UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.


                                   FORM 10-QSB


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

                  For the quarterly period ended March 31, 2004

                          Commission File No. 000-30724


                          MONTGOMERY REALTY GROUP, INC.
        ----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

                                     Nevada
          -------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                   88-0377199
                        --------------------------------
                        (IRS Employer Identification No.)

                        400 Oyster Point Blvd., Suite 415
                          South San Francisco, CA 94080
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (650) 266-8080
                           ---------------------------
                           (Issuer's telephone number)

                                       N/A
              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)



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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 14, 2004, issuer had
16,500,000 shares of issued and outstanding common stock, par value $0.001.

Transitional Small Business Disclosure Format:  Yes [ ]  No [X]

<PAGE>

                          MONTGOMERY REALTY GROUP, INC.


                              INDEX TO FORM 10-QSB


                          PART I--FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

         Condensed Balance Sheets as of March 31, 2004, and
           December 31, 2003.................................................3
         Condensed Statements of Operations for the Three Months
           Ended March 31, 2004, and 2003....................................4
         Condensed Statements of Cash Flows for the Three Months
           Ended March 31, 2004, and 2003....................................5
         Notes to Condensed Financial Statements.............................6

Item 2.  Management's Discussion and Analysis or Plan of Operations..........7

Item 3.  Controls and Procedures............................................13

                           PART II--OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K...................................15

         Signatures.........................................................15

                                       2
<PAGE>
<TABLE>
<CAPTION>
                          PART I--FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

MONTGOMERY REALTY GROUP, INC.

CONDENSED BALANCE SHEETS
MARCH 31, 2004, AND DECEMBER 31, 2003 (Unaudited)
------------------------------------------------------------------------------------------------------------------------

                                                                                           March 31,       December 31,
                                                                                             2004              2003
<S>                                                                                      <C>               <C>
ASSETS

PROPERTY:
  Land                                                                                   $  5,644,000      $  5,644,000
  Building                                                                                  5,434,059         5,434,059
  Improvements                                                                              3,093,822         3,093,822
                                                                                         ------------      ------------
           Total                                                                           14,171,881        14,171,881

  Less accumulated depreciation                                                            (2,910,904)       (2,857,454)
                                                                                         ------------      ------------
           Property, net                                                                   11,260,977        11,314,427


CASH                                                                                          110,835            71,818

TENANT RECEIVABLES                                                                             33,498            16,796

PREPAID EXPENSES AND OTHER ASSETS                                                             375,386           369,863

DEFERRED LOAN COSTS                                                                            75,769            96,784

DEFERRED RENT RECEIVABLE                                                                       10,509             6,583

DEFERRED TAX ASSET                                                                          1,438,021         1,423,624
                                                                                         ------------      ------------
TOTAL ASSETS                                                                             $ 13,304,995      $ 13,299,895
                                                                                         ============      ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES:
  Notes payable                                                                          $ 15,201,331      $ 15,159,817
  Accounts payable and accrued expenses                                                        76,159            93,395
  Accrued interest                                                                             73,777            66,218
  Security deposits and prepaid rent                                                           49,539            49,539
                                                                                         ------------      ------------
TOTAL LIABILITIES                                                                          15,400,806        15,368,969
                                                                                         ------------      ------------
STOCKHOLDERS' DEFICIT:
  Common stock, $0.001 par value; authorized 80,000,000 shares; issued and
    outstanding, 16,500,000 shares at March 31, 2004 and
    December 31, 2003                                                                          16,500            16,500
  Preferred stock, $0.001 par value; authorized 20,000,000 shares; no
    shares issued and outstanding at March 31, 2004 and December 31, 2003
  Additional capital                                                                        1,692,742         1,692,742
  Accumulated deficit                                                                      (3,805,053)       (3,778,316)
                                                                                         ------------      ------------
TOTAL STOCKHOLDERS' DEFICIT                                                                (2,095,811)       (2,069,074)
                                                                                         ------------      ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                              $ 13,304,995      $ 13,299,895
                                                                                         ============      ============

See notes to the financial statements.

                                       3
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<TABLE>
<CAPTION>
MONTGOMERY REALTY GROUP, INC.

CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2004 AND 2003 (Unaudited)
--------------------------------------------------------------------------------------------------------------------------

                                                                                            2004               2003
<S>                                                                                      <C>               <C>
REVENUES:
  Rent                                                                                   $    398,607      $    346,710
  Other                                                                                           503                 -
                                                                                         ------------      ------------
           Total revenues                                                                     399,110           346,710
                                                                                         ------------      ------------

EXPENSES:
  Real estate taxes                                                                            70,165            57,544
  Utilities                                                                                     2,853             2,575
  Repairs and maintenance                                                                       8,511               285
  General building                                                                              3,809             6,321
  Administration                                                                               18,092            16,142
  Insurance                                                                                    11,514             4,263
  Management fee                                                                               30,000            28,233
  Depreciation                                                                                 53,450            49,468
  Amortization                                                                                 21,015            14,686
                                                                                         ------------      ------------
           Total expenses                                                                     219,409           179,517
                                                                                         ------------      ------------

INCOME BEFORE INTEREST EXPENSE,
  INCOME TAXES AND DISCONTINUED OPERATIONS                                                    179,700           167,193

INTEREST EXPENSE, NET                                                                        (220,835)         (195,668)
                                                                                         ------------      ------------
LOSS BEFORE INCOME TAXES AND
  AND DISCONTINUED OPERATIONS                                                                 (41,135)          (28,475)

INCOME TAX BENEFIT                                                                             14,397             9,962
                                                                                         ------------      ------------
LOSS FROM CONTINUING OPERATIONS                                                               (26,738)          (18,513)

DISCONTINUED OPERATIONS:

   Income from discontinued operations, net tax effect of $0 and
     $2,844, respectively                                                                           -             4,820
                                                                                         ------------      ------------
NET LOSS                                                                                 $    (26,738)     $    (13,693)
                                                                                         ============      ============

NET LOSS PER COMMON SHARE, BASIC AND DILUTED                                             $     (0.002)     $     (0.001)
                                                                                         ============      ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES,
  BASIC AND DILUTED                                                                        16,500,000        16,500,000
                                                                                         ============      ============

See notes to the financial statements.

                                       4
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<TABLE>
<CAPTION>
MONTGOMERY REALTY GROUP, INC.

CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2004 AND 2003 (Unaudited)
-----------------------------------------------------------------------------------------------------------------------------

                                                                                              2004              2003
<S>                                                                                      <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                               $    (26,737)     $    (13,693)
  Depreciation and amortization                                                                74,465            66,803
  Deferred rent receivable                                                                     (3,926)              527
  Deferred taxes                                                                              (14,397)           (7,131)
  Adjustments to reconcile net loss to net cash
    provided by operating activities:
    Tenant receivables                                                                        (16,702)          (19,241)
    Prepaid expenses and other assets                                                          (5,523)          (23,538)
    Accounts payable                                                                          (17,236)           (5,735)
    Accrued interest                                                                            7,559             5,650
    Security deposits and prepaid rent                                                              -            47,804
                                                                                         ------------      ------------
           Net cash (used in) provided by operating activities                                 (2,497)           51,446
                                                                                         ------------      ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of notes payable                                                     100,000                 -
  Payments on notes payable                                                                   (58,486)          (64,163)
                                                                                         ------------      ------------
           Net cash provided by (used in) financing activities                                 41,514           (64,163)
                                                                                         ------------      ------------
INCREASE (DECREASE) IN CASH                                                                    39,017           (12,717)

CASH, BEGINNING OF PERIOD                                                                      71,818           386,565
                                                                                         ------------      ------------
CASH, END OF PERIOD                                                                      $    110,835      $    373,848
                                                                                         ============      ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for interest                                                                   $    245,616      $    215,452
                                                                                         ============      ============
Cash paid for income taxes                                                               $     50,000      $          -
                                                                                         ============      ============

See notes to the financial statements.

                                       5
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<PAGE>

                          MONTGOMERY REALTY GROUP, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS


1.       BASIS OF PRESENTATION

         The accompanying unaudited financial statements have been prepared from
         the Company's accounting records in accordance with the rules and
         regulations of the Securities and Exchange Commission. Accordingly,
         they do not include all of the information and footnotes required by
         generally accepted accounting principles for complete financial
         statements. Such statements include all adjustments, consisting only of
         normal recurring adjustments, that are, in the opinion of management,
         necessary for a fair presentation of the Company's financial position
         and results of operations for the interim period reported upon. The
         interim financial statements should be read in conjunction with the
         Company's annual report on Form 10-KSB for the year ended December 31,
         2003, including the financial statements and the notes thereto.

2.       TRANSACTIONS WITH AFFILIATE

         Property management fees of $30,000 were paid to an affiliate of the
         majority shareholder for the three months ended March 31, 2004.

         No development fees were paid to an affiliate of the majority
         shareholder for the three months ended March 31, 2004, although the
         affiliate does retain a $10,000 retainer to be used for development and
         planning department fees and expenses.

         On March 31, 2004, Mr. Dinesh Maniar, the principal shareholder of the
         Company, made a loan of $100,000 to the Company on an unsecured basis.
         The loan bears interest at the rate of 10% per annum, payable monthly,
         with all principal and interest due on April 1, 2005.

3.       BASIC AND DILUTED LOSS PER SHARE OF BENEFICIAL INTEREST

         Basic and diluted loss per share is computed by dividing net loss by
         the weighted average number of shares outstanding of 16,500,000 for the
         three months ended March 31, 2004 and 2003. There were no outstanding
         options for the three months ended March 31, 2004.

                                       6
<PAGE>

        ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward-Looking Information May Prove Inaccurate

         This report contains statements about the future, sometimes referred to
as "forward-looking" statements. Forward-looking statements are typically
identified by the use of the words "believe," "may," "could," "should,"
"expect," "anticipate," "estimate," "project," "propose," "plan," "intend" and
similar words and expressions. Statements that describe future strategic plans,
goals or objectives of the Company are also forward-looking statements. The
Company intends the forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

         Readers of this report are cautioned that any forward-looking
statements, including those regarding the Company or its management's current
beliefs, expectations, anticipations, estimations, projections, proposals, plans
or intentions are not guarantees of future performance or results of events and
involve risks and uncertainties. The forward-looking information is based on
present circumstances and on the Company's predictions respecting events that
have not occurred, that may not occur, or that may occur with different
consequences from those now assumed or anticipated. Actual events or results may
differ materially from those discussed in the forward-looking statements as a
result of various factors. The forward-looking statements included in this
report are made only as of the date of this report. The Company is not obligated
to update such forward-looking statements to reflect subsequent events or
circumstances.

         The following discussion should be read in conjunction with the
financial statements of the Company and the notes thereto.

Overview

         Montgomery is a real estate company that emphasizes investment in both
developmental real estate assets and income-producing real estate assets.
Montgomery is engaged in the ownership, leasing, management, operation,
development, redevelopment, acquisition and sale of real estate assets in the
Greater San Francisco Bay Area. Montgomery currently owns: (a) a retail shopping
center in Contra Costa County, California, two office buildings in the City of
County of San Francisco, California, and an undeveloped parcel of land referred
to as the "Eccles Project" in South San Francisco, as discussed in more detail
in Montgomery's report on Form 10-KSB.

Basis of Presentation of Financial Information

         Montgomery accounts for its real estate assets using the historical
cost method consistent with accounting principles generally accepted in the
United States of America. For those real estate assets Montgomery acquired from
its principal shareholder, Dinesh Maniar, in a "reverse acquisition," the
historical cost as shown on the financial statements is Mr. Maniar's original
purchase cost, which in some instances may be quite dated. For example, the
historical cost of the Eccles Project is $539,500 dating back to 1980. The
appraised value of the Eccles Project as of February 2002 was $12,370,000. While
the Eccles Project is the most extreme example of such a disparity between
historical cost and appraised value, other disparities are identified under
Capital Requirements below. For the Front Street Office Building, the historical
cost as shown on the financial statements is the July 2003 purchase price.

                                       7
<PAGE>

Results of Operations

         Three Months Ended March 31, 2004, and March 31, 2003

         Montgomery's net loss increased to $26,737 for the period ended March
31, 2004, from $13,693 for the period ended March 31, 2003, or 95.3%. This
increase is due primarily to the increase in operating expenses due to the
acquisition of the Front Street Office Building.

         Montgomery's total revenues increased to $399,110 at March 31, 2004,
from $346,710 at March 31, 2003, or 15.1%. This is due primarily to the increase
in base rent resulting from the acquisition of the Front Street Office Building.

         Total continuing operating expenses increased to $219,409 for the three
months ended March 31, 2004, from $179,517 for the period ended March 31, 2003,
or 22.2%. This change is primarily due to the increase in real estate taxes
resulting from the purchase of the Front Street Office Building.

         Net continuing interest expense increased to $220,835 for the three
months ended March 31, 2004, from $195,668 for the three months ended March 31,
2003, or 12.9%. This increase is due primarily to the larger first mortgage debt
on the Front Street Office Building, as compared to the first mortgage debt on
the San Ramon Retail Center, which Montgomery owned during the quarter ended
March 31, 2003.

Lease Status of Real Estate Assets

         The Keker & Van Nest lease is due to expire on November 18, 2004.
However, the tenant has a five-year option to extend the term of the lease,
which the tenant exercised by letter dated March 9, 2004. The lease requires
that Montgomery, the landlord, advise the tenant of the proposed "fair market
value" rental rate for the next five-year term not less than 120 days prior to
the expiration of the current term. The current monthly rent is $59,190.

         If the tenant disagrees with Montgomery's proposed "fair market value"
rent, then the actual rental rate will be determined by means of "baseball
arbitration." "Baseball arbitration" requires that Montgomery select a fair
market value rental rate, that the tenant select a fair market value rental
rate, and that a panel of three arbitrators determines a fair market value
rental rate. The actual rental rate that will apply during the five-year option
period will be whichever of the two rental rates chosen by Montgomery and the
tenant is closest to the fair market value rate selected by the arbitrators. The
rental rate will not be the fair market rent chosen by the arbitrators. Since
the landlord or tenant only prevails if the rate chosen by it is closest to the
rate determined by the arbitrators, the process tends to force both landlord and
tenant to select probable and reasonable rental rates, such that the procedure
has been nicknamed "baseball arbitration." The parties intend to meet and
discuss the future rental rate in an informal setting prior to commencing the
process set forth in the lease. Regardless of the actual rental rate, both
Montgomery and the tenant are now bound to the extension of the lease for an
additional five years. On April 16, 2004, Montgomery's Board of Directors
authorized its President to negotiate with the tenant and to arbitrate the
matter if necessary.

         The Front Street Office Building, which currently has one tenant,
Schroeders' Restaurant, is subject to a lease expiring in 2012, with rights of
renewal.

                                       8
<PAGE>

         The Orchard Supply Shopping Center has as its major tenant Orchard
Supply Hardware, a division of Sears Roebuck & Co., and has possession of over
50,000 square feet, or 95% of the leasable space through 2016. The remaining
space of the Orchard Supply Shopping Center is leased to three small tenants
occupying approximately 4,804 square feet. Although each tenant pays a slightly
different rental rate (together with reimbursements for taxes, insurance and
common area expenses), the average rent paid by these tenants exceeds $2.00 per
square foot. None of the leases are scheduled to terminate in 2004.

         The only real estate asset owned by Montgomery that is not
income-producing is the Eccles Project, which consists of approximately 7.4
acres of land suitable for sale, development or other disposition.

Operating Agreements with Affiliated Corporations

         Montgomery has two separate agreements with a corporation owned by Mr.
Dinesh Maniar, the majority shareholder of Montgomery. These two agreements are:

                  (1) a property management agreement executed June 1999 and
         filed as an exhibit to Montgomery's registration statement on Form
         10-SB; and

                  (2) a Development and Consulting Agreement executed August
         2003 and filed as an exhibit to Montgomery's quarterly report on Form
         10-QSB for the quarter ended September 30, 2003.

Montgomery's audit committee has reviewed the transactions and found that they
are fair and in the best interests of Montgomery. Montgomery's board of
directors has imposed a current moratorium on any increases in the management
fees paid by Montgomery to Diversified Investment & Management Corporation, or
DIMC, and those fees therefore remain at $10,000 per month until such time as
the board of directors of Montgomery may authorize a fee increase. No payments
are currently being made from Montgomery to DIMC under the Development and
Consulting Agreement.

Loans from Shareholders

         On March 31, 2004, Mr. Dinesh Maniar, the principal shareholder of
Montgomery, made a loan of $100,000 to Montgomery on an unsecured basis. The
loan bears interest at the rate of 10% per annum, payable monthly, with all
principal and interest due on April 1, 2005.

Liquidity and Capital Resources

         Montgomery has met its requirements for liquidity and capital resources
principally from cash provided by operations and through short-term loans from
its principal shareholder. Montgomery also obtains liquidity through refinancing
its real estate assets to convert the equity into cash, and also realizes the
equity of the real estate assets by means of sales and/or tax-free exchanges.

         Montgomery's liquidity consists of cash on hand at March 31, 2004, of
$110,835.

         Operating activities used $2,497 net cash for the three months ended
March 31, 2004, as compared with the $51,446 of cash provided by operating
activities for the three-month period ended March 31, 2003. This change is
primarily the result of a decrease in prepaid rents related to the main tenant
at the Orchard Supply Shopping Center and two minor tenants at the San Ramon
Retail Center.

                                       9
<PAGE>

         Interest and principal payments on Montgomery's various mortgages
totaled $304,102 for the three months ended March 31, 2004, as compared to
$279,614 in interest and principal payments on Montgomery's various mortgages
for the same three-month period in the prior fiscal year.

Investing Activities

         Montgomery did not use cash for investing activities for either the
period ended March 31, 2004, or the period ended March 31, 2003.

Financing Activities

         During the three months ended March 31, 2004, financing activities
provided cash of $41,514 as compared to $64,163 cash used in financing
activities for the three months ended March 31, 2003. The primary reason for
this increase in cash provided from financing activities was an unsecured loan
in the amount of $100,000 from Montgomery's principal shareholder, Mr. Maniar.
The note was issued on March 31, 2004, bears interest at the rate of 10% per
annum, payable monthly, and is due in full by April 1, 2005.

Capital Requirements

         Although Montgomery does not have net cash flow from its current
activities, it believes that its ability to obtain short-term loans from related
parties; refinance existing assets to convert equity to cash; and sell or
exchange its real estate assets to realize the benefit of its strong equity
position, will permit Montgomery to continue to operate on a long-term basis, so
as to provide sufficient cash to cover activities, other than new acquisitions
or developments.

         Montgomery's principal methods for obtaining acquisition and
development capital come from either additional financing activities, as
discussed below, or the sale or exchange of existing real estate assets to
realize a cash or trade value from the equity generated by appreciation of real
estate assets. Absent additional capital from financing activities or the sale
or exchange of real estate assets, Montgomery may not have sufficient cash flow
to fund expansions or acquisitions.

Equity in Real Estate

         Based upon independent appraisals performed between September 1998 and
July 2003, Montgomery's properties had a combined value of approximately
$29,650,000 at March 31, 2004, as compared to the historical cost, net of
depreciation of $11,260,977, at which such properties are reported in
Montgomery's financial statements as of March 31, 2004. The related indebtedness
secured by such properties totaled $15,101,331 as of March 31, 2004, such that
Montgomery has equity of approximately $14,548,669 in its real estate assets as
of March 31, 2004.

                                       10
<PAGE>

         Montgomery's real estate assets are a valuable source of equity and the
difference between their fair market value is shown as follows (see Footnote 2
to Montgomery's audited financial statements for the year ended December 31,
2003):

    Assets:                           Historical Cost (Net)  Fair Market Values
    -------                           ---------------------  ------------------

    Keker & Van Nest Building           $  2,612,816           $  6,750,000
    Orchard Supply Shopping Center         3,648,113              6,500,000
    Eccles Project                           539,500             12,370,000
    Front Street Office Building           4,460,548              4,030,000
                                        ------------           ------------
             Total                      $ 11,260,977           $ 29,650,000
                                        ============           ============

         Montgomery believes that diversification is the key to long-term real
estate industry viability and success. Therefore, Montgomery plans to continue
to diversify its current portfolio with future acquisitions of income-producing
real estate and/or real estate with development potential. Montgomery may seek
the capital for such growth and diversification through a combination of asset
sales or exchanges, refinancings through commercial loan sources, as well as
through the sale of debt or equity securities.

Front Street Office Building Renovation

         Montgomery is in the process of renovating the Front Street Office
Building property to increase leasable space to approximately 18,000 square feet
above ground and another 5,000 square feet of basement space. Montgomery, with
the assistance of DIMC as its agent, has obtained the initial entitlements and
is in the process of filing the plans with the San Francisco Planning Department
to obtain building permits. If permits are issued as Montgomery expects,
Montgomery anticipates renovating the top three floors into first class office
space in downtown San Francisco in 2004.

         Montgomery is also seeking to reacquire certain transferable
development rights, or TDRs, to erect office buildings in downtown San Francisco
in excess of the height restrictions otherwise controlled by San Francisco's
master plan. TDRs were commonly purchased and sold in San Francisco in the
1980s, when a great deal of construction was going on, and developers that
wished to erect large buildings were forced to acquire from others the seller's
TDRs, so that the initial development space could be expanded. Owners with no
intent to expand often sold their TDRs to good economic advantage. The TDRs
associated with the Front Street Office Building were sold prior to Mr. Maniar's
acquisition of the property in 2002; however, local counsel has indicated that
the TDRs may be recaptured, subject to payment of a fair market price, so that
the current building can be expanded, providing even more space for offices
and/or other amenities.

         Montgomery currently estimates that renovation pursuant to the plans to
be filed with the City of San Francisco Planning Department would entail a
construction cost of approximately $2,000,000. With the assistance of DIMC,
Montgomery has begun to look for a construction lender; however, until permits
are actually issued, it is unlikely that a commitment will be made to
Montgomery. Additionally, given Montgomery's lack of history in real estate
development and the successful record of Montgomery's president, Dinesh Maniar,
any construction lender may well require that Mr. Maniar personally guarantee
the construction loan. No assurance that Mr. Maniar will do so can be made.

                                       11
<PAGE>

         The renovated building is pre-leased in part. Schroeders' Restaurant
has orally agreed to restructure its leasehold premises to take a remodeled
basement that will provide more effective storage space for it, while at the
same time leaving the portion of the basement facing the entry and street
available for a lease to Diamond Oaks Vineyard as a wine tasting room, at a rent
of $72,000 per annum ($44 per square foot) as set forth in the Purchase and Sale
Agreement. Also, DIMC has agreed to lease the renovated top floor of the Front
Street Office Building for $120,000 per annum ($26 per square foot) as set forth
in the Purchase and Sale Agreement. The renovation will leave two floors vacant,
with each floor having approximately 5,000 square feet of leasable space.
Current San Francisco rents vary from a low of $25 per square foot per year to a
high of $60 per square foot per year.

         While Montgomery currently anticipates being able to lease the
remaining office space in the Front Street Office Building, consisting of
approximately 10,000 square feet, and while it is currently anticipated that the
lease rate will be approximately $30 to $40 per square foot per year, such that
post-renovation lease income would be increased by up to $300,000 to $400,000
over and above the Schroeders' lease income and the pre-leased space, no
assurance can be given that such additional rents will materialize, nor can any
assurance be given as to the length of time required to lease the property, the
costs for leasing commissions, or similar matters.

         In August 2003, Montgomery entered into a development agreement with
DIMC for DIMC to act as Montgomery's agent with respect to obtaining the
building permits, obtaining other necessary permits and planning department
approvals, obtaining TDRs, assisting in the construction bid process, and
supervising and monitoring the construction. DIMC will also offer its services
to assist Montgomery in obtaining a construction loan for the renovation and
will act as a broker to assist Montgomery in leasing the building once all
renovation is completed.

         Montgomery believes that the successful renovation of the Front Street
Office Building will help establish a record of successful real estate
renovation and development for Montgomery and wishes to employ DIMC because of
its experience in real estate development, financing and leasing. Fees for DIMC
personnel will range from $75 to $225 per hour. Additionally, Montgomery has
paid $14,000 for plans and will incur approximately another $500,000 in soft
costs for additional professional services and carrying costs as part of the
renovation.

Eccles Project

         The Eccles Project area consists of approximately 7.4 acres of
unimproved land located at Eccles Avenue and Gull Road in South San Francisco,
California. This area, known as Oyster Point, is approximately four miles from
the downtown central business district of South San Francisco, California.

         Management has evaluated three alternatives with respect to the Eccles
Project land: (1) development by Montgomery, either alone or through a joint
venture with third parties; (2) sale or exchange of the property; or (3) a
long-term ground lease. Montgomery has placed its development efforts for the
Eccles Project on indefinite hold due to the downturn in the real estate market
and the national recession.

         Dinesh Maniar, the majority shareholder of Montgomery (and its
president and chairman of the board), has more than 28 years experience in real
estate development. With such a background and the assistance of DIMC,
Montgomery believes it is capable of developing the project once economic
conditions again warrant such development.

                                       12
<PAGE>

         In addition to the potential development of the Eccles Project as noted
above, management has also considered the possibility of selling or exchanging
the Eccles Project land. A tax-free exchange would allow Montgomery to exchange
the Eccles Project for another property that would provide additional
opportunities to Montgomery consistent with its strategies while deferring the
realization of a taxable gain that would result from a sale of the Eccles
Project.

         Management has also considered the possibility of entering into a
long-term ground lease. This would provide cash flow to Montgomery while
eliminating any tax liability associated with the sale of the Eccles Project.

         Management will continue to evaluate the available options to determine
how to proceed with the Eccles Project in a manner that provides the greatest
return and cash flow to Montgomery while minimizing risk and advancing
Montgomery's strategy. There can be no assurance that management will indeed be
successful in identifying and pursuing the best possible financial return to
Montgomery for the Eccles Project.

Properties Listed or Held for Sale

         In order to maximize its potential sources of operating capital,
Montgomery has executed two exclusive listing agreements with CB Richard Ellis,
a commercial brokerage firm located in San Francisco, California.

         The first of these exclusive listing agreements concerns the Keker &
Van Nest Office Building, which is listed at $8,750,000. The second exclusive
listing agreement concerns the Eccles Project, which is listed at $11,000,000.

         Montgomery's management has not made a final determination as to
whether or not to sell any of these properties, and therefore, a sale of either
of these assets within one year is not currently anticipated, such that
reporting under FASB 144 would be required.

         Montgomery's management deems the continued listing of its real estate
assets, to determine the market's valuation of its properties, an important
aspect of its business because the equity in these properties is a primary
source of long-term financing, whether by sale, refinancing or by leasing.

Other Matters

         Montgomery has reviewed all recently issued, but not yet effective,
accounting standards in order to determine their effects, if any, on
Montgomery's financial condition or results of operations. Based on that review,
Montgomery believes that none of these pronouncements will have a significant
effect on current or future earnings or operations.


                         ITEM 3. CONTROLS AND PROCEDURES

         Montgomery maintains a system of internal controls and procedures
designed to provide reasonable assurance as to the reliability of its financial
statements and other disclosures included in this report. Montgomery's board of
directors, operating through its audit committee, provides oversight to its
financial reporting process.

                                       13
<PAGE>

         Within the 90-day period prior to the date of this report, Montgomery
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act
of 1934. Based upon that evaluation, Montgomery's Chief Executive Officer and
Chief Financial Officer concluded that its disclosure controls and procedures
are effective in alerting them in a timely manner to material information
relating to Montgomery required to be included in this quarterly report on Form
10-QSB.

         There have been no significant changes in Montgomery's internal
controls or in other factors that could significantly affect internal controls
subsequent to the date that it carried out its evaluation and there were no
corrective actions regarding significant deficiencies or material weaknesses.

                                       14
<PAGE>

                           PART II. OTHER INFORMATION

                    ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits. The following exhibits are included as part of this
report at the location indicated:


   Exhibit
    Number               Title of Document                           Location
-------------- -------------------------------------------------- --------------

   Item 31     Rule 13a-14(a)/15d-14(a) Certifications
--------------------------------------------------------------------------------
    31.01      Certification of Chief Executive Officer             This filing
               Pursuant to Rule 13a-14

    31.02      Certification of Chief Financial Officer             This filing
               Pursuant to  Rule 13a-14

   Item 32     Section 1350 Certifications
--------------------------------------------------------------------------------
    32.01      Certification of Chief Executive Officer             This filing
               Pursuant to 18 U.S.C. Section 1350, as Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley
               Act of 2002

    32.02      Certification of Chief Financial Officer             This filing
               Pursuant to 18 U.S.C. Section 1350, as Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley
               Act of 2002
--------------------

*    All exhibits are numbered with the number preceding the decimal indicating
     the applicable SEC reference number in Item 601 and the number following
     the decimal indicating the sequence of the particular document. Omitted
     numbers in the sequence refer to documents previously filed as an exhibit,
     but no longer required.

         (b) Reports on Form 8-K. During the quarter ended March 31, 2004,
Montgomery did not file any report on Form 8-K.


                                   SIGNATURES

         In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                               MONTGOMERY REALTY GROUP, INC.
                                               (Registrant)


Date: May 14, 2004                             By: /s/ Dinesh Maniar
                                                  ------------------------------
                                                   Dinesh Maniar, President
                                                   Principal Executive Officer


Date: May 14, 2004                             By: /s/ Sixto Alcantara
                                                  ------------------------------
                                                   Sixto Alcantara
                                                   Principal Financial Officer

                                       15