Sunrise Solar (SSLR) 10-Q 2009 Q1 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

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

For the quarterly period ended March 31, 2009

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

For the transition period from ________to _________

Commission File Number 001-16173

Sunrise Solar Corporation

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

Nevada	88-0460457
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
11815 IH 10 West, Suite 110
San Antonio, Texas	78230
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code:  (210) 881-0850

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ  No o

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

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

There were 13,633,744 shares of the registrant’s common stock issued and outstanding as of May 13, 2009.

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

Yes o  No þ

IMPORTANT INFORMATION REGARDING THIS FORM 10-Q

Unless otherwise indicated, references to “we,” “us,” and “our” in this Quarterly Report on Form 10-Q refer to Sunrise Solar Corporation.

Readers should consider the following information as they review this Quarterly Report:

Forward-Looking Statements

The statements contained or incorporated by reference in this Quarterly Report on Form 10-Q that are not historical facts are “forward-looking statements” (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements.  Forward-looking statements include any statement that may project, indicate or imply future results, events, performance or achievements.  The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,” “expect,” “may,” “will,” “should,” “intend,” “plan,” “could,” “estimate” or “anticipate” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties.

Given the risks and uncertainties relating to forward-looking statements, investors should not place undue reliance on such statements.  Forward-looking statements included in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q and are not guarantees of future performance.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, such expectations may prove to have been incorrect.  All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.

Subsequent Events

All statements contained in this Quarterly Report on Form 10-Q, including the forward-looking statements discussed above, are made as of May 14, 2009, unless those statements are expressly made as of another date.  We disclaim any responsibility for the accuracy of any information contained in this Quarterly Report on Form 10-Q to the extent such information is affected or impacted by events, circumstances or developments occurring after May 14, 2009 or by the passage of time after such date.  Except to the extent required by applicable securities laws, we expressly disclaim any obligation or undertakings to release publicly any updates or revisions to any statement or information contained in this Quarterly Report on Form 10-Q, including the forward-looking statements discussed above, to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any statement or information is based.

SUNRISE SOLAR CORPORATION

 (A DEVELOPMENT STAGE ENTERPRISE)

CONTENTS

PART I – FINANCIAL INFORMATION
ITEM 1 – UNAUDITED FINANCIAL STATEMENTS
(Unaudited) Balance Sheets as of March 31, 2009,	F-1 – F-2
and December 31, 2008
(Unaudited) Statements of Operations
for the three months ended March 31, 2009 and 2008, and
from Re-entering the Development Stage to March 31, 2009	F-3
(Unaudited) Statements of Changes in Stockholders’ Deficit
for the three months ended March 31, 2009 and
the years ended December 31, 2008 and 2007	F-4
(Unaudited) Statement of Cash Flows
for the three months ended March 31, 2009 and 2008 , and
from Re-entering the Development Stage to March 31, 2009	F-5
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)	6 – 10
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS	11 – 14
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISKS	15
ITEM 4T – CONTROLS AND PROCEDURES	15-16
PART 2 – OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS	17-18
ITEM 6 – EXHIBITS AND REPORTS ON FORM 8K	18

SUNRISE SOLAR CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

BALANCE SHEET (UNAUDITED)

	March 31, 2009		December 31, 2008
ASSETS
CURRENT ASSETS
Cash	$	50,137	$	-
TOTAL ASSETS	$	50,137	$	-

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

F-1

SUNRISE SOLAR CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

BALANCE SHEET (UNAUDITED)

	March 31, 2009			December 31, 2008
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Bank Overdraft	$	-		$	5,456
Accounts Payable		4,894			3,506
Deferred Liability		70,000			70,000
Litigation Settlement Liability		307,500			307,500
Notes Payable and Accrued Interest		464,975			450,125
Related Party Advances		192,750			86,450
Other Current Liabilities		38,086			38,086
Total Current Liabilities		1,078,205			961,123
TOTAL LIABILITIES		1,078,205			961,123
COMMITMENTS AND CONTINGENCIES		-			-
STOCKHOLDERS'  DEFICIT
Preferred Stock, $.0001 par value, 5 million shares   authorized; no shares issued and outstanding		-			-
Common Stock, $.0001 par value, 100 million shares authorized; 11,812,744 and 6,282,077 shares issued and outstanding, respectively		1,181			628
Additional Paid-in Capital		29,509,247			26,677,290
Accumulated Deficit from Prior Operations		(26,663,674	)		(26,663,674	)
Accumulated Deficit from the Development Stage		(3,874,822	)		(975,367	)
TOTAL STOCKHOLDERS' DEFICIT		(1,028,068	)		(961,123	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	50,137		$	-

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

F-2

SUNRISE SOLAR CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF OPERATION (UNAUDITED)

							Re-entering
							Development Stage,
	Three Months Ended			Three Months Ended			January 15, 2008, to
	March 31, 2009			March 31, 2008			March 31, 2009
REVENUES	$	-		$	-		$	-
COST OF REVENUES		-			-			-
GROSS PROFIT		-			-			-
EXPENSES
Payroll, contract labor and consultants		2,843,814			395,147			3,297,996
Selling, general and administrative expenses		38,095			11,813			97,167
OPERATING LOSS FROM CONTINUING OPERATIONS		(2,881,909	)		(406,960	)		(3,395,163	)
Gain on disposal of assets		-			62,151			(67,171	)
Interest expense		(17,546	)		(32,229	)		(54,949	)
NET LOSS FROM CONTINUING OPERATIONS		(2,899,455	)		(377,038	)		(3,517,283	)
DISCONTINUED OPERATIONS (Note 12)
Loss from discontinued operations		-			(163,459	)		(357,539	)
NET LOSS	$	(2,899,455	)	$	(540,497	)	$	(3,874,822	)
NET LOSS PER SHARE:
Common Stock:
Basic and Diluted Net Loss Per Share	$	(0.33	)	$	(0.07	)
Basic and Diluted Net Loss Per Share for Discontinued Operations	$	(0.00	)	$	(0.03	)
Total Basic and Diluted Net Loss Per Share	$	(0.33	)	$	(0.09	)
Denominator for Basic and Diluted Net Loss Per Share
Weighted Average Number of Common Shares Outstanding		8,910,000			5,764,000

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

F-3

SUNRISE SOLAR CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF CHANGES IN STOCKHOLDERS'  (UNAUDITED)

					Additional		Accumulated Defecit						Total
	Common Stock				Paid-In		Prior			Development			Stockholders'
	Shares		Amount		Capital		Operations			Stage			Deficit
BALANCE — December 31, 2006		4,138,077		414		19,604,623		(25,163,220	)		-			(5,558,183	)
Interest Imputed on Non-Interest Bearing Notes Payable		—		—		210,868		—			—			210,868
Net loss		—		—		—		(1,446,287	)		—			(1,446,287	)
														.
BALANCE — December 31, 2007		4,138,077		414		19,815,491		(26,609,507	)		-			(6,793,602	)
Compensatory Element of Stock Issuance		500,000		50		99,950		—			—			100,000
Stock Issued for Consulting Services		1,644,000		164		372,237		—			—			372,401
Interest Imputed on Non-Interest Bearing Notes Payable		—		—		149,606		—			—			149,606
Debt & Interest Forgiven by Related Parties		—		—		6,240,006		—			—			6,240,006
Net loss		—		—		—		(54,167	)		(975,367	)		(1,029,534	)
														.
BALANCE — December 31, 2008		6,282,077	$	628	$	26,677,290	$	(26,663,674	)	$	(975,367	)	$	(961,123	)
Stock Issued for Consulting Services		5,530,667		553		2,829,261		—			—			2,829,814
Interest Imputed on Non-Interest Bearing Notes Payable		—		—		2,696		—			—			2,696
Net loss		—		—		—		—			(2,899,455	)		(2,899,455	)
														.
BALANCE — March 31, 2009		11,812,744	$	1,181	$	29,509,247	$	(26,663,674	)	$	(3,874,822	)	$	(1,028,068	)

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

F-4

SUNRISE SOLAR CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF CASH FLOWS (UNAUDITED)

							Re-entering
							Development Stage,
	Three Months Ended			Three Months Ended			January 15, 2008, to
	March 31, 2009			March 31, 2008			March 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(2,899,455	)	$	(540,497	)	$	(3,874,822	)
Loss from Discontinued Operations		-			163,459			357,539
Loss from Continuing Operations		(2,899,455	)		(377,038	)		(3,517,283	)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Gain on Disposal of Assets		-			(62,151	)		-
Issuance of Common Stock for Services		2,829,814			400,000			3,302,215
Interest Imputed on Non-Interest Bearing Notes Payable		2,696			58,431			132,785
Changes in operating assets and liabilities:
Accounts Payable		(9,268	)		(16,796	)		(9,268	)
Accrued Expenses		14,850			(70,083	)		31,917
Prepaid Expenses		-			11,310			11,310
NET CASH USED IN OPERATING ACTIVITIES		(61,363	)		(56,327	)		(48,324	)
CASH FLOWS FROM INVESTING ACTIVITIES
Principal Payments on Notes Receivable		-			8,125			(976	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		-			8,125			(976	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on Notes Payable		(10,000	)		-			-
Note Proceeds from Stockholders		121,500			39,730			253,807
NET CASH PROVIDED BY FINANCING ACTIVITIES		111,500			39,730			253,807
DISCONTINUED OPERATIONS
Discontinued Operating Activities		-			(3,335	)		(144,847	)
NET CASH USED IN DISCONTINUED OPERATIONS		-			(3,335	)		(144,847	)
NET INCREASE (DECREASE) IN CASH		50,137			(11,807	)		59,660
CASH – Beginning		-			19,776			(9,523	)
CASH – Ending	$	50,137		$	7,969		$	50,137
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
Interest	$	-		$	-		$	-
Income Taxes	$	-		$	-		$	-
Non-cash investing and financing activities:
Sale of ASPECT Business Segment for Note Receivable	$	-		$	65,000		$	65,000

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

F-5

SUNRISE SOLAR CORPORATION

AND SUBSIDIARIES

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Sunrise Solar Corporation (“SSC”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in SSC's financial statements filed with the SEC on Form 10-K for the year ended December 31, 2008. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2008 as reported in Form 10-K have been omitted.

NOTE 2 – GOING CONCERN

The Company sustained a substantial loss of approximately $2,899,000 during the three months ended March 31, 2009, and as of March 31, 2009, had a combined accumulated deficit of approximately $30,538,000.

These factors raise a substantial doubt about the Company’s ability to continue as a going concern.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.

In addition to operational expenses, as the Company executes its business plan, it is incurring expenses related to complying with its public reporting requirements.  In order to finance these expenditures, the Company has raised capital in the form of debt which will have to be repaid, as discussed in detail below.  The Company has depended on shareholder loans for much of its operating capital.  The Company will need to raise capital in the next twelve months in order to remain in business.

6

SUNRISE SOLAR CORPORATION

AND SUBSIDIARIES

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

Management anticipates that significant dilution will occur as the result of any future sales of the Company’s common stock and this will reduce the value of its outstanding shares. The Company cannot project the future level of dilution that will be experienced by investors as a result of its future financings, but it will significantly affect the value of its shares.

Management has plans to address the Company’s financial situation as follows:

In the near term, management plans to continue to focus on raising the funds necessary to fully implement the Company’s business plan.  Management believes that certain shareholders will continue to advance the capital required to meet the Company’s financial obligations.  There is no assurance, however, that these shareholders will continue to advance capital to the Company or that the new business operations will be profitable.  The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.

In the long term, management believes that the Company’s previously announced projects and initiatives will be successful and will provide significant profit to the Company which will be used to finance the Company’s future growth.  However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability.  The Company’s long term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations and the ability of the Company to ultimately achieve adequate profitability and cash flows from operations to sustain its operations.

NOTE 3 –ACCOUNTING POLICIES

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE – Basic and diluted earnings (loss) per share equals net loss divided by weighted average shares outstanding during the period.  Diluted earnings (loss) per share includes the impact of common stock equivalents using the treasury stock method when the effect is dilutive.  There were no common stock equivalents at March 31, 2009.

DEVELOPMENT STAGE ENTERPRISE - As a result of the Company’s sale of SMS Envirofuels, Inc. and ASPECT, it’s only revenue source, the Company is now considered a development stage enterprise pursuant to FASB Statement number 7, which focuses on development stage companies. Users of the financial statements should be familiar with this statement and its effect on the financial statements.

7

SUNRISE SOLAR CORPORATION

AND SUBSIDIARIES

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 4 – NOTES PAYABLE TO OTHERS

On February 3, 2006, SMS borrowed $500,000 from an independent lender. The security pledged for this note is equipment recently purchased plus the deposit placed on equipment currently being prepared for delivery in the future.  The interest rate on the unpaid balance is 18%. The Company is in default on this note. On February 8, 2007, an agreement to transfer deposit rights and partial release of the promissory note was signed by the Company and the independent note holder. In the agreement, the Company has transferred the rights to the deposit placed by the Company on 4 pieces of equipment that were to be used by its subsidiary SMSE, a value of $170,000, in exchange for a release and discharge of $240,000 of the promissory note. In addition, the Company has the right to further release of $15,000 for any future transfer to note holder of the rights in the deposits of 2 additional pieces of equipment, a value of $85,000.  At March 31, 2009, the deferred liability is $70,000 and the principal balance on the note is $260,000 with interest accrued of $204,975.  On August 20, 2008, the Company sold its SMSE subsidiary, some of the assets of which were used to collateralize this promissory note.  At this time the Company cannot accurately forecast the ramifications of this default.

NOTE 5 – ADVANCES FROM RELATED PARTIES

As of March 31, 2009 the Company had received net, non-interest bearing advances from certain related parties totaling $192,750.  These advances are not collateralized and are due on demand.

NOTE 6 – EQUITY

2008 Equity Incentive Plan

On February 27, 2009, the Company filed a Form S-8 with the Securities and Exchange Commission.  The purpose of the filing was to register up to 3 million shares of the Company’s common stock to be issued to eligible persons under the Company’s 2008 Equity Incentive Plan.

As of March 31, 2009, the Company had issued 2,840,667 shares of its common stock to eligible persons pursuant to the 2008 Equity Incentive plan valued at $1,565,214 based on the quoted market price of the Company’s common stock on the date of issuance.

Share Issuances Outside the Plan

Additionally, as of March 31, 2009, the Company had issued 2,690,000 shares of its common stock to several consultants valued at $1,264,600 based on the quoted market price of the Company’s common stock on the date of issuance.

8

SUNRISE SOLAR CORPORATION

AND SUBSIDIARIES

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 7 – INTERNAL REVENUE SERVICE TAX LIEN

During the second and third quarters of 2005, ASPECT, one of the Company’s former subsidiaries, did not have the funds necessary to cover all the payroll taxes. In January 2006, the Internal Revenue Service (“IRS”) placed a lien on ASPECT assets. A third party accounting firm which represented ASPECT in the due process hearing negotiated an installment plan to settle the outstanding liability. Payments were tendered from this third party firm on behalf of the Company’s largest shareholder and holder of a line of credit with ASPECT.  The balance due at March 31, 2009 is $38,086.

NOTE 8 – OPERATING RESULTS AND SEGMENT INFORMATION

	(Discontinued)			(Discontinued)
	Software Sales			Alternative
	& Programming			Fuels			All Other			Total
3 Months Ended March 31, 2009
Revenues from operations	$	—		$	—		$	—		$	—
Net operating loss from operations		—			—			(2,899455	)		(2,899,455	)
Loss from discontinued operations		—			—			—			—
Assets held for sale		—			—			—			—
Capital Expenditures		—			—			—			—
Current Depreciation (included in gain on disposal)		—			—			—			—
3 Months Ended March 31, 2008
Revenues from operations	$	14,634		$	—		$	—		$	14,634
Net operating loss from operations		—			—			(377,038	)		(377,038	)
Loss from discontinued operations		(46,942	)		(116,517	)		—			(163,459	)
Assets held for sale		—			574,619			—			574,619
Capital Expenditures		—			—			—			—
Depreciation		2,819			—			—			2,819

The Company reports its operations by segments, which for the Company, relates to specific subsidiaries that are individually managed and have separate financial results that are viewed by the Company’s chief operating decision-maker.  Profit from operations is net sales less cost of sales and selling, general and administrative expenses.  There are two segments: Software sales and programming, and alternative fuels.  In addition, the Company reports certain administrative activities under the corporate segment labeled “All Other.”

As previously discussed, the Company sold its SMSE business segment on August 20, 2008.  The results of SMSE are presented herein as discontinued operations.

9

SUNRISE SOLAR CORPORATION

AND SUBSIDIARIES

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

Also, as previously discussed, the Company sold its ASPECT business segment on January 15, 2008.  The results of ASPECT are presented herein as discontinued operations.

NOTE 9 – RELATED PARTY TRANSACTIONS

The Company is located in office space which is sub-leased from a related party.  This space is approximately 1,500 square feet, with an average monthly rent of $2,300.

The Company has an agreement with a related party for the advancement of funds as needed by the Company.  As of March 31, 2009 the Company had received net, non-interest bearing advances under this agreement totaling $192,750.  These advances are not collateralized and are due on demand.

NOTE 10 – RECLASSIFICATION

Certain accounts from prior periods have been reclassified to conform to current period presentation.

NOTE 11 – Subsequent Events

Amendment to 2008 Equity Incentive Plan

On April 15, 2009, the Company’s Board of Directors directed the Company to amend its previously filed S-8 Registration Statement to authorize an additional 6 million shares of the Company’s common stock for issuance under the 2008 Equity Incentive Plan.

Subsequent to March 31, 2009 and as of May 13, 2009, the Company had issued an additional 1,821,000 shares of its common stock to eligible persons pursuant to the 2008 Equity Incentive plan valued at $1,100,840 based on the quoted market price of the Company’s common stock on the date of issuance.

10

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements may be identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will" or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of the Company.  Forward-looking statements are based on management's current expectations and assumptions, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.  Actual outcomes and results may differ materially from these expectations and assumptions due to changes in global political, economic, business, competitive, market, regulatory and other factors.  We undertake no obligation to publicly update or review any forward-looking information, whether as a result of new information, future developments or otherwise.

The following discussion and analysis should be read in connection with the Company’s consolidated financial statements and related notes thereto, as included in this report, as well as the Company’s Annual Report filed on form 10-K.

Overview

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

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

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

11

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

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

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

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Expenses. Our expenses for continuing operations increased substantially, when comparing 2009 to 2008 for the three month period ending March 31.  The increase is attributed mainly to costs related to the issuance of stock to our consultants for the continued implementation of our solar business model.  As of March 31, 2009, the Company had 2 full-time employees and relied on contractors to meet its financial and regulatory reporting requirements.

Results of Operation

SSC incurred a net loss of approximately $2,899,000 for the three months ended March 31, 2009, and had a working capital deficit of approximately $1,028,000 as of March 31, 2009.  These conditions create an uncertainty as to SSC’s ability to continue as a going concern.

Cash used in continuing operations was approximately $61,000 for the three months ended March 31, 2009.  The funds to cover these uses of cash were received against the advance agreement the Company maintains with a related party.

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

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Critical Accounting Policies

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

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

Internal Revenue Service Tax Lien

During the second and third quarters of 2005, ASPECT, one of the Company’s former subsidiaries, did not have the funds necessary to cover all the payroll taxes. In January 2006, the Internal Revenue Service (“IRS”) placed a lien on ASPECT assets. A third party accounting firm which represented ASPECT, in the due process hearing, negotiated an installment plan to settle the outstanding liability. Payments were tendered from this third party firm on behalf of the Company’s largest shareholder and holder of a line of credit with ASPECT. The balance due at March 31, 2009 is approximately $38,000.

Liquidity and Capital Resources

Cash used in operating activities was approximately $61,000 for the three months ended March 31, 2009.  During the three months ended March 31, 2009, the Company received advances under a finance agreement from a related party in the amount of $121,500.

Risk Factors

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

Competition

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

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Reliance on Key Personnel

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

Sales Channels

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

Limited Operating History: Operating Losses

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

Going Concern

The Company’s ability to continue as a going concern is an issue raised as a result of the significant operating losses incurred during the three months ended March 31, 2009 and 2008 and its negative working capital. The Company continues to experience net operating losses. The ability to continue as a going concern is subject to the Company’s ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of securities, increasing sales or obtaining loans and grants from various financial institutions where possible.

Additional Financing

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

Limited Trading Market

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

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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4T: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

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

Management’s Report on Internal Control over Financial Reporting

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

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

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

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

Change In Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS

Other than as disclosed below, we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

In early 2005, the landlord for the offices occupied by YCO Holdings, Inc. and its subsidiaries filed suit in the 295th District Court of Harris County, Texas Cause No. 2005-04423 captioned WKB Value Partners, LP vs. Systems Management Solutions, Inc., alleging that the Company was obligated on the lease even though no authorized officer of the Company had signed the same.  This lawsuit was dismissed in February, 2006 pursuant to a Comprehensive Settlement Agreement which required the Company to make payments to WKB Value Partners, LP in the amount of $470,000.  The payment schedule called for $20,000 initial payment, followed by monthly payments of $7,500 for 60 months.  The Company is currently in default under the terms of the settlement agreement.  As of March 31, 2009 the liability to WKB was approximately $307,500.

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

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

ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K

(a)	Exhibits:
	Exhibit No.	Description
	31.1	Section 302 Certification – Eddie Austin, Jr.
	32.1	Section 906 Certification – Eddie Austin, Jr.

(b)	Reports on Form 8-K:
	None.

SIGNATURES

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

	Sunrise Solar Corporation
By:	/s/  Eddie Austin, Jr.
	Eddie Austin, Jr.
	Chairman & CEO
	(Principal Executive Officer and Principal Accounting Officer)

Date:  May 15, 2009

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