the PRC laws.

~~Not~~On ~~Applicable~~February 24, 2023, the CSRC, together with other PRC government authorities, released the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises, or the Confidentiality and Archives Administration Provisions, which came into effect on March 31, 2023. The Confidentiality and Archives Administration Provisions require, among others, that PRC domestic enterprises seeking to offer and list securities in overseas markets, either directly or indirectly, shall establish the confidentiality and archives system, and shall complete approval and filing procedures with competent authorities, if such PRC domestic enterprises or their overseas listing entities provide or publicly disclose documents or materials involving state secrets and work secrets of PRC government agencies to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals. It further stipulates that providing or publicly disclosing by domestic companies, or providing or publicly disclosing through its overseas listing entities, to the relevant securities companies, securities service agencies, overseas regulatory authorities and other entities or individuals documents and materials that may adversely affect national security or public interests after leakage, the domestic enterprise shall strictly go through the corresponding procedures in accordance with relevant laws and regulations. Where a domestic company provides to the relevant securities companies, securities service institutions, overseas regulatory authorities and other entities or individuals, any accounting records or duplicates of such accounting records, it shall complete relevant procedures according to the relevant regulations. The Confidentiality and Archives Administration Provisions were also newly published, and there remains uncertainty as to their interpretation, application and implementation.

Furthermore, if the CSRC, CAC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals or complete the filing or reporting procedures for this offering or to maintain our listing status or for our future offshore securities offerings, we may be unable to obtain such approvals or complete such filing or reporting procedures in a timely manner, or

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~~ITEM~~at 7all, and such approvals may be rescinded even if obtained. ~~MANAGEMENT’S~~Any ~~DISCUSSION~~such ~~AND~~circumstance ~~ANALYSIS~~could OFsignificantly ~~FINANCIAL~~limit ~~CONDITION~~or ~~AND~~completely ~~RESULTS~~hinder OFour ~~OPERATIONS~~ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

~~The~~We ~~following~~may ~~Management’s~~use ~~Discussion~~dividends and ~~Analysis~~other ~~(“MD&A”)~~distributions ison ~~intended~~equity topaid ~~help~~by ~~the~~our ~~reader~~principal ~~understand~~operating ~~Sunrise~~subsidiaries ~~Real~~to ~~Estate~~fund ~~Group, Inc.~~offshore ~~(“SRRE”)~~cash and financing requirements. ~~MD&A~~Any islimitation ~~provided~~on asthe aability ~~supplement~~of our PRC operating subsidiaries to, ~~and~~make ~~should~~payments beto ~~read~~us incould ~~conjunction~~have ~~with,~~an ~~our~~adverse ~~financial~~effect ~~statements~~on ~~and~~our ~~the~~ability ~~accompanying~~to ~~notes~~conduct our business.

~~OVERVIEW~~We are a holding company and may use dividends and other distributions on equity paid by our principal operating subsidiaries, for our offshore cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, fund inter-company loans, service any debt we may incur outside of China and pay our expenses. When our principal operating subsidiaries incur additional debt, the instruments governing the debt may restrict their ability to pay dividends or make other distributions or remittances to us. Furthermore, the laws, rules and regulations applicable to our PRC subsidiaries and certain other subsidiaries permit payments of dividends only out of their accumulated after-tax profits upon satisfaction of relevant statutory conditions and procedures, if any, determined in accordance with applicable accounting standards and regulations.

InUnder ~~October 2004~~PRC laws, ~~the~~rules ~~former~~and ~~shareholders~~regulations, each of ~~Sunrise~~our ~~Real~~subsidiaries ~~Estate~~incorporated ~~Development~~in ~~Group, Inc.~~China ~~(Cayman~~is ~~Islands)~~required ~~(“CY~~to set aside at least 10% of its after-~~SRRE”)~~tax ~~and~~profits ~~LIN~~each ~~RAY~~year, ~~YANG~~if ~~Enterprise~~any, ~~Ltd~~to fund certain statutory reserves until the cumulative amount of such reserves reaches 50% of its registered capital. ~~(“LRY”)~~These ~~acquired~~reserves, together with the registered capital, are not distributable as cash dividends. As a ~~majority~~result of these laws, rules and regulations, our ~~voting~~subsidiaries ~~interests~~incorporated in aChina ~~share~~are ~~exchange.~~restricted ~~Before~~in ~~the~~their ~~completion~~ability to transfer a portion of ~~the~~their ~~share~~respective ~~exchange~~net assets to their shareholders as dividends, ~~SRRE~~loans ~~had~~or noadvances. ~~continuing~~In ~~operations~~addition, ~~and~~registered ~~its~~capital ~~historical~~is ~~results~~also ~~would~~restricted ~~not~~from bewithdrawal ~~meaningful~~in ifthe ~~combined~~PRC ~~with~~while the ~~historical~~capital ~~results~~reserve ofaccounts ~~CY-SRRE~~are prohibited from making up for losses. Furthermore, ~~LRY~~the incurrence of indebtedness by our PRC subsidiaries could result in operating and ~~their~~financing covenants and undertakings to creditors that would restrict the ability of our PRC subsidiaries to pay dividends to us.

AsThe aability ~~result~~ of ~~the acquisition, the former owners of CY-SRRE and LRY hold a majority interest in the combined entity~~U.S. ~~Generally~~authorities ~~accepted~~to ~~accounting~~bring ~~principles~~actions ~~require in certain circumstances that a company whose shareholders retain the majority voting interest in the combined business be treated as the acquirer~~ for ~~financial~~violations ~~reporting~~of ~~purposes~~U.S. ~~Accordingly,~~securities ~~the~~law ~~acquisition has been accounted for as a “reverse acquisition” arrangement whereby CY-SRRE~~ and ~~LRY~~regulations ~~are~~against ~~deemed~~us, toour ~~have purchased SRRE. However~~directors, ~~SRRE~~executive ~~remains~~officers ~~the~~or ~~legal entity and~~ the ~~Registrant~~expert ~~for~~named ~~Securities~~in ~~and~~this ~~Exchange~~prospectus ~~Commission~~may ~~reporting~~be ~~purposes~~limited. ~~The historical financial statements prior to October 5~~Therefore, ~~2004~~you ~~are~~may ~~those~~not ofbe ~~CY-SRRE~~afforded ~~and LRY and their subsidiaries. All equity information and per share data prior to~~ the ~~acquisition~~same ~~have~~protection ~~been~~as ~~restated~~provided to ~~reflect~~investors ~~the~~in ~~stock~~U.S. ~~issuance~~domestic ~~as a recapitalization of CY-SRRE and LRY~~companies.

~~SRRE~~The ~~and~~SEC, ~~its~~the ~~subsidiaries~~U.S. Department of Justice, ~~namely~~or the DOJ, CYand other U.S. authorities often have substantial difficulties in bringing and enforcing actions against non-~~SRRE~~U.S. companies such as us, ~~LRY~~and non-U.S. persons, ~~Shanghai~~such ~~Xin~~as Jiour ~~Yang~~directors ~~Real~~and ~~Estate~~executive ~~Consultation~~officers ~~Company~~in ~~Limited~~China. ~~(“SHXJY”),~~Due ~~Shanghai~~to ~~Shang~~jurisdictional ~~Yang~~limitations, ~~Investment~~matters ~~Management~~of comity and ~~Consulting~~various ~~Company~~other ~~Limited~~factors, ~~(“SHSY”)~~the SEC, ~~Suzhou~~the ~~Shang~~DOJ ~~Yang~~and ~~Real~~other ~~Estate~~U.S. ~~Consultation~~authorities ~~Company~~may ~~Limited~~be ~~(“SZSY”),~~limited ~~Suzhou~~in ~~Xin~~their Jiability ~~Yang~~to ~~Real~~pursue ~~Estate~~bad ~~Consultation~~actors, ~~Company~~including ~~Limited~~in ~~(“SZXJY”)~~instances of fraud, ~~Linyi~~in ~~Rui~~emerging ~~Lin~~markets ~~Construction~~such as China. We conduct our operations mainly in China and ~~Design~~our ~~Company~~assets ~~Limited~~are ~~(“LYRL”)~~mainly located in China. In addition, ~~Linyi~~all ~~Shang~~of ~~Yang~~our ~~Real~~directors ~~Estate~~and ~~Development~~executive ~~Company~~officers ~~Limited~~reside ~~(“LYSY”),~~within ,China. ~~Wuhan~~There ~~Gao~~are ~~Feng~~significant ~~Hui~~legal ~~Consultation~~and ~~Company~~other ~~Limited~~obstacles ~~(“WHGFH”),~~for ~~Sanya~~U.S. ~~Shang~~authorities ~~Yang~~to ~~Real~~obtain ~~Estate~~information ~~Consultation~~needed ~~Company~~for ~~Limited~~investigations ~~(“SYSY”)~~or litigation against us or our directors, ~~Shanghai~~executive ~~Rui~~officers ~~Jian~~or ~~Design~~other ~~Company~~gatekeepers ~~Limited~~in ~~(“SHRJ”),~~case ~~Zhong~~we Jior Puany Faof ~~Real~~these ~~Estate~~individuals ~~Company~~engage ~~Limited~~in ~~(“SHGXL”)，Huai~~fraud Anor ~~Zhan~~other ~~Bao~~wrongdoing. ~~Industrial~~In ~~Company~~addition, ~~Limited~~local ~~(“HAZB”)and~~authorities ~~its~~in ~~equity~~China ~~investments~~may be constrained in ~~affiliates~~their ability to assist U.S. authorities and overseas investors in connection with legal proceedings. As a result, ~~namely~~if ~~Wuhan~~we, ~~Yuan~~our Yudirectors, ~~Long~~executive ~~Real~~officers ~~Estate~~or ~~Development~~other ~~Company~~gatekeepers ~~Limited~~commit ~~(“WHYYL”)~~any securities law violation, ~~are~~fraud ~~sometimes~~or ~~hereinafter~~other ~~collectively~~financial ~~referred~~misconduct, the U.S. authorities may not be able to asconduct ~~“the~~effective ~~Company~~investigations or bring and enforce actions against us,” “our” directors, executive officers or ~~“us”~~other gatekeepers. Therefore, you may not be able to enjoy the same protection provided by various U.S. authorities as it is provided to investors in U.S. domestic companies.

~~The~~We ~~principal~~may ~~activities~~be oftreated ~~the~~as ~~Company~~a ~~are~~resident ~~real~~enterprise ~~estate~~for ~~agency~~PRC ~~sales,~~tax ~~real~~purposes ~~estate~~under ~~marketing~~the ~~services,~~PRC ~~real~~Enterprise ~~estate~~Income ~~investments~~Tax Law, ~~property~~and ~~leasing~~we ~~services~~may ~~and~~therefore ~~property~~be ~~management~~subject ~~services~~to inPRC ~~the~~income ~~PRC~~tax on our global income.

~~RISKS~~Under ~~ASSOCIATED~~the ~~WITH~~Enterprise ~~FORWARD~~Income Tax Law and its implementing rules, enterprises established under the laws of jurisdictions outside of China with “de facto management bodies” located in China may be considered PRC tax resident enterprises for tax purposes and may be subject to the PRC enterprise income tax at the rate of 25% on their global income. “De facto management body” refers to a managing body that exercises substantial and overall management and control over the production and operations, personnel, accounting and assets of an enterprise. The State Administration of Taxation “ the SAT” issued the Notice Regarding the Determination of Chinese-~~LOOKING~~Controlled ~~STATEMENTS~~Offshore-Incorporated ~~INCLUDED~~Enterprises INas ~~THIS~~PRC ~~FORM 10~~Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, on April 22, 2009, which was most recently amended on December 29, 2017. Circular 82 provides certain specific criteria for determining whether the “de facto management body” of a Chinese-Kcontrolled offshore-incorporated enterprise is located in China. Although Circular 82 only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by foreign enterprises or individuals, the determining criteria set forth in Circular 82 may reflect the State Administration of Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises or PRC enterprise groups. According to Circular 82, an offshore

In February 2016, the FASB issued ASU 2016-02 which establishes new accounting and disclosure requirements for leases. ASU No. 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. The Company adopted ASU 2016-02 in the first quarter of 2022 using the effective date approach to recognize and measure leases as of the adoption date. The Company has elected to utilize the available practical expedient to not separate lease components from non-lease components as well as the package of practical expedients that allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any existing leases as of the adoption date. At the date of adoption on January 1, 2022, this guidance had no impact to the Company’s condensed consolidated financial statements.

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which, among other things, provides guidance on how to account for contracts on an entity’s own equity. This ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, this ASU modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in this ASU are effective for the public companies for fiscal years beginning after December 15, 2021, including interim periods within

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~~those~~incorporated ~~fiscal~~enterprise ~~years.~~controlled ~~Early~~by ~~adoption~~a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management and the management department is ~~permitted~~in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, ~~but~~accounting nobooks ~~earlier~~and ~~than~~records, ~~fiscal~~company ~~years~~seals, ~~beginning~~and ~~after~~board ~~December~~and 15shareholder resolutions and minutes, ~~2020~~are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. ~~The~~If ~~Company~~we ~~adopted~~were ~~this~~to ~~standard~~be considered a PRC resident enterprise, we would be subject to PRC enterprise income tax at the rate of 25% on ~~January~~our 1global income. In such case, ~~2022~~our profitability and cash flow may be materially reduced as a result of our global income being taxed under the Enterprise Income Tax Law. In addition, ~~which~~our ~~had~~shareholders nomay ~~material~~be ~~impact~~subject to PRC tax, as described in “— Dividends paid to our foreign investors and gains on the ~~Company’s~~sale ~~condensed~~or ~~consolidated~~other ~~financial~~disposition ~~statements~~of the ADSs or ordinary shares by our foreign investors may become subject to PRC tax” below. We believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.”

~~APPLICATION~~Dividends OFpaid ~~CRITICAL~~to ~~ACCOUNTING~~our ~~POLICIES~~foreign investors and gains on the sale or other disposition of ordinary shares by our foreign investors may become subject to PRC tax.

~~Our~~Under ~~discussion~~the Enterprise Income Tax Law and ~~analysis~~its ofimplementation ~~our~~rules ~~financial~~issued ~~condition~~by ~~and~~the ~~results~~State ofCouncil, ~~operations~~a ~~are~~10% ~~based~~PRC ~~upon~~withholding ~~our~~tax ~~consolidated~~is ~~financial~~applicable ~~statements.~~to ~~These~~dividends ~~financial~~paid ~~statements~~to investors that are ~~prepared~~non-resident inenterprises, ~~accordance~~which ~~with~~do ~~generally~~not ~~accepted~~have ~~accounting~~an ~~principles~~establishment inor ~~the~~place ~~United~~of ~~States~~business ~~(“U.S.~~in ~~GAAP”),~~the ~~which~~PRC ~~requires~~or uswhich tohave ~~make~~such ~~estimates~~establishment ~~and~~or ~~assumptions~~place ~~that~~of ~~affect~~business but the ~~reported~~dividends ~~amounts~~are ofnot ~~our~~effectively ~~assets~~connected ~~and~~with ~~liabilities~~such ~~and~~establishment ~~revenues~~or ~~and~~place ~~expenses~~of business, to ~~disclose~~the ~~contingent~~extent ~~assets~~such ~~and~~dividends ~~liabilities~~are derived from sources within the PRC. Any gain realized on the ~~date~~transfer of ~~the~~ordinary ~~consolidated~~shares ~~financial~~by ~~statements,~~such ~~and~~investors is also subject to ~~disclose~~PRC ~~the~~tax ~~reported~~at ~~amounts~~a current rate of ~~revenues~~10%, ~~and~~if ~~expenses~~such ~~incurred~~gain ~~during~~is ~~the~~regarded ~~financial~~as ~~reporting~~income ~~period~~derived from sources within the PRC. ~~The~~If ~~most~~we ~~significant~~are ~~estimates~~deemed ~~and~~a ~~assumptions~~PRC ~~include~~resident enterprise (as discussed above under “— We may be treated as a resident enterprise for PRC tax purposes under the ~~collection~~PRC ofEnterprise ~~accounts~~Income ~~receivable~~Tax Law, and ~~the~~we ~~useful~~may ~~lives~~therefore ~~and~~be ~~impairment~~subject ofto ~~property~~PRC ~~and~~income ~~equipment~~tax on our global income”), ~~goodwill~~dividends ~~and~~paid ~~intangible~~on ~~assets~~our ordinary shares, and any gain realized from the ~~valuation~~transfer of ~~deferred~~our ~~tax~~ordinary ~~assets~~shares, ~~and~~would ~~inventories~~be ~~and~~treated as income derived from sources within the ~~provisions~~PRC ~~for~~and ~~income~~would ~~taxes.~~as Wea ~~continue~~result tobe ~~evaluate~~subject ~~these~~to ~~estimates~~PRC ~~and~~taxation. ~~assumptions~~Furthermore, ~~that~~if we ~~believe~~are todeemed bea ~~reasonable~~PRC ~~under~~resident ~~the~~enterprise, ~~circumstances.~~dividends Wepaid ~~rely~~to onindividual ~~these~~investors ~~evaluations~~who asare ~~the~~non-PRC ~~basis~~residents ~~for~~and ~~making~~any ~~judgments~~gain ~~about~~realized on the ~~carrying~~transfer ~~values~~ of ~~assets~~ordinary ~~and~~shares ~~liabilities~~by ~~that~~such ~~are~~investors ~~not~~may ~~readily~~be ~~apparent~~subject ~~from~~to ~~other~~PRC ~~sources.~~tax ~~Since~~(which in the ~~use~~case of ~~estimates~~dividends ismay anbe ~~integral~~withheld ~~component~~at source) at a rate of ~~the~~20%. ~~financial~~Any ~~reporting~~PRC ~~process,~~tax ~~actual~~liability ~~results~~may ~~could~~be ~~differ~~reduced ~~from~~by ~~those~~an ~~estimates~~applicable tax treaty or under applicable tax arrangements between jurisdictions. ~~Some~~However, if we or any of our ~~accounting~~subsidiaries ~~policies~~established ~~require~~outside ~~higher~~China ~~degrees~~are ofconsidered ~~judgment~~a ~~than~~PRC ~~others~~resident inenterprise, ~~their~~it ~~application.~~is Weunclear ~~believe~~whether ~~critical~~holders ~~accounting~~of ~~policies~~ordinary asshares ~~disclosed~~would inbe ~~this~~able ~~Form 10-K~~to ~~reflect~~obtain the ~~more~~benefit ~~significant~~of ~~judgments~~income tax treaties or agreements entered into between China and ~~estimates~~other ~~used~~countries inor ~~preparation~~areas. ofIf dividends paid to our ~~consolidated~~non-PRC ~~financial~~investors, ~~statements.~~or Wegains ~~believe~~from ~~there~~the ~~have~~transfer ~~been~~of noordinary ~~material~~shares ~~changes~~by tosuch ~~our~~investors, ~~critical~~are ~~accounting~~deemed ~~policies~~as income derived from sources within the PRC and ~~estimates~~thus are subject to PRC tax, the value of your investment in the ordinary shares may decline significantly.

The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements:

Revenue Recognition

Most of the Company’s revenue is derived from real estate sales in the PRC. The majority of the Company’s contracts contain a single performance obligation involving significant real estate development activities that are performed together to deliver a real estate property to customers. Revenues arising from real estate sales are recognized when or as the control of the asset is transferred to the customer. The control of the asset may transfer over time or at a point in time. For the sales of individual condominium units in a real estate development project, the Company has an enforceable right to payment for performance completed to date, revenue is recognized at a point in time when the customer obtains control of the asset.

All revenues represent gross revenues less sales and business tax.

ASC 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied. ASC 606 also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, ASC 606 requires extensive disclosures.

The Company adopted ASC 606 on January 1, 2018 using the modified retrospective approach with no restatement of comparative periods and no cumulative-effect adjustment to retained earnings recognized as of the date of adoption. A significant portion of the Company’s revenue is derived from development and sales of condominium real estate property in the PRC, with revenue previously recognized using the percentage of completion method. Under the new standard, to recognize revenue over time is similar to the percentage of completion method, contractual provisions need to provide the Company with an enforceable right to payment and the Company has no alternative use of the asset. Historically, all contracts executed contained an enforceable right to home purchase payments and the Company had no alternative use of assets, therefore, the adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements.

Real Estate Property Under Development

Real estate property under development, which consists of residential unit sites and commercial and residential unit sites under development, is stated at the lower of carrying amounts or fair value less selling costs.

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Expenditures for land development, including cost of land use rights, deed tax, pre-development costs and engineering costs, are capitalized and allocated to development projects by the specific identification method. Costs are allocated to specific units within a project based on the ratio of the sales value of units to the estimated total sales value times the total project costs.

Costs of amenities transferred to buyers are allocated as common costs of the project that are allocated to specific units as a component of total construction costs. For amenities retained by the Company, costs in excess of the related fair value of the amenity are also treated as common costs. Results of operations of amenities retained by the Company are included in current operating results.

In accordance with ASC 360, “Property, Plant and Equipment” (“ASC 360”), real estate property under development is subject to valuation adjustments when the carrying amount exceeds fair value. An impairment loss is recognized only if the carrying amount of the assets is not recoverable and exceeds fair value. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to be generated by the assets.

There is no impairment of real estate property under development during the years ended December 31, 2022 and 2021.

Impairment of Long-lived Assets

In accordance with ASC 360, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company is required to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

The Company tests long-lived assets, including property and equipment, investment properties and other assets, for recoverability when events or circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset’s expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There is no impairment of long-lived assets during the years ended December 31, 2022 and 2021.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company recognizes tax benefits that satisfy a greater than 50% probability threshold and provides for the estimated impact of interest and penalties for such tax benefits. The Company did not incur any interest or penalties related to potential underpaid income tax expenses during the years ended December 31, 2022 and 2021.

RESULTS OF OPERATIONS

We provide the following discussion and analyses of our changes in financial condition and results of operations for the year ended December 31, 2022 with comparisons to the historical year ended December 31, 2021.

Table of Contents

Net Revenues

The following table shows the detail for net revenues by line of business:


	Years Ended December 31,
	2022		% to total		2021		% to total		% change
Property management		1,101,389		1		1,340,951		2		(18)
House sales		78,918,800		99		52,799,457		98		49
Net revenues		80,020,189		100		54,140,409		100		48

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not Applicable

~~The~~ITEM ~~net revenue for 2022 was $80,020,189, an increase of 48% from $54,140,409 in 2021~~1C. ~~In 2022, property management and house sales represented 1%, and 99% of our total net revenue. The increase in 2022 was mainly due to the recognition of house sales of the HATX project in 2022.~~CYBERSECURITY

~~Property Management~~

~~Property~~We ~~management~~believe ~~represented~~cybersecurity 1%is ofcritical to us because we are conducting material operations. Cybersecurity threats have not affected our ~~revenue~~business instrategy ~~year~~or results of ~~2022~~operations. The Board of Directors will continue to assess the potential threat to future operations as such operations develop. The Board of Directors will oversee management’s processes for assessing, identifying and ~~revenue~~mitigating risks, including cybersecurity risks, to facilitate mitigating our risks involved with cybersecurity and help align our risk exposure with our strategic objectives. The Board relies on its executive officers to identify cybersecurity risks and retains oversight of cybersecurity. In the event of an incident, we intend to take appropriate steps from ~~property~~incident ~~management~~detection ~~decreased~~to mitigation, recovery and notification of appropriate parties. Management is responsible for day-to-day monitoring of cybersecurity, including detection and response and to report risks and incidents to the Board of Directors. We rely on computer software provided by ~~18%~~third ~~compared~~parties ~~with~~to ~~2021~~protect our computer systems against cybersecurity threats.

~~House Sales~~

~~House sales represented 99% of our revenue in year of 2022. The company has recognized a proportion of net revenue from the HATX project.~~34

~~Cost~~Table of ~~Revenues~~Contents

~~The~~ITEM ~~following~~2. ~~table shows the Cost of Revenues detail by line of business:~~PROPERTY

Our headquarter office space is located at 18 Panlong Road, Qingpu District, Shanghai, PRC. We rent the office from SHDEW on a year to year basis for $30,788 per year in rent. We also rent regional field support offices in various cities in China, including Shanghai, Suzhou, Linyi and Huaian. We lease the facilities that house our regional field support offices. The terms of the leases do not contain rent escalation, contingent rent, renewal, or purchase options.


	Years Ended December 31,
	2022		% to total		2021		% to total		% change
Property management		1,672,063		2		1,668,434		4		1
House sales		68,891,739		98		39,564,623		96		74
Cost of revenues		70,563,802		100		41,233,057		100		71

~~The~~ITEM ~~cost of revenues for 2022 was $70,563,802, an increase of 71% from $41,233,057 for 2021~~3. InLEGAL 2022, property management and house sales represented 2%, and 98% of total cost of revenues. The increase in cost of revenues is mainly due to the recognition of cost of revenue of house sales from the HATX project in 2022.PROCEEDINGS

36We are not a party to any legal proceeding that could reasonably be expected to have a material impact on our operations or finances. However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in any such matter may harm our business.

~~Table of Contents~~

~~Property~~ITEM ~~Management~~4. MINE SAFETY DISCLOSURES

~~The~~Not ~~cost of revenue from property management for 2022 was $1,672,063, an increase of 1% from $1,668,434 for 2021~~applicable.

~~House Sales~~

~~House sales represented 98% of our cost of revenue in year of 2022. The Company has recognized its cost of revenue from the HATX project at a certain proportion.~~PART II

~~Operating~~ITEM ~~Expenses~~5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the OTC Market system under the symbol “SRRE.” The following table ~~shows~~sets ~~operating~~forth ~~expenses~~the ~~detailed~~high byand ~~line~~low quotations of ~~business:~~our common stock reported by the OTC Market system for the periods indicated. Effective in March, 2011, quotations for our common stock were reported by the OTC Market system.

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


	Years Ended December 31,
	2022		% to total		2021		% to total		% change
Property management		158,102		5		990,738		29		(84)
House sales		2,870,986		95		2,427,124		71		18
Operating expenses		3,029,088		100		3,417,862		100		(11)

(Expressed in U.S. Dollars based on Yahoo Finance)

The operating expenses for 2022 were $3,029,088, a decrease of 11% from $3,417,862 in 2021. In 2022, the expenses related to property management and house sales represented 5%, and 95% of the total operating expenses.


	2023					2022
	High		Low			High		Low
First quarter	$	0.47	$	0.18	First quarter	$	0.21	$	0.16
Second quarter	$	0.53	$	0.25	Second quarter	$	0.26	$	0.17
Third quarter	$	0.38	$	0.25	Third quarter	$	0.24	$	0.17
Fourth quarter	$	0.30	$	0.23	Fourth quarter	$	0.48	$	0.17

~~Property Management~~

InAs ~~2022,~~of ~~the~~December ~~operating~~31, ~~expenses~~2023, ~~for~~we ~~property~~have ~~management~~approximately ~~decreased~~604 byrecord ~~84%~~holders ~~compared~~of toour ~~the~~common ~~amount in 2021~~stock. ~~The~~On ~~primary~~December ~~reason~~31, ~~for~~2023, the ~~decrease~~closing ~~was~~price ~~due~~of toour ~~less~~common ~~relevant~~stock ~~property~~was ~~renewing cost~~$0.28.

~~House~~The Company did not repurchase any of its outstanding equity securities nor have any sales of unregistered securities during the year ended December 31, 2023.

The operating expenses related to our house sales business in 2022 increased by 18% compared to 2021. The increase was mainly due to the increase in our sales promotion activities in HATX project and Linyi project.

~~General~~ITEM ~~and~~6. ~~Administrative~~SELECTED ~~Expenses~~FINANCIAL DATA

~~The~~Not ~~general and administrative expenses in 2022 were $8,550,561, which was an 126% increase from $3,779,319 in 2021~~Applicable. ~~The primary reason for the increase was due to the settlement of land value added tax (LVAT) of GXL project and LYSY project.~~

~~Operating Loss~~

~~In 2022, we had an operating loss of $3,366,456, representing a decreased loss from an operating gain of $5,710,171 in 2021.~~35

~~The~~Table ~~decrease in gain was mainly due to the loss from the house sales recognition~~ of ~~the HATX project in 2022 and settlement of LVAT of GXL project and LYSY project.~~Contents

~~Major~~ITEM ~~Related~~7. ~~Party~~MANAGEMENT’S ~~Transaction~~DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AThe ~~related~~following ~~party~~Management’s isDiscussion anand ~~entity~~Analysis ~~that~~(“MD&A”) ~~can~~is ~~control~~intended orto ~~significantly~~help ~~influence~~ the ~~management~~reader orunderstand ~~operating~~Sunrise ~~policies~~Real ofEstate ~~another~~Group, Inc. ~~entity~~(“SRRE”). toMD&A ~~the~~is ~~extent~~provided ~~one~~as ofa ~~the~~supplement ~~entities~~to, ~~may~~and should be ~~prevented~~read ~~from~~in ~~pursuing~~conjunction ~~its~~with, ~~own~~our ~~interests.~~financial Astatements ~~related~~and ~~party may also be any party~~ the ~~entity~~accompanying ~~deals with that can exercise that control~~notes.

~~Amount Due To Directors~~OVERVIEW

~~The~~In ~~amounts~~October 2004, ~~due~~the toformer ~~directors~~shareholders asof Sunrise Real Estate Development Group, Inc. (Cayman Islands) (“CY-SRRE”) and LIN RAY YANG Enterprise Ltd. (“LRY”) acquired a majority of ~~December~~our 31voting interests in a share exchange. Before the completion of the share exchange, ~~2022~~SRRE ~~were~~had ~~$480~~no continuing operations,~~109.~~ ~~The~~and ~~amounts~~its ~~due~~historical ~~were~~results aswould ~~follows:~~not be meaningful if combined with the historical results of CY-SRRE, LRY and their subsidiaries.

37As 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 shareholders retain the majority voting interest in the combined business 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 equity information and per share data prior to the acquisition have been restated to reflect the stock issuance as a recapitalization of CY-SRRE and LRY.

~~Table~~SRRE ofand ~~Contents~~its subsidiaries, namely, CY-SRRE, LRY, Shanghai Xin Ji Yang Real Estate Consultation Company Limited (“SHXJY”), Shanghai Shang Yang Investment Management and Consulting Company Limited (“SHSY”), Suzhou Shang Yang Real Estate Consultation Company Limited (“SZSY”), Suzhou Xin Ji Yang Real Estate Consultation Company Limited (“SZXJY”), Linyi Rui Lin Construction and Design Company Limited (“LYRL”), Linyi Shang Yang Real Estate Development Company Limited (“LYSY”), Wuhan Gao Feng Hui Consultation Company Limited (“WHGFH”), Sanya Shang Yang Real Estate Consultation Company Limited (“SYSY”), Shanghai Rui Jian Design Company Limited (“SHRJ”), Zhong Ji Pu Fa Real Estate Company Limited (“SHGXL”)，Huai An Zhan Bao Industrial Company Limited (“HAZB”)and its equity investments in affiliates, namely Wuhan Yuan Yu Long Real Estate Development Company Limited (“WHYYL”), are sometimes hereinafter collectively referred to as “the Company,” “our” or “us”.

~~Amount~~The ~~Due~~principal Toactivities ~~Lin~~of ~~Chi-Jung~~the Company are real estate development, real estate investments, property leasing services and property management services in the PRC.

~~The~~RISKS ~~amount~~ASSOCIATED ~~due~~WITH ~~to Lin Chi~~FORWARD-~~Jung~~LOOKING asSTATEMENTS ofINCLUDED ~~December~~IN ~~31,~~THIS ~~2022 was $459,298, which is unpaid loan.~~FORM 10-K

~~Amount~~In ~~Due~~February To2016, ~~Lin~~the ~~Hsin~~FASB ~~Hung~~issued ASU 2016-02 which establishes new accounting and disclosure requirements for leases. ASU No. 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. The Company adopted ASU 2016-02 in the first quarter of 2022 using the effective date approach to recognize and measure leases as of the adoption date. The Company has elected to utilize the available practical expedient to not separate lease components from non-lease components as well as the package of practical expedients that allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any existing leases as of the adoption date. At the date of adoption on January 1, 2022, this guidance had no impact to the Company’s condensed consolidated financial statements.

~~The~~In ~~balance~~August ~~due~~2020, tothe ~~Lin~~Financial ~~Hsin~~Accounting ~~Hung~~Standards asBoard of(“FASB”) ~~December~~issued 31Accounting Standards Update (“ASU”) 2020-06, ~~2022~~Debt—Debt ~~was~~with $Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,~~811,~~ which, isamong ~~unsecured~~other things, ~~interest-free~~provides guidance on how to account for contracts on an entity’s own equity. This ASU eliminates the beneficial conversion and ~~has~~cash noconversion ~~fixed~~accounting ~~term~~models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of ~~repayment~~specific settlement provisions. In addition, this ASU modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in this ASU are effective for the public companies for fiscal years beginning after December 15, 2021, including interim periods within

~~Amount Due From An Unconsolidated Affiliates~~36

~~The~~Table ~~unpaid portion~~ of ~~dividend announced of SHDEW, an unconsolidated affiliate, at the amount of $16,210,622.~~Contents

~~Amount~~those ~~Due~~fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The Company adopted this standard on January 1, 2022, which had no material impact to ~~Affiliates~~the Company’s condensed consolidated financial statements.

AsAPPLICATION ofOF ~~December~~CRITICAL ~~31,~~ACCOUNTING ~~2022, the amount due to Shanghai Shengji (“SHSJ”) a shareholder of HATX, $48,742,263 and JXSY, $509,010, was an intercompany transfer for day-to-day operations.~~POLICIES

~~Equity~~Our ~~Stock~~discussion ~~Option~~and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenues and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. The most significant estimates and assumptions include the collection of accounts receivable, and the useful lives and impairment of property and equipment, goodwill and intangible assets, the valuation of deferred tax assets and inventories and the provisions for income taxes. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this Form 10-K reflect the more significant judgments and estimates used in preparation of our consolidated financial statements. We believe there have been no material changes to our critical accounting policies and estimates.

OnThe ~~December~~following ~~28,~~critical ~~2021,~~accounting ~~the~~policies ~~Board~~rely ofupon ~~Directors~~assumptions ofand ~~the~~estimates ~~Company~~and ~~authorized~~were ~~the~~used ~~Company~~in ~~to issue options to purchase an aggregate of 3,000,000 shares of common stock as a bonus incentive to 13 individuals, who has each served~~ the ~~Company~~preparation ~~for a minimum~~ of ~~eight~~our ~~years.~~consolidated ~~The~~financial ~~options vested immediately and are exercisable until December 27, 2023 at an exercise price of $0.60 per share. The Directors and Executive Officers who were granted options include~~statements:


Lin Chi Jung	Director	2,000,000	shares
Zhang Jian	Chief Executive Officer	150,000	shares
Lin Hsin Hung	Chairman of the Board	100,000	shares
Pan Yu Jen	Director	100,000	shares
Mi Yong Jun	Chief Financial Officer	150,000	shares
Wang Wenhua	Director	25,000	shares

Revenue Recognition

~~LIQUIDITY~~All ~~AND~~revenues ~~CAPITAL~~represent ~~RESOURCES~~gross revenues less sales and business tax.

InASC ~~2022,~~606 ~~our~~requires ~~principal~~an ~~sources~~entity ofto ~~cash~~recognize ~~were~~revenue ~~revenues~~when ~~from~~it ~~our~~transfers ~~receipts~~promised ingoods ~~advance~~or ~~from~~services ~~real~~to ~~estate~~customers ~~development~~in ~~projects,~~an ~~property~~amount ~~management~~that ~~business,~~reflects asthe ~~well~~consideration asto which the ~~dividend~~entity ~~distribution~~expects ~~from~~to ~~our~~be ~~affiliates~~entitled in exchange for those goods or services. ~~Most~~ASC of606 ~~our~~creates ~~cash~~a ~~resources~~five-step ~~were~~model ~~used~~that requires entities to ~~fund~~exercise ~~our~~judgment ~~property~~when ~~development~~considering ~~investment~~the ~~and~~terms ~~revenue~~of ~~related~~the ~~expenses~~contract(s) which include (i) identifying the contract(s) with the customer, ~~such~~(ii) identifying asthe ~~salaries~~separate ~~and~~performance ~~commissions~~obligations ~~paid~~in tothe contract, (iii) determining the ~~sales~~transaction ~~force~~price, ~~daily~~(iv) allocating ~~administrative~~the ~~expenses~~transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied. ASC 606 also specifies the ~~maintenance~~accounting for the incremental costs of ~~regional~~obtaining ~~offices~~a contract and the costs directly related to fulfilling a contract. In addition, ASC 606 requires extensive disclosures.

WeThe ~~ended~~Company adopted ASC 606 on January 1, 2018 using the ~~period~~modified retrospective approach with ano ~~cash~~restatement ~~position~~of comparative periods and no cumulative-effect adjustment to retained earnings recognized as of ~~$33~~the date of adoption. A significant portion of the Company’s revenue is derived from development and sales of condominium real estate property in the PRC,~~201~~ with revenue previously recognized using the percentage of completion method. Under the new standard,~~354~~ to recognize revenue over time is similar to the percentage of completion method, contractual provisions need to provide the Company with an enforceable right to payment and the Company has no alternative use of the asset. Historically, all contracts executed contained an enforceable right to home purchase payments and the Company had no alternative use of assets, therefore, the adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements.

~~Net~~Real ~~cash~~Estate ~~used~~Property inUnder the Company’s operating activities in 2022 was $13,174,908, representing an increase of receipts in cash in the amount of $5,867,864 as compared to the cash provided for 2021. The increase was primarily attributable to the decrease in cash used in receipts in advance of $83,545,766.Development

~~Net~~Real ~~cash~~estate ~~used~~property byunder ~~the Company’s investment activities was $1~~development,~~626,200,~~ ~~representing~~which aconsists ~~decrease~~ of ~~$26,520,753~~residential asunit ~~compared~~sites toand ~~the~~commercial ~~cash~~and ~~received~~residential inunit ~~investing~~sites ~~activities~~under ~~for~~development, ~~2021.~~is ~~The~~stated ~~decrease~~at inthe ~~cash~~lower ~~from~~of ~~investment~~carrying ~~activities~~amounts ~~was~~or ~~primarily~~fair ~~attributable~~value toless ~~the~~selling ~~net cash from transactional financial assets in 2022~~costs.

Net cash provided by the Company’s financing activities was $23,759,027, representing an increase from $46,086,948 in 2021. This increase was primarily attributable to restricted cash of $23,759,027.37

~~The~~Table ~~cash~~of ~~needs for 2023 were for the funds required to finance the Company’s future projects in property agency and real estate developments.~~Contents

38Expenditures for land development, including cost of land use rights, deed tax, pre-development costs and engineering costs, are capitalized and allocated to development projects by the specific identification method. Costs are allocated to specific units within a project based on the ratio of the sales value of units to the estimated total sales value times the total project costs.

~~Table~~Costs of ~~Contents~~amenities transferred to buyers are allocated as common costs of the project that are allocated to specific units as a component of total construction costs. For amenities retained by the Company, costs in excess of the related fair value of the amenity are also treated as common costs. Results of operations of amenities retained by the Company are included in current operating results.

IfReal ~~our~~estate ~~business~~property ~~otherwise~~under ~~grows~~development ~~more~~is ~~rapidly~~subject ~~than~~to wevaluation ~~predict,~~adjustments wewhen ~~plan~~the tocarrying ~~raise~~amount ~~funds~~exceeds ~~through~~fair value. An impairment loss is recognized only if the ~~issuance~~carrying amount of ~~additional~~the ~~shares~~asset ofis ~~our~~not ~~equity~~recoverable ~~securities~~and inexceeds ~~one~~fair orvalue. ~~more~~The ~~public~~carrying oramount ~~private~~is ~~offerings.~~not Werecoverable ~~will~~if ~~also~~it ~~consider~~exceeds ~~raising~~the ~~funds~~sum ~~through~~of ~~credit~~the ~~facilities~~undiscounted ~~obtained~~cash ~~with~~flows ~~lending~~expected ~~institutions~~to ~~and~~be ~~affiliates,~~generated asby wethe ~~have~~asset. ~~done~~The ~~previously,~~Company ~~but~~reviewed ~~there~~all ~~can~~of beits noreal ~~guarantee~~estate ~~that~~projects wefor ~~will~~future belosses ~~able~~and impairment by comparing the estimated future undiscounted cash flows for each project to ~~obtain~~the carrying value of such ~~funds~~project. ~~through~~For the ~~issuance~~year ofended ~~debt~~December or31, ~~equity~~2023, ~~with~~the ~~terms~~Company ~~satisfactory~~recognized to$19.6 ~~management~~million ~~and~~impairment ~~our~~for ~~board~~real ofestate ~~directors~~property under development. Accumulated impairment losses totaled $19.6 million.

~~Management~~Impairment believes that the Company will generate sufficient cash flows to fund its operations and to meet its obligations on a timely basis for the next twelve months by successfully implementing its business plans, obtaining continued support from its lenders to roll over debts when they became due, and securing additional financing as needed. Based upon the equity income generated by SHDEW in 2022, we expect a substantial cash dividend from SHDEW in 2023, which will be our principal source of ~~liquidity.~~Long-lived We have been able to secure new bank lines of credit from banks and secure additional loans from affiliates to fund our operations to date. However, if events or circumstances occur such that the Company is unable to successfully implement its business plans, fails to obtain continued support from its lenders or to secure additional financing, the Company may be required to suspend operations or cease business entirely.Assets

~~The~~In ~~Market~~accordance ~~Supervisions~~with ~~Administration~~ASC ~~(“MSA”) of Baokang County~~360, a“Accounting ~~county~~for ~~located within Hubei Province, China, conducted an investigation into~~ the ~~business~~Impairment ~~practices~~or Disposal of ~~SHDEW,~~ InLong-Lived ~~September 2021~~Assets”, the ~~MSA~~Company ~~fined~~is ~~SHDEW~~required 21to ~~million~~review ~~RMB~~its ~~(approximately~~long-lived $3assets ~~million)~~ for ~~business~~impairment ~~practices~~whenever ~~that~~events ~~did~~or ~~not~~changes ~~conform~~in tocircumstances ~~government~~indicate ~~standards.~~that ~~The~~the ~~MSA~~carrying ~~required~~amount ~~SHDEW~~of toan ~~change~~asset ~~its~~may ~~business~~not ~~model~~be ~~for~~recoverable through the ~~collection~~estimated ofundiscounted ~~commissions~~cash ~~from~~flows ~~downline~~expected ~~distributors, which was found~~ to ~~resemble~~result anfrom ~~unacceptable~~the ~~multi-level~~use ~~marketing~~and ~~program.~~eventual ~~Accordingly,~~disposition ~~SHDEW~~of ~~subsequently paid~~ the ~~fine~~assets. ~~and~~Whenever ~~changed~~any ~~its~~such ~~business~~impairment ~~practices.~~exists, Wean ~~are~~impairment ~~not~~loss ~~related~~will tobe ~~this~~recognized ~~investigation,~~for ~~and~~the weamount doby ~~not~~which ~~have~~the ~~any~~carrying ~~control~~value orexceeds ~~influence over~~ the ~~business~~fair ~~practices of SHDEW~~value.

OnThe ~~November~~Company ~~4th~~tests long-lived assets, ~~2022~~including property and equipment, ~~the~~investment ~~MSA~~properties ofand ~~Yuhua~~other ~~District~~assets, ~~Shijiazhuang~~for ~~City,~~recoverability awhen ~~city~~events ~~located~~or ~~within~~circumstances ~~Hebei~~indicate ~~Province~~that ~~held~~the anet ~~hearing~~carrying ~~regarding~~amount ~~the~~is ~~proposed~~greater ~~disgorgement~~than ofits ~~the~~fair ~~proceeds~~value. ofAssets 19are ~~entities~~grouped and ~~individuals~~evaluated ~~including~~at ~~SHDEW,~~the ~~Shanghai~~lowest ~~Shangyang~~level ~~Investment~~for ~~Management~~their ~~and~~identifiable ~~Consulting~~cash ~~Co.,~~flows ~~Ltd.~~that ~~(“SHSY”), Linyi~~are ~~Ruilin~~largely ~~Consulting~~independent ~~and~~of ~~Design~~the Cocash flows of other groups of assets., ~~Ltd~~The ~~(“LYRL”), Lin~~Company ~~Chi~~considers ~~Jung,~~ historical performance and ~~Wang~~future ~~Wenhua,~~estimated ~~regarding~~results ~~SHDEW’s~~in ~~online~~its ~~multi-level~~evaluation ~~marketing~~of ~~program.~~potential ~~SHSY~~impairment and ~~LYRL~~then ~~are~~compares ~~our~~the ~~wholly-owned~~carrying ~~subsidiaries~~amount ~~that~~of ~~own~~the ~~our~~asset ~~interest~~to inthe ~~SHDEW.~~future ~~The~~estimated ~~MSA~~cash isflows ~~evaluating~~expected to result from the ~~results~~use of the ~~hearing~~asset. ~~and~~If ~~has~~the ~~not~~carrying ~~determined~~amount of the ~~final~~asset ~~amounts,~~exceeds ifestimated ~~any,~~expected toundiscounted befuture ~~disgorged~~cash flows, ~~which~~the ~~could~~Company bemeasures ~~material.~~the ~~Our~~amount ~~counsel~~of ~~believes~~impairment ~~that~~by comparing the Yucarrying ~~Hua~~amount ~~District~~of ~~has~~the noasset ~~jurisdiction~~to ~~over~~its ~~this~~fair ~~case~~value. ~~and~~The ~~that~~estimation ~~the~~of ~~allegations~~fair ~~are~~value ~~likely~~is ~~without~~generally ~~merit,~~determined ~~although~~by ~~there~~using ~~can~~the beasset’s noexpected ~~assurance~~future ~~regarding~~discounted ~~the~~cash ~~outcome~~flows or market value. ~~None~~The ofCompany ~~such~~estimates ~~individuals~~fair orvalue ~~entities~~of ~~have~~the ~~received~~assets ~~any~~based ~~formal~~on ~~notification~~certain byassumptions Yusuch ~~Hua~~as ~~District’s~~budgets, ~~State~~internal ~~Administration~~projections, ~~for~~and ~~Market~~other ~~Regulation~~available ofinformation ~~this~~as ~~action~~considered ~~and no~~necessary. ~~final~~There ~~decision~~is ~~has~~no ~~been~~impairment ~~made~~of bylong-lived assets during the ~~Yuhua~~years ~~District~~ended ~~MSA~~December ~~against~~31, ~~any party~~2023 and 2022..

WeIncome do not know how any change in SHDEW’s business practices will affect its revenue and ability to pay a dividend, which has been a significant source of our revenue in recent years. Dividends from SHDEW enabled us to declare a dividend in 2023. On January 16, 2023, the Company’s Board of Directors declared a cash dividend of $0.15 per share payable April 5, 2023 to shareholders of record as of January 30, 2023. While SHDEW is not required to pay any dividends, any material decline in the dividend could have a material adverse effect on our business. At this stage, we are also unable to evaluate the impact on our future cash flow resulting from this investigation.Taxes

~~Indebtedness~~The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company’s ~~indebtedness~~recognizes istax ~~described~~benefits ~~under~~that ~~“Note~~satisfy ~~12-Promissory~~a ~~Notes~~greater ~~Payable”~~than 50% probability threshold and ~~“Note~~provides ~~13-~~for ~~Amounts~~the ~~Due~~estimated toimpact ~~Directors”~~of tointerest ~~the~~and penalties for such tax benefits. The Company’s ~~accompanying~~did ~~consolidated~~not ~~financial~~incur ~~statements~~any ~~for~~interest or penalties related to potential underpaid income tax expenses during the years ended December 31, ~~2022~~2023 and ~~2021 in Item 8~~2022.

Promissory Notes: As of December 31, 2022, the Company had an aggregate amount due under outstanding promissory notes to parties other than banks in the amount of $1,435,833 bearing interest at a rate of 0%. The interest expense on promissory notes amounted to $NIL and $NIL as of December 31, 2022 and 2021, respectively.38

~~Advances~~Table ~~from Officers and Directors: The Company has also financed its operations in part with advances from officers and directors. The Company had loans with unpaid principals and interest expenses as~~ of ~~December 31, 2022 and December 31, 2021 totaling $480,109 and $525,396, respectively. The balances are unsecured and interest free.~~Contents

~~Amount~~RESULTS ~~due~~OF ~~to affiliates: As of December 31, 2022, the amount due to SHSJ and Jiaxing Shangyang (“JXSY”), in the amount of $49,251,273, was intercompany transfers for day-to-day operation.~~OPERATIONS

~~OFF~~We ~~BALANCE~~provide ~~SHEET~~the ~~ARRANGEMENTS~~following discussion and analyses of our changes in financial condition and results of operations for the year ended December 31, 2023 with comparisons to the historical year ended December 31, 2022.

WeNet do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in an unconsolidated Revenues

39The following table shows the detail for net revenues by line of business:

~~Table of Contents~~

entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.


	Years Ended December 31,
	2023		% to total		2022		% to total		% change
Property management		1,405,110		6		1,101,389		1		27
House sales		23,428,753		94		78,918,800		99		(70)
Net revenues		24,833,863		100		80,020,189		100		(69)

~~ITEM~~The 7Anet revenue for 2023 was $24,833,863, a decrease of 69% from $80,020,189 in 2022. ~~QUANTITATIVE~~In ~~AND~~2023, ~~QUALITATIVE~~property ~~DISCLOSURES~~management ~~ABOUT~~and ~~MARKET~~house ~~RISKS~~sales represented 6%, and 94% of our total net revenue. The decrease in 2023 was mainly due to the less house sales of the HATX project in 2023.

~~Not~~Property ~~applicable.~~Management

Property management represented 6% of our revenue in year of 2023 and revenue from property management increased by 27% compared with 2022.

40House Sales

~~Table~~House sales represented 94% of ~~Contents~~our revenue in year of 2023. The company has recognized a proportion of net revenue from the HATX project.

~~ITEM~~Cost 8.of ~~FINANCIAL STATEMENTSAND SUPPLEMENTARY DATA~~Revenues

The following table shows the Cost of Revenues detail by line of business:

~~INDEX TO CONSOLIDATED FINANCIAL STATEMENTS~~


	Years Ended December 31,
	2023		% to total		2022		% to total		% change
Property management		1,822,794		9		1,672,063		2		9
House sales		18,066,686		91		68,891,739		98		(74)
Cost of revenues		19,889,480		100		70,563,802		100		(72)


	Page
Report of Independent Registered Public Accounting Firm	42

Consolidated Balance Sheets as of December 31, 2022 and 2021	43

Consolidated Statements of Operations for the years ended December 31, 2022 and 2021	44

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2022 and 2021	45

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2022 and 2021	46

Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021	47

Notes to Consolidated Financial Statements	48 - 63

The cost of revenues for 2023 was $19,889,480, a decrease of 72% from $70,563,802 for 2022. In 2023, property management and house sales represented 9%, and 91% of total cost of revenues. The decrease in cost of revenues is mainly due to the less recognition of cost of revenue of house sales from the HATX project in 2023.

Table of Contents

41Property Management

~~Table~~The cost of ~~Contents~~revenue from property management for 2023 was $1,822,794, an increase of 9% from $1,672,063 for 2022.

~~REPORT~~House ~~OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~Sales

ToHouse ~~the~~sales ~~Board~~represented 91% of ~~Directors~~our ~~and~~cost of revenue in year of 2023. The Company has recognized its cost of revenue from the HATX project at a certain proportion.

~~Stockholders~~Operating ~~of Sunrise Real Estate Group, Inc.~~Expenses

~~Opinion~~The onfollowing ~~the~~table ~~Financial~~shows ~~Statements~~operating expenses detailed by line of business:

We have audited the accompanying balance sheets of Sunrise Real Estate Group, Inc. and subsidiaries (the Company) as of December 31, 2022 and 2021, and the related statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two years’ period ended December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Emphasis of matter


	Years Ended December 31,
	2023		% to total		2022		% to total		% change
Property management		715,170		40		158,102		5		352
House sales		1,087,388		60		2,870,986		95		(62)
Operating expenses		1,802,558		100		3,029,088		100		(40)

As discussed in item 3, legal proceedings to the form 10-K, on November 4th, 2022, the Market Supervisions Administration (“MSA”) of Yuhua District, Shijiazhuang City, a city located within Hebei Province held a hearing regarding the proposed disgorgement of the proceeds of 19 entities and individuals including Shanghai Da Er Wei Trading Company Limited (“SHDEW”), Shanghai Shangyang Investment Management and Consulting Co., Ltd. (“SHSY”), Linyi Ruilin Consulting and Design Co., Ltd (“LYRL”), Lin Chi Jung, and Wang Wenhua, regarding SHDEW’s online multi-level marketing program. SHSY and LYRL are the Company’s wholly-owned subsidiaries that own the Company’s interest in SHDEW. The MSA is evaluating the results of the hearing and has not determined the final amounts, if any, to be disgorged, which could be material. The Company’s counsel believes that the Yu Hua District has no jurisdiction over this case and that the allegations are likely without merit, although there can be no assurance regarding the outcome. Our opinion is not modified with respect to that matter.

~~Basis~~The operating expenses for ~~Opinion~~2023 were $1,802,558, a decrease of 40% from $3,029,088 in 2022. In 2023, the expenses related to property management and house sales represented 40%, and 60% of the total operating expenses.

~~These~~Property financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.Management

WeIn ~~conducted~~2023, ~~our audits in accordance with~~ the ~~standards~~operating ofexpenses ~~the~~for ~~PCAOB.~~property ~~Those~~management ~~standards~~increased ~~require~~by ~~that~~352% wecompared ~~plan and perform the audit~~ to ~~obtain reasonable assurance about whether~~ the ~~financial~~amount ~~statements~~in ~~are free of material misstatement, whether due to error or fraud~~2022. The ~~Company~~primary isreason not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the ~~purpose~~increase ofwas ~~expressing~~due anto ~~opinion~~relevant onproperty ~~the~~renewing ~~effectiveness of the Company’s internal control over financial reporting~~cost. ~~Accordingly, we express no such opinion.~~

~~Our~~House audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.sales

~~Critical~~The ~~Audit~~operating ~~Matters~~expenses related to our house sales business in 2023 decreased by 62% compared to 2022. This decrease was mainly due to the less in our sales promotion activities in HATX project and Linyi project.

~~The~~General ~~critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee~~ and ~~that:~~Administrative (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.Expenses

~~/s/~~The RHgeneral ~~CPA~~and administrative expenses in 2023 were $3,755,767, which was a 56% decrease from $8,550,561 in 2022. The primary reason for the decrease in 2023 was due to the settlement of land value added tax (LVAT) of GXL project and LYSY project of the year 2022.

WeOperating ~~have served as the Company’s auditor since 2017.~~Loss

~~PCAOB~~In ~~ID:~~2023, ~~6389~~we had an operating loss of $613,942, representing a decreased loss from an operating loss of $2,123,262 in 2022.

~~Bayside,~~The NYdecrease in loss in 2023 was mainly due to the loss from settlement of LVAT of GXL project and LYSY project of the year 2022.

~~April~~Major ~~14,~~Related ~~2023~~Party Transaction

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.

42Amount Due To Directors

~~Table~~The amounts due to directors as of ~~Contents~~December 31, 2023 were $472,104. The amounts due were as follows:

~~SUNRISE REAL ESTATE GROUP, INC. AND SUBSIDIARIES~~40

~~CONSOLIDATED~~Table ~~BALANCE~~of ~~SHEETS~~Contents

~~(Expressed~~Amount inDue ~~U.S.~~To ~~Dollars)~~Lin Chi-Jung

The amount due to Lin Chi-Jung as of December 31, 2023 was $451,640, which is unpaid loan.


	December 31,		December 31,
	2022		2021
ASSETS

Current assets
Cash and cash equivalents	$	33,201,354	$	24,901,044
Restricted cash (Note 3)		43,869,156		73,010,575
Transactional financial assets (Note 4)		10,960,511		13,890,946
Accounts receivable, net		204,518		65,850
Real estate property under development (Note 5)		120,302,022		178,685,026
Amount due from unconsolidated affiliates (Note 9)		16,502,409		15,837,851
Other receivables and deposits, net (Note 6)		10,733,460		15,241,563
Total current assets		235,773,430		321,632,855

Property and equipment, net (Note 7)		1,001,077		1,238,416
Investment properties, net (Note 8)		22,673,139		26,340,669
Deferred tax assets		—		853,364
Investments in unconsolidated affiliates (Note 9)		12,751,061		14,320,943
Other investments, net (Note 10)		652,693		712,981
Goodwill (11)		1,243,194		1,855,655
Total assets	$	274,094,594	$	366,954,883

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Promissory notes payable (Note 12)		1,435,833		1,568,455
Amounts due to directors (Note 13)		480,109		525,396
Accounts payable (Note14)		22,372,938		25,120,074
Customer deposits (Note 15)		34,742,361		126,175,201
Amount due to an affiliate (Note 16)		49,251,273		20,489,304
Other payables and accrued expenses (Note 17)		7,587,515		8,819,132
Other taxes payable		255,175		404,833
Dividends payables		10,303,789		10,303,789
Income Taxes payable (Note 18)		1,848,666		683,957
Total current liabilities		128,277,659		194,090,141

Long-term income tax payable (Note 18)		1,078,422		2,243,118
Total liabilities		129,356,081		196,333,259

Commitments and contingencies (Note 20)

Stockholders’ equity
Common stock, par value $0.01 per share; 200,000,000 shares Authorized; 68,691,925 and 68,691,925 shares issued and outstanding as of December 31, 2022 and 2021, respectively		686,919		686,919
Additional paid-in capital		8,110,008		8,050,008
Statutory reserve (Note 19)		3,986,618		3,986,618
Retained earnings		109,300,636		117,729,224
Accumulated other comprehensive income		9,447,265		24,738,423
Total equity of Sunrise Real Estate Group, Inc.		131,531,446		155,191,192
Non-controlling interests		13,207,067		15,430,432
Total stockholders’ equity		144,738,513		170,621,624

Total liabilities and stockholders’ equity	$	274,094,594	$	366,954,883

Amount Due To Lin Hsin Hung

The balance due to Lin Hsin Hung as of December 31, 2023 was $20,464, which is unsecured, interest-free and has no fixed term of repayment.

~~See~~Amount ~~accompanying~~Due ~~notes~~From toAn ~~consolidated~~Unconsolidated ~~financial statements.~~Affiliates

The unpaid portion of dividend announced of SHDEW, an unconsolidated affiliate, at the amount of $16,210,622.

43Amount Due to Affiliates

~~Table~~As of ~~Contents~~December 31, 2023, the amount due to Shanghai Shengji (“SHSJ”) a shareholder of HATX, $31,568,727 and JXSY, $500,014, was an intercompany transfer for day-to-day operations.

~~SUNRISE~~Equity ~~REAL~~Stock ~~ESTATE GROUP, INC. AND SUBSIDIARIES~~Option

~~CONSOLIDATED~~On ~~STATEMENTS~~December OF28, ~~OPERATIONS~~2021, the Board of Directors of the Company authorized the Company to issue options to purchase an aggregate of 3,000,000 shares of common stock as a bonus incentive to 13 individuals, who has each served the Company for a minimum of eight years. The options vested immediately and are exercisable until December 27, 2023 at an exercise price of $0.60 per share. The Directors and Executive Officers who were granted options include:

(Expressed in U.S. Dollars)


Lin Chi Jung	Director	2,000,000	shares
Zhang Jian	Chief Executive Officer	150,000	shares
Lin Hsin Hung	Chairman of the Board	100,000	shares
Pan Yu Jen	Director	100,000	shares
Mi Yong Jun	Chief Financial Officer	150,000	shares
Wang Wen Hua	Director	25,000	shares


	Years Ended December 31,
	2022		2021
Net revenues	$	80,020,189	$	54,140,409
Cost of revenues		(70,563,802)		(41,233,057)
Gross profit		9,456,387		12,907,352

Operating expenses		(3,029,088)		(3,417,862)
General and administrative expenses		(8,550,561)		(3,299,319)
Operating profit (loss)		(2,123,262)		6,190,171

Other income (expenses)
Interest income		691,096		936,108
Interest expense		(651,085)		—
Other income (loss)		(2,770,136)		41,298,243
Total Other Income (Expenses)		(2,730,125)		42,234,351

Income (Loss) before income taxes		(4,853,387)		48,424,522
Income taxes (Note 18)		(4,542,509)		(2,140,466)
Net income /(loss)		(9,395,896)		46,284,056
Less: Net (income) loss attributable to non-controlling interests		967,308		(11,238,667)
Net income (loss) attributable to stockholders of Sunrise Real Estate Group, Inc.	$	(8,428,588)	$	35,045,389

Earnings (loss) per share - basic and fully diluted	$	(0.12)	$	0.51

Weighted average common shares outstanding
- Basic and fully diluted		68,691,925		68,691,925

None of the above persons exercised their options from December 21, 2021 to December 31, 2023.

~~See accompanying notes to consolidated financial statements.~~

LIQUIDITY AND CAPITAL RESOURCES

44In 2023, our principal sources of cash were revenues from our receipts in advance from real estate development projects, property management business, as well as the dividend distribution from our affiliates. Most of our cash resources were used to fund our property development investment and revenue related expenses, such as salaries and commissions paid to the sales force, daily administrative expenses and the maintenance of regional offices.

~~Table~~We ended the period with a cash position of ~~Contents~~$20,453,464.

~~SUNRISE~~Net ~~REAL~~cash ~~ESTATE~~used ~~GROUP~~in the Company’s operating activities in 2023 was $4, ~~INC~~058,654, representing an increase of receipts in cash in the amount of $9,116,254 as compared to the cash provided for 2022. ~~AND~~The ~~SUBSIDIARIES~~increase was primarily attributable to the receipts in advance of $10,893,668.

~~CONSOLIDATED~~Net ~~STATEMENTS~~cash OFused ~~COMPREHENSIVE~~by ~~INCOME~~the Company’s investment activities was $15,804,638, representing a decrease of $17,430,947 as compared to the cash received in investing activities for 2022. The decrease in cash from investment activities was primarily attributable to the net cash from transactional financial assets in 2023.

~~(Expressed~~Net cash used by the Company’s financing activities was $24,296,584, representing a decrease from $NIL in U2022.S. ~~Dollars)~~This decrease was primarily attributable to repayments to an affiliate of $14,118,909 and dividends paid in 2023.


	Years Ended December 31,
	2022		2021
Net income /(loss)	$	(9,395,896)	$	46,284,056

Other comprehensive income (loss)
- Foreign currency translation adjustment		(16,547,215)		3,680,999
Total comprehensive income (loss)		(25,943,111)		49,965,055
Less: Comprehensive loss attributable to non-controlling interests		2,223,365		(13,164,962)

Total comprehensive income (loss) attributable to stockholders of Sunrise Real Estate Group, Inc.	$	(23,719,746)	$	36,800,093

The cash needs for 2024 were for the funds required to finance the Company’s future projects in property agency and real estate developments.

If our business otherwise grows more rapidly than we predict, we plan to raise funds through the issuance of additional shares of our equity securities in one or more public or private offerings. We will also consider raising funds through credit facilities obtained with lending institutions and affiliates, as we have done previously, but there can be no guarantee that we will be able to obtain such funds through the issuance of debt or equity with terms satisfactory to management and our board of directors.

~~See accompanying notes to consolidated financial statements.~~41

Table of Contents

Management believes that the Company will generate sufficient cash flows to fund its operations and to meet its obligations on a timely basis for the next twelve months by successfully implementing its business plans, obtaining continued support from its lenders to roll over debts when they became due, and securing additional financing as needed. Based upon the equity income generated by SHDEW in 2023, we expect a substantial cash dividend from SHDEW in 2024, which will be our principal source of liquidity. We have been able to secure new bank lines of credit from banks and secure additional loans from affiliates to fund our operations to date. However, if events or circumstances occur such that the Company is unable to successfully implement its business plans, fails to obtain continued support from its lenders or to secure additional financing, the Company may be required to suspend operations or cease business entirely.

45In 2021, the Market Supervisions Administration (“MSA”) of Baokang County, a county located within Hubei Province, investigated the business practices of SHDEW, a company in which we own a 19.91% interest, and some of its affiliates. SHDEW sells cosmetics and other consumer goods online. In September 2021, the MSA fined SHDEW 21 million RMB (approximately $3 million) for business practices that did not conform to government standards. The MSA required SHDEW to change its business model for the collection of commissions from downline distributors, which was found to resemble an unacceptable multi-level marketing program. Accordingly, SHDEW subsequently paid the fine and changed its business practices. We are not related to this investigation, and we do not have any control or influence over the business practices of SHDEW. We are unable to evaluate the merits of any allegations or conclusions by the MSA.

~~Table~~On November 4th, 2022, the MSA of ~~Contents~~Yuhua District, Shijiazhuang City, a city located within Hebei Province held a hearing regarding the proposed disgorgement of the proceeds of 19 entities and individuals including SHDEW, Shanghai Shangyang Investment Management and Consulting Co., Ltd. (“SHSY”), Linyi Ruilin Consulting and Design Co., Ltd (“LYRL”), Lin Chi Jung, and Wang Wenhua, regarding SHDEW’s online multi-level marketing program. SHSY and LYRL are our wholly-owned subsidiaries that own our interest in SHDEW. The MSA is evaluating the results of the hearing and has not determined the final amounts, if any, to be disgorged, which could be material. Our counsel believes that the Yu Hua District has no jurisdiction over this case and that the allegations are likely without merit, although there can be no assurance regarding the outcome. None of such individuals or entities have received any formal notification by Yu Hua District’s State Administration for Market Regulation of this action and no final decision has been made by the Yuhua District MSA against any party.

~~SUNRISE REAL ESTATE GROUP, INC.~~Indebtedness

~~CONSOLIDATED~~The ~~STATEMENTS~~Company’s OFindebtedness ~~STOCKHOLDERS~~is described under “Note 11-Promissory Notes Payable” and “Note 12- Amounts Due to Directors” to the Company’s ~~EQUITY~~accompanying consolidated financial statements for the years ended December 31, 2023 and 2022 in Item 8.

~~(Expressed~~Promissory Notes: As of December 31, 2023, the Company had an aggregate amount due under outstanding promissory notes to parties other than banks in Uthe amount of $1,411,891 bearing interest at a rate of 0%.S. ~~Dollars)~~The interest expense on promissory notes amounted to $NIL and $NIL as of December 31, 2023 and 2022, respectively.


										Accumulated				Total
	Common Stock			Additional				Retained		Other				Stockholders’
	Number of			Paid-in		Statutory		Earnings		Comprehensive		Non-controlling		(Deficit)
	shares issued	Amount		Capital		Reserve		(Deficits)		Income		Interests		Equity
Balance, December 31, 2020	68,691,925	$	686,919	$	7,570,008	$	3,986,618	$	100,291,529	$	22,918,737	$	2,261,537	$	137,778,348
Profit (loss) for the year	—		—		—		—		34,565,389		—		11,238,667		45,804,056
Company Cancellation	—		—		—		—		45,288		—		—		45,288
Common stock issued to employees and consultants for services	—		—		480,000		—		—		—		—		480,000
Dividend distributions	—		—		—		—		(17,172,983)		—		—		(17,172,983)
Translation of foreign operations	—		—		—		—		—		1,756,686		1,930,228		3,686,914
Balance, December 31, 2021	68,691,925		686,919		8,050,008		3,986,618		117,729,224		24,738,423		15,430,432		170,621,624

Advances from Officers and Directors: The Company has also financed its operations in part with advances from officers and directors. The Company had loans with unpaid principals and interest expenses as of December 31, 2023 and December 31, 2022 totaling $472,104 and $480,109, respectively. The balances are unsecured and interest free.

Amount due to affiliates: As of December 31, 2023, the amount due to SHSJ and Jiaxing Shangyang (“JXSY”), in the amount of $32,068,951, was intercompany transfers for day-to-day operation.


										Accumulated				Total
	Common Stock			Additional				Retained		Other				Stockholders’
	Number of			Paid-in		Statutory		Earnings		Comprehensive		Non- controlling		(Deficit)
	shares issued	Amount		Capital		Reserve		(Deficits)		Income		Interests		Equity
Balance, December 31, 2021	68,691,925	$	686,919	$	8,050,008	$	3,986,618	$	117,729,224	$	24,738,423	$	15,430,432	$	170,621,624
Profit (loss) for the year	—		—		—		—		(8,428,588)		—		(967,308)		(9,395,896)
Company Cancellation	—		—		—		—		—		—		—		—
Common stock issued to employees and consultants for services	—		—		60,000		—		—		—		—		60,000
Dividend distributions	—		—		—		—		—		—		—		—
Translation of foreign operations	—		—		—		—		—		(15,291,158)		(1,256,057)		(16,547,215)
Balance, December 31, 2022	68,691,925		686,919		8,110,008		3,986,618		109,300,636		9,447,265		13,207,067		144,738,513

OFF BALANCE SHEET ARRANGEMENTS

We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.

~~See accompanying notes to consolidated financial statements.~~

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Not applicable.

~~Table of Contents~~42

~~SUNRISE~~Table ~~REAL~~of ~~ESTATE GROUP, INC. AND SUBSIDIARIES~~Contents

~~CONSOLIDATED~~ITEM ~~STATEMENTS~~8. OFFINANCIAL ~~CASH~~STATEMENTSAND ~~FLOWS~~SUPPLEMENTARY DATA

~~(Expressed in U.S. Dollars)~~


	Years ended December 31,
	2022		2021
Cash flows from operating activities
Net income (loss)	$	(9,395,896)	$	46,284,056

Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization		1,779,670		4,281,324
Loss (gain) on disposal of property and equipment		27,559		7,666
Changes in assets and liabilities
Accounts receivable		(149,204)		13,264
Net Cash from directors		(891)		(23,148,580)
Real estate property under development		44,764,605		(8,455,093)
Customer deposits		(83,545,766)		7,204,719
Amount due from unconsolidated affiliates		29,472,050		(43,324,502)
Other receivables and deposits		3,330,221		(300,077)
Deferred tax assets		808,115		122,863
Dividends		901,258		—
Accounts payable		(644,540)		4,142,878
Other payables and accrued expenses		(502,641)		31,136
Taxes payable		99,955		(708,968)
Deferred government subsidy		—		(5,135,878)
Other Tax payable		(119,403)		(57,580)
Net cash provided by (used in) operating activities		(13,174,908)		(19,042,772)

Cash flows from investing activities
Acquisition of property, plant and equipment		(190,148)		(109,047)
Proceeds from disposal of plant and equipment		—		—
Capital injection to unconsolidated affiliates, net		—		—
Acquisition of investment		—		—
Transactional financial assets		1,816,348		11,565,629
Dividend distribution of affiliates		—		16,690,371
Net cash provided by investing activities		1,626,200		28,146,953

Cash flows from financing activities
Advances from an affiliate		—		—
Dividends paid		—		(6,869,193)
Restricted cash		23,759,027		(15,458,728)
Net cash (used in) financing activities		23,759,027		(22,327,921)

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(3,910,009)		(2,244,828)

Net increase (decrease) in cash, cash equivalents and restricted cash		(8,300,310)		(15,468,568)
Cash, cash equivalents, and restricted cash at beginning of year		24,901,044		40,369,612
Cash, cash equivalents, and restricted cash at end of year	$	33,201,354	$	24,901,044
Supplemental disclosure of cash flow information
Income taxes paid	$	4,542,509	$	345,095
Interest paid		1,485,288		—

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

See accompanying notes to consolidated financial statements.


	Page
Report of Independent Registered Public Accounting Firm	44

Consolidated Balance Sheets as of December 31, 2023 and 2022	46

Consolidated Statements of Operations for the years ended December 31, 2023 and 2022	47

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023 and 2022	48

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023 and 2022	49

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022	50

Notes to Consolidated Financial Statements	51 - 65

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~43

~~NOTE 1 —~~Table ~~ORGANIZATION~~of ~~AND DESCRIPTION OF BUSINESS~~Contents

~~Sunrise~~REPORT ~~Real~~OF ~~Estate~~INDEPENDENT ~~Group, Inc.~~REGISTERED ~~(“SRRE”)~~PUBLIC ~~and~~ACCOUNTING its subsidiaries (collectively referred to as “the Company”, “our” or “us”) was 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. On April 25, 2006, Sunrise Estate Development Group, Inc. filed Articles of Amendment with the Texas Secretary of State, changing its name to Sunrise Real Estate Group, Inc., effective May 23, 2006.FIRM

AsTo ~~of December 31, 2022,~~ the ~~Company~~Board ~~has~~of ~~the~~Directors ~~following major subsidiaries~~ and ~~equity investments.~~

Stockholders of Sunrise Real Estate Group, Inc.


			% of
			Ownership		Relationship
	Date of	Place of	held by the		with the
Company Name	Incorporation	Incorporation	Company		Company	Principal Activity
Sunrise Real Estate Development Group, Inc. (CY-SRRE)	April 30, 2004	Cayman Islands	100	%	Subsidiary	Investment holding
Lin Ray Yang Enterprise Limited (“LRY”)	November 13, 2003	British Virgin Islands	100	%	Subsidiary	Investment holding
Shanghai Xin Ji Yang Real Estate Consultation Company Limited (“SHXJY”)	August 20, 2001	PRC	100	%	Subsidiary	Property brokerage services
Shanghai Shang Yang Investment Management and consultation Company Limited (“SHSY”)	February 5, 2004	PRC	100	%	Subsidiary	Property brokerage services
Suzhou Shang Yang Real Estate Consultation Company Limited (“SZSY”)	November 24, 2006	PRC	75.25	%1	Subsidiary	Property brokerage and management services
Suzhou Xi Ji Yang Real Estate Consultation Company Limited (“SZXJY”)	June 25, 2004	PRC	75	%	Subsidiary	Property brokerage services
Linyi Shangyang Real Estate Development Company Limited (“LYSY”)	October 13, 2011	PRC	34	%2	Subsidiary	Real estate development
Sanya Shang Yang Real Estate Consultation Company Limited (“SYSY”)	September 18, 2008	PRC	100	%	Subsidiary	Property brokerage services
Shanghai Rui Jian Design Company Limited (“SHRJ”)	August 15, 2011	PRC	100	%	Subsidiary	Property brokerage services
Linyi Rui Lin Construction and Design Company Limited (“LYRL”)	March 6, 2012	PRC	100	%	Subsidiary	Investment holding
Wuhan Yuan Yu Long Real Estate Development Company Limited (“WHYYL”)	December 28, 2009	PRC	49	%	Equity investment	Real estate development
Shanghai Xin Xing Yang Real Estate Brokerage Company Limited (“SHXXY”)	September 28, 2011	PRC	20	%	Equity investment	Property brokerage services
Shanghai Da Er Wei Trading Company Limited (“SHDEW”)	June 6, 2013	PRC	19.91	%3	Equity investment	Import and export trading
Shanghai Hui Tian (“SHHT”)	July 25, 2014	PRC	100	%	Subsidiary	Investment holding
Shanghai Shangyang Tianxi (“SHTX”)	July 25, 2014	PRC	19.91	%	Subsidiary	Investment holding
Huaian Zhanbao Industrial Co., Ltd. (“HAZB”)	December 6, 2018	PRC	78.46	% 4	Subsidiary	Investment holding
Huaian Tianxi Real Estate Development Co., Ltd (“HATX”)	October, 2018	PRC	78.46	% 4	Subsidiary	Investment holding
Shanghai Taobuting Media Co., Ltd. (“TBT”)	July 1, 2020	PRC	7.5	%	Subsidiary	Streaming platform

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Sunrise Real Estate Group, Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, and the related statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two years’ period ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

1.Basis ~~After~~for an equity transaction in February 2015, the Company held equity in subsidiaries of SZSY as follows: SZXJY 49%, SHXJY 26% and Sunrise Real Estate Development Group, Inc. (CY-SRRE) 12.5%, totaling 75.25% equity interest in SZSY.Opinion

2.These ~~The~~financial ~~Company~~statements ~~and~~are athe ~~shareholder~~responsibility of ~~LYSY,~~the ~~who~~Company’s ~~holds~~management. ~~46%~~Our ~~equity~~responsibility ~~interest~~is into ~~LYSY,~~express ~~entered~~an ~~into~~opinion aon ~~voting agreement that~~ the Company’s isfinancial ~~entitled~~statements tobased ~~exercise~~on ~~the~~our ~~voting~~audits. ~~rights~~We inare ~~respect~~a ofpublic ~~her~~accounting ~~46%~~firm ~~equity~~registered ~~interest~~with inthe ~~LYSY.~~Public ~~The~~ Company ~~effectively~~Accounting ~~holds~~Oversight ~~80%~~Board ~~voting~~(United ~~rights~~States) in(PCAOB) ~~LYSY~~ and ~~therefore~~are ~~considers~~required ~~LYSY~~to asbe aindependent ~~subsidiary~~with ofrespect to the Company. Onin ~~May~~accordance ~~27,~~with ~~2020,~~the ~~LYRL~~U.S. ~~received~~federal ~~10%~~securities oflaws and the ~~issued~~applicable rules and ~~outstanding~~regulations ~~shares~~ of ~~LYSY~~the ~~from~~Securities ~~Nanjing~~and ~~Longchang~~Exchange ~~Real~~Commission ~~Estate~~and ~~Development Group. LYRL owned 34% of LYSY following~~ the ~~purchase~~PCAOB.

3We conducted our audits in accordance with the standards of the PCAOB. OnThose ~~January~~standards ~~28,~~require ~~2013~~that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, ~~CY-SRRE~~whether due to error or fraud. The Company is not required to have, ~~SZXJY~~nor ~~and~~were we engaged to perform, an ~~unrelated~~audit ~~party~~of ~~established~~its ainternal ~~subsidiary~~control inover ~~the~~financial ~~PRC~~reporting. As part of our audits, ~~SHXJYB~~we are required to obtain an understanding of internal control over financial reporting, ~~with~~but ~~CY-SRRE~~not ~~holding~~for ~~15%~~the ~~equity~~purpose ~~interest~~of ~~and~~expressing ~~SZXJY~~an ~~holding~~opinion ~~60%~~on ~~equity~~the ~~interest~~effectiveness inof ~~SHXYJB~~the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

4.Our Inaudits ~~December~~included ~~2019~~performing procedures to assess the risks of material misstatement of the financial statements, ~~SHDEW~~whether ~~had~~due anto ~~employee~~error ~~stock~~or ~~bonus~~fraud, ~~where~~and ~~its~~performing ~~employees~~procedures ~~received~~that ~~their~~respond ~~issued~~to ~~shares~~those risks. ~~This~~Such ~~resulted~~procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the ~~dilution~~financial ofstatements. ~~our~~Our ~~ownership~~audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of ~~SHDEW~~the ~~from~~financial 20statements.~~38%~~ toWe 19believe that our audits provide a reasonable basis for our opinion.~~91%.~~

Critical Audit Matters

48The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

~~Table of Contents~~44

~~CY-SRRE~~Table ~~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”), a corporation,~~ of which Lin Chi-Jung, an individual, is the principal and controlling shareholder. SHXJY was established in the People’s Republic of China (“PRC”) on August 20, 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, SZXJY in the PRC, at which point in time, SHXJY held a 90% equity interest in SZXJY. On August 9, 2005, SHXJY sold 10% equity interest in SZXJY to a company owned by a director of SZXJY and transferred 5% equity interest in SZXJY to CY-SRRE. Following the disposal and the transfer, CY-SRRE effectively held 80% equity interest in SZXJY.Contents

~~LRY~~Real ~~was~~Estate ~~established~~Property inUnder ~~the~~Development 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, SHSY in the PRC as a limited liability company.Impairment

OnDuring ~~August~~ the year ended December 31, ~~2004~~2023, ~~SRRE,~~the ~~CY-SRRE~~Company ~~and~~recorded ~~Lin~~impairment ~~Chi-Jung,~~loss anon ~~individual~~real ~~and~~estate ~~agent~~property ~~for~~under ~~the~~development ~~beneficial~~totaling ~~shareholder~~$19.6 ~~of CY-SRRE, i~~million.~~e.,~~ ~~Ace~~As ~~Develop,~~disclosed ~~entered~~in ~~into~~Note an2 ~~exchange~~to ~~agreement~~the ~~under~~consolidated ~~which~~financial ~~SRRE~~statements, ~~issued~~real ~~5,000,000~~estate ~~shares~~property ofunder ~~common~~development ~~stock~~is subject to valuation adjustments when the ~~beneficial~~carrying ~~shareholder~~amount orexceeds ~~its~~fair ~~designees,~~value. inAn ~~exchange~~impairment ~~for~~loss ~~all~~is ~~outstanding~~recognized ~~capital~~only ~~stock~~if ofthe ~~CY-SRRE.~~carrying ~~The~~amount ~~transaction~~of ~~was~~the ~~closed~~asset onis ~~October 5,~~not ~~2004.~~recoverable ~~Lin~~and ~~Chi-Jung~~exceeds ~~was~~fair ~~Chairman~~value. ofThe ~~the~~carrying ~~Board~~amount ofis ~~Directors~~not ofrecoverable ~~SRRE,~~if it exceeds the ~~President~~sum of ~~CY-SRRE~~the ~~and~~undiscounted ~~the~~cash ~~principal~~flows ~~and~~expected ~~controlling~~to ~~shareholder~~be ofgenerated ~~Ace~~by ~~Develop~~the asset.

~~Also~~Significant onjudgment ~~August 31,~~is ~~2004,~~exercised ~~SRRE,~~by ~~LRY~~management ~~and~~in ~~Lin~~evaluating ~~Chi-Jung,~~the anrecoverability ~~individual~~ and ~~agent~~fair ~~for~~value ~~beneficial shareholders~~ of ~~LRY,~~the ~~i.e.,~~real ~~Ace~~estate ~~Develop,~~property ~~Planet~~noted ~~Tech~~above. ~~and~~Given ~~SystemsTech,~~these ~~entered into an exchange agreement under which SRRE issued 10~~factors,~~000,000~~ ~~shares of common stock to~~ the ~~beneficial~~related ~~shareholders,~~audit oreffort ~~their designees,~~ in ~~exchange~~evaluating ~~for~~these ~~all~~management ~~outstanding~~judgments ~~capital stock of LRY. The transaction~~ was ~~closed on October 5~~challenging, ~~2004. Lin Chi-Jung was Chairman of the Board of Directors of SRRE~~subjective, ~~the President of LRY~~ and ~~the~~complex ~~principal~~ and ~~controlling~~required ~~shareholder~~a ofhigh ~~Ace~~degree ~~Develop. Regarding the 10,000,000 shares~~ of ~~common~~auditor ~~stock of SRRE issued in this transaction, SRRE issued 8,500,000 shares to Ace Develop, 750,000 shares to Planet Tech and 750,000 shares to Systems Tech~~judgment.

AsHow aWe ~~result~~Addressed of the ~~acquisition,~~Matter ~~the former owners of CY-SRRE and LRY hold a majority interest~~ in ~~the~~our combined entity. Generally accepted accounting principles require in certain circumstances that a company whose shareholders retain the majority voting interest in the combined business 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. 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.Audit

OnTo ~~January 10,~~test ~~2005,~~management’s ~~LRY~~assessment ~~and~~for athose ~~PRC~~real ~~third~~estate ~~party~~property ~~established~~where athere ~~subsidiary,~~were ~~SZGFH,~~indicators aof ~~limited~~impairment, ~~liability~~we ~~company~~performed inaudit ~~the~~procedures ~~PRC~~that included, ~~with~~evaluating ~~LRY~~the ~~holding~~estimation ~~80%~~methodology ofand testing the ~~equity~~aforementioned ~~interest~~significant inassumptions ~~SZGFH.~~and Onthe ~~May 8~~completeness, ~~2006~~accuracy, ~~LRY~~and ~~acquired~~relevance ~~20%~~ of ~~the~~underlying ~~equity~~data ~~interest~~used, ingiving ~~SZGFH~~consideration ~~from~~to management’s plans, comparing the ~~third~~significant ~~party.~~data ~~Following~~and assumptions used to estimate future cash flows to the ~~acquisition~~Company’s accounting records, ~~LRY~~current ~~effectively~~industry ~~held~~and ~~100%~~economic oftrends, ~~the~~or ~~equity~~other ~~interest~~third-party indata ~~SZGFH.~~and ~~The~~testing ~~Company~~the ~~sold~~mathematical ~~SZGFH~~accuracy inof ~~2017~~management’s calculations.

On November 24, 2006, CY-SRRE, SHXJY, a shareholder of SZXJY and a third party established a subsidiary, SZSY in the PRC, with CY-SRRE holding 12.5% equity interest, SHXJY holding 26% equity interest and the shareholder of SZXJY holding 12.5% equity interest in SZSY. At the date of incorporation, SRRE and the shareholder of SZXJY entered into a voting agreement that SRRE is entitled to exercise the voting right in respect of its 12.5% equity interest in SZSY. Following that, SRRE effectively holds 51% of the voting rights in SZSY.

On/s/ ~~September 24,~~RH ~~2007, CY-SRRE sold 5% equity interest in SZXJY to a company owned by a director of SZXJY. Following the disposal, CY-SRRE effectively holds 75% equity interest in SZXJY.~~CPA

InWe ~~October~~have ~~2011,~~served ~~SHXJY~~as ~~purchased 24% interest in Linyi Shang Yang Real Estate Consultation Company Limited (“LYSY”) and acquired approximately 103,385 square meters of land for~~ the ~~purpose of developing the land into villa-style residential housing. On March 6, 2012, SHXJY established a wholly-owned subsidiary, namely Linyi Rui Lin Construction and Design~~ Company ~~Limited (“LYRL”). SHXJY~~’s ~~24%~~auditor ~~equity~~since ~~interest in LYSY was then transferred to LYRL~~2017. On May 27, 2020, LYRL received 10% of the issued and outstanding shares of LYSY from Nanjing Longchang Real Estate Development Group. LYRL owned 34% of LYSY following the purchase. The Company and a shareholder of LYSY, Zhang Shu Qin, who holds 46% equity interest in LYSY, entered into a voting agreement that the Company is entitled to exercise the voting rights in respect of her 46% equity interest in LYSY. The Company effectively holds 80% voting rights in LYSY and therefore considers LYSY as a subsidiary of the Company.

49PCAOB ID: 6398

~~Table~~Bayside, ~~of Contents~~NY

OnMay ~~March 6~~22, 2012, SHXJY established a subsidiary in the PRC — LYRL. The equity interest in LYRL is held by three Chinese individuals in trust for SHXJY. At the date of its incorporation, SHXJY transferred its 24% equity interest in LYSY to LYRL. On August 2014, all the equity interest in LYRL was transferred to SHRJ.2024

On June 6, 2013, SHSY and LYRL together with 4 investors established a company, Shanghai Daerwei (“SHDEW”), in the PRC focusing on the cosmetics and skincare business. SHSY holds 12.6% equity interest and LYRL holds 7.3% equity interest in SHDEW. As the Company does not have significant influence in SHDEW , we adopted the alternative measurement accounting method for the SHDEW investment.

On July 25, August 19 and October 15, 2014 respectively, the Company established three investment holding company separately, namely SHHT, SHSYTX and SZSYHT. These three companies were wholly owned subsidiary to the Company and have not commenced their operations. In the year 2017, SHSYTX has transferred its shares of 76.92% to other shareholders and has 19.9% as of 2020. SZSYHT has transferred all of its shares to other shareholders.45

InTable ~~October 2018, HATX purchased the property in Huai’an, Qingjiang Pu district with an area~~ of 78,030 square meters. In December 2018 we established HAZB with a 78.46% ownership for the purpose of real estate investment and in March 2019, HAZB purchased 100% of HATX and tis land usage rights to the Huaian property. The Huaian project, named Tianxi Times, started its first phase development in early 2019 with a GFA of 82,218 sqm totaling 679 units, and started its second phase in middle 2020 with a GFA of 99,123 sqm totaling 873 units. As of March 31, 2023, the Company sold and pre-sold 343 units and 327 units, respectively, out of 679 units of first phase and pre-sold 364 out of 873 of second phase.Contents

~~The~~SUNRISE ~~principal~~REAL ~~activities~~ESTATE ~~of the Company are real estate development~~GROUP, INC. ~~including~~AND ~~property marketing, leasing and management services in the PRC.~~SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

~~NOTE 2 —~~(Expressed ~~SUMMARY~~in OFU.S. ~~SIGNIFICANT ACCOUNTING POLICIES~~Dollars)

~~Basis of Accounting and Principles of Consolidation~~

The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).


	December 31,		December 31,
	2023		2022
ASSETS

Current assets
Cash and cash equivalents	$	20,453,464	$	33,201,354
Restricted cash (Note 3)		2,723,667		43,869,156
Transactional financial assets (Note 4)		26,505,532		10,960,511
Accounts receivable, net		552,964		204,518
Real estate property under development (Note 5)		88,742,269		120,302,022
Amount due from unconsolidated affiliates (Note 9)		16,203,433		16,502,409
Other receivables and deposits, net (Note 6)		9,321,913		10,733,460
Total current assets		164,503,242		235,773,430

Property and equipment, net (Note 7)		728,094		1,001,077
Investment properties, net (Note 8)		28,910,575		22,673,139
Deferred tax assets		—		—
Investments in unconsolidated affiliates (Note 9)		13,091,335		12,751,061
Other investments, net (Note 10)		641,810		652,693
Goodwill		—		1,243,194
Total assets	$	207,875,056	$	274,094,594

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Promissory notes payable (Note 11)		1,411,891		1,435,833
Amounts due to directors (Note 12)		472,104		480,109
Accounts payable (Note13)		24,885,181		22,372,938
Customer deposits (Note 14)		23,318,011		34,742,361
Amount due to an affiliate (Note 15)		32,068,741		49,251,273
Other payables and accrued expenses (Note 16)		7,352,352		7,587,515
Other taxes payable		247,516		255,175
Dividends payables		—		10,303,789
Income Taxes payable (Note 17)		1,926,888		1,848,666
Total current liabilities		91,682,684		128,277,659

Long-term income tax payable (Note 17)		—		1,078,422
Total liabilities		91,682,684		129,356,081

Commitments and contingencies (Note 19)

Stockholders’ equity
Common stock, par value $0.01 per share; 200,000,000 shares Authorized; 68,691,925 and 68,691,925 shares issued and outstanding as of December 31, 2023 and 2022, respectively		686,919		686,919
Additional paid-in capital		8,110,008		8,110,008
Statutory reserve (Note 18)		3,986,618		3,986,618
Retained earnings		99,169,737		109,300,636
Accumulated other comprehensive income		7,311,786		9,447,265
Total equity of Sunrise Real Estate Group, Inc.		119,265,068		131,531,446
Non-controlling interests		(3,072,696)		13,207,067
Total stockholders’ equity		116,192,372		144,738,513

Total liabilities and stockholders’ equity	$	207,875,056	$	274,094,594

The consolidated financial statements include the financial statements of Sunrise Real Estate Group, Inc. and its subsidiaries. All significant inter-company accounts and transactions have been eliminated on consolidation.

~~Investments~~See inaccompanying ~~business~~notes ~~entities,~~to inconsolidated ~~which the Company does not have control but can exercise significant influence over operating and~~ financial ~~policies, are accounted for using the equity method~~statements.

~~Use of Estimates~~

The preparation of financial statements in accordance with U.S GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.46

~~Fair~~Table ~~Value~~ of ~~Financial Instruments~~Contents

~~The~~SUNRISE ~~Company~~REAL ~~follows~~ESTATE ~~the provisions of Accounting Standards Codification (“ASC”) 820~~GROUP, ~~Fair Value Measurements and Disclosures (“ASC 820”)~~ INC. ItAND ~~clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:~~SUBSIDIARIES

~~Level~~CONSOLIDATED ~~1-Inputs~~STATEMENTS ~~are~~OF ~~unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.~~OPERATIONS

~~Level~~(Expressed ~~2-Inputs are unadjusted quoted prices for similar assets and liabilities~~ in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market dataU.S. Dollars)


	Years Ended December 31,
	2023		2022
Net revenues	$	24,833,863	$	80,020,189
Cost of revenues		(19,889,480)		(70,563,802)
Gross profit		4,944,383		9,456,387

Operating expenses		(1,802,558)		(3,029,088)
General and administrative expenses		(3,755,767)		(8,550,561)
Operating profit (loss)		(613,942)		(2,123,262)

Other income (expenses)
Interest income		832,461		691,096
Interest expense		(3,226,658)		(651,085)
Real estate property under development Impairment		(19,590,407)		—
Goodwill impairment loss		(1,132,629)		—
Other income (loss)		(1,435,287)		(2,770,136)
Total Other Income (Expenses)		(24,552,520)		(2,730,125)

Income (Loss) before income taxes		(25,166,462)		(4,853,387)
Income taxes (Note 18)		(1,095,356)		(4,542,509)
Net income /(loss)		(26,261,818)		(9,395,896)
Less: Net (income) loss attributable to non-controlling interests		16,130,919		967,308
Net income (loss) attributable to stockholders of Sunrise Real Estate Group, Inc.	$	(10,130,899)	$	(8,428,588)

Earnings (loss) per share - basic and fully diluted	$	(0.15)	$	(0.12)

Weighted average common shares outstanding
- Basic and fully diluted		68,691,925		68,691,925

~~Table of Contents~~

~~Level~~See ~~3-Inputs~~accompanying ~~are~~notes ~~unobservable~~to ~~inputs~~consolidated ~~which~~financial ~~reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information~~statements.

The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, promissory deposits, amount due from an unconsolidated affiliate, other receivables and deposits, deferred tax assets, bank loans, promissory notes payable, accounts payable, customer deposits, amounts due to directors, other payables and accrued expenses, other taxes payable and income taxes payable approximate their fair value based on the short-term maturity of these instruments.

~~The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2022.~~47


Description	Level 1		Level 2		Level 3		Total
		4,795,862						4,795,862
Wealth management investment products		6,164,649						6,164,649
Investment in transactional equity securites		—						—
Total	$	10,960,511	$	—	$	—	$	10,960,511

Table of Contents

SUNRISE REAL ESTATE GROUP, INC. AND SUBSIDIARIES

~~The~~CONSOLIDATED ~~following~~STATEMENTS ~~are~~OF ~~the~~COMPREHENSIVE ~~major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2021.~~INCOME


Description	Level 1		Level 2		Level 3		Total
		4,603,522						4,603,522
Wealth management investment products		9,287,424						9,287,424
Investment in transactional equity securites		—						—
Total	$	13,890,946	$	—	$	—	$	13,890,946

(Expressed in U.S. Dollars)


	Years Ended December 31,
	2023		2022
Net income /(loss)	$	(26,261,818)	$	(9,395,896)

Other comprehensive income (loss)
- Foreign currency translation adjustment		(2,284,323)		(16,547,215)
Total comprehensive income (loss)		(28,546,141)		(25,943,111)
Less: Comprehensive loss attributable to non-controlling interests		16,279,763		2,223,365

Total comprehensive income (loss) attributable to stockholders of Sunrise Real Estate Group, Inc.	$	(12,266,378)	$	(23,719,746)

~~Concentrations of Credit Risk~~

~~Financial~~See ~~instruments~~accompanying ~~that~~notes ~~potentially expose the Company~~ to ~~concentrations~~consolidated of credit risk consist primarily of cash and cash equivalents, restricted cash, accounts receivable, other receivables and deposits, and amount due from an unconsolidated affiliate. The Company places its cash and cash equivalents with reputable financial ~~institutions with high credit ratings~~statements.

The Company conducts credit evaluations of customers and generally does not require collateral or other security from customers. The Company establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors relevant to determining the credit risk of specific customers. The amount of receivables ultimately not collected by the Company has generally been consistent with management’s expectations and the allowance established for doubtful accounts.

~~During the year ended December 31, 2022 and 2021, there was no single customer that represented more than 10% of our net revenues.~~48

~~Cash~~Table ~~and~~of ~~Cash Equivalents~~Contents

~~Cash~~SUNRISE ~~and~~REAL ~~cash~~ESTATE ~~equivalents include cash on hand and all high liquidity investments with an original maturity of three~~GROUP, ~~months or less~~INC.

~~The~~CONSOLIDATED ~~Company~~STATEMENTS ~~maintains~~OF ~~cash and cash equivalents with various banks in the PRC which are not insured or otherwise protected. Should any of these banks holding the Company~~STOCKHOLDERS’s ~~cash deposits become insolvent, or if the Company is otherwise unable to withdraw funds for any reason, the Company could lose the cash on deposit with that particular bank.~~EQUITY

~~Foreign~~(Expressed ~~Currency~~in ~~Translation~~U.S. ~~and Transactions~~Dollars)

The functional currency of SRRE, CY-SRRE and LRY is U.S. dollars (“$”) and their financial records are maintained and the financial statements prepared in U.S. dollars. The functional currency of the Company’s subsidiaries and affiliates in China is Renminbi (“RMB”) and their financial records and statements are maintained and prepared in RMB.


	Common Stock									Accumulated				Total
	Number of			Additional				Retained		Other			Non-	Stockholders’
	shares			Paid-in		Statutory		Earnings		Comprehensive		controlling		(Deficit)
	issued	Amount		Capital		Reserve		(Deficits)		Income		Interests		Equity
Balance, December 31, 2021	68,691,925	$	686,919	$	8,050,008	$	3,986,618	$	117,729,224	$	24,738,423	$	15,430,432	$	170,621,624
Profit (loss) for the year	—		—		—		—		(8,428,588)		—		(967,308)		(9,395,896)
Company Cancellation	—		—		—		—		—		—		—		—
Common stock issued to employees and consultants for services	—		—		60,000		—		—		—		—		60,000
Dividend distributions	—		—		—		—		—		—		—		—
Translation of foreign operations	—		—		—		—		—		(15,291,158)		(1,256,057)		(16,547,215)
Balance, December 31, 2022	68,691,925		686,919		8,110,008		3,986,618		109,300,636		9,447,265		13,207,067		144,738,513

Foreign currency transactions during the year 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.


	Common Stock									Accumulated				Total
	Number of			Additional				Retained		Other			Non-	Stockholders’
	shares			Paid-in		Statutory		Earnings		Comprehensive		controlling		(Deficit)
	issued	Amount		Capital		Reserve		(Deficits)		Income		Interests		Equity
Balance, December 31, 2022	68,691,925	$	686,919	$	8,110,008	$	3,986,618	$	109,300,636	$	9,447,265	$	13,207,067	$	144,738,513
Profit (loss) for the year	—		—		—		—		(10,130,899)		—		(16,130,919)		(26,261,818)
Company Cancellation	—		—		—		—		—		—		—		—
Common stock issued to employees and consultants for services	—		—		—		—		—		—		—		—
Dividend distributions	—		—		—		—		—		—		—		—
Translation of foreign operations	—		—		—		—		—		(2,135,479)		(148,844)		(2,284,323)
Balance, December 31, 2023	68,691,925		686,919		8,110,008		3,986,618		99,169,737		7,311,786		(3,072,696)		116,192,372

~~Table of Contents~~

~~Assets~~See ~~and~~accompanying ~~liabilities~~notes ~~denominated~~to ~~in foreign currencies at the balance sheet date are translated into each company’s denominated currency at year-end exchange rates. All exchange differences are dealt with in the~~ consolidated ~~statements~~financial ~~of operations~~statements.

The financial statements of the Company’s operations based outside of the United States have been translated into U.S. dollars in accordance with ASC830. Management has determined that the functional currency for each of the Company’s foreign operations is its applicable local currency. When translating functional currency financial statements into U.S. dollars, year-end exchange rates are applied to the consolidated balance sheets, while average exchange rates as to revenues and expenses are applied to consolidated statements of operations. The effect of foreign currency translation adjustments are included as a component of accumulated other comprehensive income in shareholders’ equity.

The RMB is not freely convertible into foreign currency and all foreign exchange transaction must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rate used in translation.49

~~Real~~Table ~~Estate~~of ~~Property under Development~~Contents

~~Real~~SUNRISE ~~estate~~REAL ~~property~~ESTATE ~~under development~~GROUP, INC. ~~which~~AND ~~consists of residential unit sites and commercial and residential unit sites under development, is stated at the lower of carrying amounts or fair value.~~SUBSIDIARIES

~~Expenditures~~CONSOLIDATED ~~for~~STATEMENTS ~~land~~OF ~~development,~~CASH including cost of land use rights, deed tax, and pre-development costs and engineering costs, are capitalized and allocated to development projects by the specific identification method. Costs are allocated to specific units within a project based on the ratio of the sales value of units to the estimated total sales value times the total project costs.FLOWS

~~Costs~~(Expressed of amenities transferred to buyers are allocated as common costs of the project that are allocated to specific units as a component of total construction costs. For amenities retained by the Company, costs in ~~excess of the related fair value of the amenity are also treated as common costs~~U. ~~Results of operations of amenities retained by the Company are included in current operating results~~S. Dollars)


	Years ended December 31,
	2023		2022
Cash flows from operating activities
Net income (loss)	$	(26,261,818)	$	(9,395,896)

Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization		1,723,524		1,779,670
Loss (gain) on disposal of property and equipment		34,020		27,559
Bad Debt		804,919		—
Real estate property under development Impairment		19,590,407		—
Goodwill impairment loss		1,243,194		—
Changes in assets and liabilities
Accounts receivable		(353,443)		(149,204)
Net Cash from directors		1		(891)
Real estate property under development		10,096,668		44,764,605
Customer deposits		(10,893,953)		(83,545,766)
Amount due from unconsolidated affiliates		(2,292,261)		29,472,050
Other receivables and deposits		433,213		3,330,221
Deferred tax assets		—		808,115
Dividends		—		901,258
Accounts payable		2,898,312		(644,540)
Other payables and accrued expenses		(109,135)		(502,641)
Taxes payable		(968,883)		99,955
Other Tax payable		(3,419)		(119,403)
Net cash provided by (used in) operating activities		(4,058,654)		(13,174,908)

Cash flows from investing activities
Acquisition of property, plant and equipment		(6,032)		(190,148)
Proceeds from disposal of plant and equipment		—		—
Capital injection to unconsolidated affiliates, net		—		—
Acquisition of investment		—		—
Transactional financial assets		(15,798,715)		1,816,348
Dividend distribution of affiliates		—		—
Net cash provided by investing activities		(15,804,747)		1,626,200

Cash flows from financing activities
Advances from an affiliate		(14,118,909)		—
Dividends paid		(10,177,675)		—
Restricted cash		—		23,759,027
Net cash (used in) financing activities		(24,296,584)		23,759,027

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(9,733,394)		(3,910,009)

Net increase (decrease) in cash, cash equivalents and restricted cash		(53,893,379)

Filing Compare · SUNRISE REAL ESTATE GROUP INC