UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                   FORM 10-KSB

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

(MARK ONE)

[X]      Annual Report Under Section 13 or 15(d) of the Securities Exchange Act
         of 1934

                  For The Fiscal Year Ended September 30, 2006

[        Transition Report Under Section 13 or 15(d) of the Securities Exchange
         Act of 1934 For the transition period from ________ to ________

                         Commission file number: 0-27159

                       National Realty and Mortgage, Inc.
        ----------------------------------------------------------------
                 (name of small business issuer in its charter)

              Nevada                                       65-0439467
---------------------------------               -------------------------------
  (State or other jurisdiction                 (IRS Employee Identification No.)
of incorporation or organization)


             One N.E. First Avenue, Suite 306, Ocala, Florida 34470
        ----------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

         Issuer's telephone number, including area code: (718) 554-3652

Securities Registered under Section 12(b) Of The Exchange Act:

Title of each class                   Name of each exchange on which registered
         None                                         None
        ------                                       ------

Securities Registered under Section 12(g) Of The Exchange Act:

                       Common Stock, $0.0000001 Par Value
                                (Title of class)











<PAGE>
         Check whether the issuer is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. [ ]

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

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B 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-KSB
or any amendment to this Form 10-KSB. [ ]

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act) Yes [X] No [ ]

         State issuer's revenues for its most recent fiscal year - $0.00.

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and asked prices of such common equity, as of
a specified date within the past 60 days: January 16, 2007 - $64,101.

         There are approximately 6,410,122 shares of our common voting stock
held by non-affiliates.

               (Issuers Involved in Bankruptcy Proceedings During
                              the past Five Years)

         Check whether the issuer has filed all documents and report required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes [ ] No [ ]


                   (Applicable Only to Corporate Registrants)

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: January 16, 2007 -
6,472,766 shares of common stock and 666,667 shares of Class A Common Stock.

                      (Documents Incorporated By Reference)

         None

Transitional Small Business Disclosure Format (Check One):

                                 Yes [ ]   No [X]











<PAGE>
                       National Realty and Mortgage, Inc.
                                   FORM 10-KSB
                                      INDEX

                                                                            Page
                                     Part I

Item 1.  Description of Business...........................................   4

Item 2.  Description of Property...........................................  11

Item 3.  Legal Proceedings.................................................  11

Item 4.  Submission of Matters to a Vote of Security Holders...............  11

                                     Part II

Item 5.  Market for Common Equity and Related
                  Stockholder Matters......................................  11

Item 6.  Management's Discussion and Analysis or
                  Plan of Operations.......................................  12

Item 7.  Financial Statements..............................................  15

Item 8.  Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure...................  36

Item 8A.  Controls and Procedures..........................................  36

Item 8B.  Other Information................................................  36


                                    Part III

Item 9.  Directors, Executive Officers, Promoters, Control Persons
         and Corporate Governance; Compliance with Section 16(a)
         of the Exchange Act...............................................  36

Item 10. Executive Compensation............................................  38

Item 11. Security Ownership of Certain Beneficial Owners
                  and Management and Related Stockholder Matters...........  39

Item 12. Certain Relationships and Related Transactions, and
                  Director Independence....................................  40

Item 13. Exhibits..........................................................  40

Item 14. Principal Accountant fees and services............................  42

Signatures.................................................................  43







                                       3
<PAGE>
                                     PART I

This annual report on Form 10-KSB contains forward-looking statements that are
based on current expectations, estimates, forecasts and projections about the
Company, us, our future performance, our beliefs and our Management's
assumptions. In addition, other written or oral statements that constitute
forward-looking statements may be made by us or on our behalf. Words such as
"expects," "anticipates," "targets," "goals," "projects," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict or assess.
Therefore, actual outcomes and results may differ materially from what is
expressed or forecast in such forward-looking statements. Except as required
under the federal securities laws and the rules and regulations of the SEC, we
do not have any intention or obligation to update publicly any forward-looking
statements after the filing of this Form 10-KSB, whether as a result of new
information, future events, changes in assumptions or otherwise.

ITEM 1.  DESCRIPTION OF BUSINESS

                                     History

         National Realty and Mortgage, Inc. (the "Company," "we," "our," "ours"
and "us") was originally incorporated in the State of Nevada on October 18, 1971
under the name of Mister Las Vegas, Inc. On December 15, 1994, we merged with
privately owned company, National Rehab Properties, Inc., a Florida corporation
formed on October 1, 1993. The surviving Nevada corporation changed its name to
National Rehab Properties, Inc. and became authorized to conduct business in the
State of Florida on August 17, 1995. On October 10, 2000, we changed our name to
National Residential Properties, Inc. and in November 2005 we changed our name
to National Realty and Mortgage, Inc.

         From 1993 until 1999, our business concentrated on investing in and
revitalizing single family homes in established older residential neighborhoods
in urban areas. We bought either single unit vacant properties and single family
homes constructed on them, or bought abandoned homes which we then renovated and
sold. During 1999, while continuing to renovate urban single family homes as one
aspect of our business, we entered a second phase of business; the development,
construction and ownership of multifamily housing projects. In 2004, we
commenced operations as a mortgage lender, which operations have been minimal.

                      Background Capitalization Information

         Our original Articles of Incorporation authorized us to issue 1 million
shares of common stock. After incorporation, the following events occurred:

         (a) In December 1994, we attempted to effect a 2-for-1 stock split;

         (b) In January 1999, we attempted to effect a 1-for-10 reverse stock
split;

         (c) Between the date of our incorporation and January 2001, we believed
we increased the number of authorized shares of common stock from 1 million
shares to 40 million shares;

         (d) In October 2000, we attempted to increase the number of authorized
shares of common stock from 40 million to 250 million shares;

                                        4
<PAGE>
         (e) In January 2001, we attempted to increase the number of authorized
shares of common shares from 250 million to 750 million shares and effect a
3-for-1 stock split; and

         (f) in June 2001, we attempted to increase the number of authorized
shares of common stock from 750 million to 1.5 billion shares.

         We have since determined that some or all of these capital changes were
not validly adopted by our board of directors, approved by our shareholders or
filed with the Nevada Secretary of State. As a result, it appears that we were
not authorized to issue more than 1 million shares of Common Stock. Until
November 17, 2005, (as described in more detail below) all shares of Common
Stock issued in excess of 1 million may have been issued in excess of the
authorized amount.

         Given the foregoing, we attempted to determine the majority owners of
the validly issued shares of Common Stock. We discovered that Richard Astrom and
Pamela Gay Astrom, tenants by the entireties, were issued a substantial block of
shares shortly after we merged with National Rehab Properties, Inc. in 1995.
These shares consisted of the majority of our validly issued outstanding shares.
After their initial issuance, approximately 22% of these shares were transferred
by Mr. and Mrs. Astrom to family members, and were then resold into the public
market. While Mr. and Mrs. Astrom did transfer these shares, we assume that,
because the shares are largely fungible, the shares transferred by Mr. and Mrs.
Astrom were those issued in excess of our authorized amount and that the validly
issued shares were still held by Mr. and Mrs. Astrom.

         Our current transfer agent's records confirm that these shares can be
traced from that time to the present, as they are still held by Richard and
Pamela Astrom, as tenants by the entireties, and have not been sold or otherwise
transferred. As such, Richard Astrom and Pamela Gay Astrom, as tenants by the
entireties, appeared to hold a majority of the validly issued shares of Common
Stock.

         Based on advice of Nevada counsel and the assumption that the shares
transferred to Mr. and Mrs. Astrom's family members described above included
only those shares that were issued in excess of our authorized amount, we
determined that Richard and Pamela Astrom could amend our articles of
incorporation to increase our authorized shares of common stock. We also
concluded that the issuance of Common Stock in excess of the authorized amount
could be cured by our board of directors.

         On September 20, 2005, we filed with the Securities and Exchange
Commission (the "SEC") a revised information Statement on Schedule 14C relating
to shareholder approval of the following proposals:

         (a) To amend the Company's articles of incorporation to increase the
number of authorized shares of common stock to 9 billion shares and accordingly
increase the total number of authorized shares of all classes of stock the
Company is authorized to issue.

         (b) To amend the Company's articles of incorporation to create Class A
common stock and to issue Class A common stock to Christopher Astrom.

         (c) To amend the Company's articles of incorporation to change the par
value of the Company's common stock to $.0000001 per share.



                                        5
<PAGE>
         (d) To amend the Company's articles of incorporation to affect a 1 for
300 reverse split of the Company's capital stock.

         (e) To ratify past changes of the Company's name and approve an
amendment to the Company's articles of incorporation to change the name of the
Company to "National Realty and Mortgage, Inc."

         (f) To amend the Company's articles of incorporation to create a class
of preferred stock, and to adopt and approve amended and restated articles of
incorporation.

         The shareholders owning a majority of the validly issued and then
outstanding Common Stock adopted and approved these proposals. On October 17,
2005, we filed with the Nevada Secretary of State Amended and Restated Articles
of Incorporation incorporating the aforementioned proposals. On November 19,
2005, our board of directors ratified these capital changes.

         On November 15, 2005, we issued to Christopher Astrom 200 million
shares of newly authorized Class A common stock, par value $.0000001 per share.
These 200 million shares of Class A common stock were subsequently reversed to
666,667 shares as a result of the 1:300 stock split.

         On December 19, 2005, we implemented a reverse stock split, whereby
every 300 shares of all classes of our capital stock were combined and converted
into one share of that same class of capital stock and our common stock began to
trade on a split adjusted basis. As of January 6, 2006, there were 6,472,766
shares of common stock issued and outstanding and 666,667 shares of Class A
common stock issued and outstanding. The issued and outstanding shares of common
stock and Class A common stock remained 6,472,766 and 666,667 respectively as of
September 30, 2006.

Subsequent event

         On October 23, 2006, we filed with the SEC a definitive Information
Statement on Schedule 14C whereby we proposed to amend our Articles of
Incorporation to reduce the number of authorized shares of Common Stock, Class A
Common Stock and Preferred stock of the Company to 100,000,000; 1,000,000;
1,000,000 shares, respectively. The amendment was filed with the State of Nevada
on or near October 23, 2006 and accordingly since that date our authorized
shares of Common Stock, Class A Common Stock and Preferred stock have been
100,000,000; 1,000,000; 1,000,000 shares, respectively.

CONNECTICUT PROPERTIES

         On May 4, 2001, our wholly-owned subsidiary, Connecticut Acquisition,
entered into a land development agreement with Mr. Nathan Kahn and various
companies controlled by him to develop a parcel of land located in Hebron,
Connecticut as a senior adult community. On April 12, 2001, in contemplation of
the financing of this project, Connecticut Acquisition obtained a loan from
accredited investors evidenced by the Connecticut Acquisition Debentures.









                                        6
<PAGE>
         On May 8, 2001, following the acquisition of the Hebron property by
Connecticut Acquisition, Connecticut Acquisition merged with and into the
Company. As a result of the Merger, (a) the rights and obligations of
Connecticut Acquisition with respect to the land development agreement inured to
the benefit of and became binding upon us, and (b) the Connecticut Acquisition
Debentures were surrendered and canceled and the NRMG Connecticut Debentures,
which were convertible into NRMG Common Stock, were issued by us to the holders
of the Connecticut Acquisition Debentures.

         In 2001, we sold all the rights, title and interest in (i) the Hebron
Parcel and (ii) contracts to purchase certain parcels of real property in
Watertown, New Milford, Granby and East Windsor, Connecticut to Senior Adult
Lifestyle, Inc., a subsidiary of Genesis Capital Corporation of Nevada
("Genesis"), which may be deemed our affiliate.

CONQUISTADOR PLAZA

         In April 2000, we acquired 80% of the outstanding shares of Encore
Services, a general construction contractor. The remaining shares were held by
Braulio Gutierrez who, until March 2002, was a director of the Company as well
as a director and officer of Capital Solutions I, another affiliated entity.

         Encore Builders, a subsidiary of Capital Solutions I was the primary
construction company responsible for construction projects at our properties.
However, the first of these projects, the Conquistador Plaza project, was
subject to substantial delays due to Encore Builders resulting in increased
costs. In March 2002, we terminated Encore Builders as the project's contractor
and returned our shares of Encore Services.

         On April 18, 2002, Conquistador Plaza, Inc. received a notice of
default from its lender. As a consequence of the defaults, the lender
accelerated and declared due and payable Conquistador Plaza's entire
indebtedness of $3,205,317.89, and advised Conquistador Plaza that the lender
would take action to protect its interest if Conquistador Plaza did not return
the entire balance by May 19, 2002. Although we were not liable on the
Conquistador Plaza loan, we invested substantial funds in the Conquistador Plaza
development and might have lost our investment were the lender to foreclose on
the lender's mortgage. In order to repay the lender, we entered into a contract
dated June 24, 2002, to sell this property to Shamrock at the Gables LLC for
$3.5 million. This transaction was completed on October 8, 2002.

         On August 2, 2002, Encore Builders filed suit against Conquistador
Plaza in the Circuit Court of the Eleventh Judicial Circuit in Miami-Dade
County, Florida seeking foreclosure of a mechanic's lien with respect to the
Conquistador Plaza development. Encore Builders asserted Conquistador Plaza
breached the January 30, 2001 construction contract between Encore Builders and
Conquistador Plaza. On August 26, 2003, the parties stipulated for a full
settlement of all claims that existed amongst them.











                                        7
<PAGE>
BARCELONA APARTMENTS

         We purchased the Barcelona Apartments, located in Miami, Florida in
2000, to construct 70 rental apartments. On March 12, 2004, we completed the
sale of the Barcelona Apartments and transferred title to the Barcelona
Apartments to Salomon Yuken for $1,550,000 in cash. Mortgages and closing
expenses totaled $1,166,796.79. A $100,000 deposit was previously paid to the
Company by Salomon Yuken. Net proceeds totaled $285,849.57. The purchase price
for the Barcelona Apartments was determined through arms-length negotiations.
The transfer was made pursuant to the terms of a Special Warranty Deed dated
March 12, 2004, by and between us and Salomon Yuken.

RESIDENCES AT BAY HARBOR

         The Bay Harbor property, located on Bay Harbor Island, Florida, was
purchased by us in 2000, for $850,000. We intended to construct a 15-story, 60
unit apartment building on the Bay Harbor property and intended for Encore
Builders to handle the construction. Immediately after closing the acquisition
of the land, we applied for a building permit, but did not obtain the permit due
to various neighborhood objections to construction. Due to our relations with
Encore Builders and the difficulties with the building permit, we chose not to
construct the building and instead, chose to resell the land.

         On April 7, 2005, we entered into an Agreement for Purchase and Sale
with Bay Harbor Island Associates, L.P. to sell the Bay Harbor property. The Bay
Harbor Agreement provided that we would transfer fee simple title and all
related interests in the property in exchange for $1.4 million. On August 3,
2005, we completed the sale of the Bay Harbor Property and transferred title to
Bay Harbor Island Associates, L.P. in exchange for $1,297,183 in cash and the
release of an aggregate of $140,000 which had been previously placed in escrow.
Net proceeds totaled $696,820.33 and the satisfaction of outstanding mortgages
and other expenses totaled $734,489.67.

Current Operations

         In 2004, we commenced operations as a direct mortgage lender. Although
we plan to develop our mortgage lending business, we have not discontinued our
real estate development business. We plan to continue our real estate
development business in tandem with our mortgage lending business to the extent
appropriate development opportunities present themselves and become available to
us. We have not hired additional personnel to engage in the mortgage lending
business. As of September 30, 2006, we had approximately $0.00 outstanding in
credit extended to borrowers. As of September 30, 2005 we had $37,482
outstanding credit extended to borrowers.

         Our common stock is quoted on the OTC Bulletin Board under the trading
symbol "NRMG".

                                  RISK FACTORS

IN ADDITION TO OTHER INFORMATION IN THIS REPORT, YOU SHOULD CONSIDER THE
FOLLOWING RISK FACTORS CAREFULLY. THESE RISKS MAY IMPAIR THE COMPANY'S OPERATING
RESULTS AND BUSINESS PROSPECTS AS WELL AS THE MARKET PRICE OF THE COMPANY'S
COMMON STOCK.





                                        8
<PAGE>
                         RISKS RELATED TO THE COMPANY'S
                     FINANCIAL CONDITION AND BUSINESS MODEL

                     OUR LIQUIDITY IS LIMITED AND WE MAY NOT
             BE ABLE TO OBTAIN SUFFICIENT FUNDS TO FUND OUR BUSINESS

         Our cash is currently very limited and may not be sufficient to fund
future operations. These factors may make the timing, amount, terms and
conditions of additional financing unattractive us. If we are unable to raise
additional capital, any future operations could be impeded. If we obtain
additional funding, the issuance of additional capital stock may be dilutive to
our stockholders.

                      RISKS RELATED TO LEGAL UNCERTAINTIES
                    WE MAY HAVE VIOLATED NEVADA CORPORATE LAW

         At the time of our incorporation, we had 1 million shares of common
stock authorized. Since that time, we have amended our capital structure several
times but we suspect that some or all of these amendments may not have validly
implemented for failure to obtain proper board and shareholder approval. For a
full explanation of these events, see "Background Capitalization Information"

         We believe that out board of directors and shareholders had the
authority to amend our capital structure by amending our articles of
incorporation. Accordingly, on September 20, 2005, we filed with the SEC a
revised Information Statement on Schedule 14C relating to shareholder approval
of the aforementioned proposals.

         As of November 17, 2005, our board of directors had cured and ratified
the over issuances of stock. While it is unlikely that a shareholder would bring
an action against us regarding the stock issuances, any such action could have a
substantial impact on the our liquidity and capital resources.

WE MAY HAVE VIOLATED SECTION 5 OF THE SECURITIES ACT.

         In April and October of 2001 we issued certain convertible debentures
(the "Debentures"). Section 5 of the Securities Act prohibits the public sale of
securities absent an effective registration statement being filed with the SEC,
unless an exemption from registration applies. All shares of Common Stock issued
upon conversion of the Debentures were sold by holders of the Debentures
following conversion. In October 2000, we issued to 2217 Acquisition Inc.
certain debentures pursuant to a merger agreement. These debentures were also
converted into our Common Stock. These transactions were performed in a manner
thought to be exempt from the registration requirements of Section 5 of the
Securities Act. However, the requirements of the exemptions relied on do not
appear to have been satisfied.

         While more than one year has passed from the initial placement of the
Debentures, there has been no actions filed against us based upon a violation of
Section 5. Because the statute of limitations has run, it is unlikely that these
holders of our Common Stock will file an action against us.

         Accordingly, as of September 30, 2006 we had $199,202 in Debentures
outstanding and $53,984 in accrued interest expense on the Debentures. We have
determined that the statute of limitations to file a claim to seek repayment on
the Debentures has passed and that no such claim has been filed. Accordingly, On
October 30, 2006, we wrote off the Debenture balance of $199,202 and accrued
interest of $53,984.

                                        9
<PAGE>
WE MAY HAVE VIOLATED THE FEDERAL PROXY RULES

         At the time of our incorporation, we had 1 million shares of common
stock authorized. Since that time, we have amended our capital structure several
times but we suspect that some or all of these amendments may not have validly
implemented for failure to obtain proper board and shareholder approval. For a
full explanation of these events, see "Background Capitalization Information"

         We may have violated the federal proxy rules by either (i) not
obtaining the requisite shareholder approval to effect these changes or (ii) not
providing shareholders with an Information Statement on Schedule 14C. As of
December 31, 2005 these potential violations were cured. As of December 31, 2005
we had proper shareholder approval, provided proper notice to the shareholders
with an Information Statements on Schedule 14C and amended and filed with the
Nevada Secretary of State amended articles of incorporation.

                                   OTHER RISKS

                          OUR STOCK PRICE HAS DECLINED
                        SIGNIFICANTLY AND MAY NOT RECOVER

         The trading price of our Common Stock has declined significantly since
approximately October 2001. The market for NRMG Common Stock is essentially
nonexistent and there can be no assurance of a change in the immediate future.

WE MAY BE SUBJECT TO PENNY STOCK REGULATIONS AND REQUIREMENTS FOR LOW PRICED
STOCK

         The SEC adopted regulations which generally define a "penny stock" to
be any non Nasdaq equity security that has a market price of less than $5.00 per
share, subject to certain exceptions. Based upon the price of our common stock
as currently traded on the OTC Bulletin Board, our common stock is subject to
Rule 15g9 under the Exchange Act which imposes additional sales practice
requirements on broker-dealers which sell securities to persons other than
established customers and "accredited investors." For transactions covered by
this rule, a broker-dealer must make a special suitability determination for the
purchaser and have received a purchaser's written consent to the transaction
prior to sale. Consequently, this rule may have a negative effect on the ability
of stockholders to sell common shares of the Company in the secondary market.

ADDITIONAL DEBT, CONVERTIBLE DEBT, OR EQUITY FINANCING MAY EFFECT ABILITY OF
INVESTORS TO SELL COMMON STOCK

         Our common stock currently trades on the OTC Bulletin Board. Stocks
trading on the OTC Bulletin Board generally attract a smaller number of market
makers and a less active public market and may be subject to significant
volatility. If we raise additional capital from the sale of common stock, the
market price could drop and the ability of investors to sell our common stock
could be diminished.











                                       10
<PAGE>
RISKS RELATED TO REAL ESTATE AND RELATED INVESTMENTS

         Although we currently do not have any real estate holdings, we may
acquire additional holdings and in such case we shall be subject to the risks
associated with ownership, operation and financing of real estate. These risks
include, but are not limited to, liability for environmental hazards, changes in
general or local economic conditions, changes in interest rates and the
availability of construction and permanent mortgage financing which may render
the acquisition, sale or refinancing of a property difficult or unattractive and
which may make debt service burdensome, changes in real estate and zoning laws,
bonding requirements, permitting requirements, changes in income taxes, real
estate taxes or federal or local economic or rent controls, floods, earthquakes
and other acts of nature and other factors beyond the Company's control. The
illiquidity of real estate investments generally may impair the Company's
ability to respond promptly to changing circumstances.

         Under federal, state and local environmental laws, ordinances and
regulations, we may be liable for removal or remediation costs, as well as other
costs (such as fines or injuries to persons and property) where its employees
may have arranged for removal, disposal or treatment of hazardous or toxic
substances. In addition, environmental laws impose liability for release of
asbestos containing materials into the air, and third parties can seek recovery
from us for personal injury associated with those materials.

ITEM 2.  DESCRIPTION OF PROPERTY

         We share office space and a phone number with our principals at One
N.E. First Avenue, Suite 306, Ocala, Florida 34470. We do not have a lease and
we pay no rent for the leased space. We do not own any properties nor do we
lease any other properties.

ITEM 3.  LEGAL PROCEEDINGS

         We are not a party to any pending legal proceedings nor is any of our
property the subject of any pending legal proceedings.

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

         The Company did not submit any matters to a vote of its stockholders,
through the solicitation of proxies or otherwise, during the fourth quarter of
fiscal 2006.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock is traded on the Over-the-Counter Bulletin Board under
the symbol "NRMG". Such trading of our common stock is limited and sporadic

         Prices reported represent prices between dealers, do not include
markups, markdowns or commissions and do not necessarily represent actual
transactions. The following table sets forth high and low bid quotations of the
Company's common stock (broken-down into fiscal quarters) for the periods
indicated as reported on the OTC Bulletin:





                                       11
<PAGE>
         The table below sets forth the high and low bid quotations for the
Company's Common Stock for the first quarter of fiscal 2007 and each quarter for
fiscal years 2006 and 2005. The quotations below reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions. In addition, the quotations below reflect price adjustments as a
result of the 1:300 reverse stock split effectuated in October 2005:



                                  Closing Bids

                                             HIGH              LOW

   2007

December 31, 2006                           $0.017           $0.011

   2006

September 30, 2006                          $0.032            $0.005
June 30, 2006                               $0.015            $0.01
March 31, 2006                              $0.03             $0.01
December 31, 2005                           $0.085            $0.006

   2005

September 30, 2005                          $0.06             $0.03
June 30, 2005                               $0.06             $0.03
March 31, 2005                              $0.06             $0.03
December 31, 2004                           $0.06             $0.03

         As of January 16, 2007, we had approximately 634 shareholders of record
of the common stock.

         No cash dividends on outstanding common stock have been paid within the
last two fiscal years, and interim periods. The Company does not anticipate or
intend upon paying cash dividends for the foreseeable future.

         Sales of our unregistered securities during the past two years - None
that have not been previously reported.

ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         The following presentation of management's discussion and analysis of
our financial condition and results of operations should be read in conjunction
with our consolidated financial statements, the accompanying notes thereto and
other financial information appearing elsewhere in this report. This section and
other parts of this report contain forward-looking statements that involve risks
and uncertainties. Our actual results may differ significantly from the results
discussed in the forward-looking statements.

OVERVIEW

RESULTS OF OPERATIONS

               TWELVE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO
                     TWELVE MONTHS ENDED SEPTEMBER 30, 2005





                                       12
<PAGE>
Revenues

         Revenues were $0.00 for the twelve months ended September 30, 2006, as
compared to $1,407,800 for the twelve months ended September 30, 2005. The 2005
revenue resulted primarily from the sale of the Bay Harbour property which was
the last parcel of property in the Company's portfolio. In addition during
fiscal 2005 the Company was still receiving revenue from outstanding mortgage
loans.

Cost of Revenues

         Cost of revenues was $0 for the twelve months ended September 30, 2006,
as compared to $1,294,286 for the twelve months ended September 30, 2005.

Operating Expenses

         Operating expenses for the twelve months ended September 30, 2006 were
$128,499 compared to $763,244 for the twelve months ended September 30, 2005.
This decrease in operating expenses was the result of the sale of the final
property in the portfolio and pay-off of outstanding mortgage loans. In
addition, professional fees, compensation expenses and general and
administrative expenses all decreased as a result of a decrease in active
operations.

Loss From Operations

         Loss from operations for the twelve months ended September 30, 2006 was
($128,499) compared to ($649,730) for the twelve months ended September 30,
2005.

Interest Expense

         Interest expense was $0 and $41,064 for the twelve months ended
September 30, 2006 and 2005, respectively.

Interest Income

         Interest income was $2,684 and $4,135 for the twelve months ended
September 30, 2006 and 2005, respectively.

Net Loss Applicable To Common Stock

         Net loss applicable to Common Stock was $125,815 for the twelve months
ended September 30, 2006, compared to $686,659 for the twelve months ended
September 30, 2005. Net loss per share applicable to common stock was $0.02 for
the twelve months ended September 30, 2006, compared to $0.11 for the twelve
months ended September 30, 2005.

Plan of Operations

         The Company does not expect to hire any employees during the next 12
months.







                                       13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

     To date, we have financed our operations primarily through mortgage debt
and the issuance of the Debentures. The Debentures are discussed in further
detail under "Debentures" below. At September 30, 2006, we had $1,681 in cash
and cash equivalents.

         In the event that cash from operations is insufficient, we intend to
satisfy our cash requirements for the next 12 months by borrowing from
affiliated company's with common ownership or control and believe we can satisfy
our cash requirements so long as we are able to obtain financing from these
affiliated companies. We expect to continue to reduce operating expenses going
forward. Further, there can be no assurance that such funds will actually be
liquid and available.

         We have invested substantial funds in previous real estate development
projects but only realized material profits from these projects upon the sale of
the real estate. With the completion of the sale of the Bay Harbor Property on
August 3, 2005, we disposed of our last remaining property.

         Currently, we are using our available cash on hand as the primary
resource to fund daily operations. Much of these funds were derived from sales
of real property holdings.

         As of September 30, 2006, the Company had current assets consisting of
cash and cash equivalents in the amount of $1,681. As of September 30, 2006, the
Company had current liabilities consisting of accounts payable, debentures
payable and short term notes payable in the amount of $239,811.

         As of September 30, 2006 the Company had $199,202 in Debentures . The
Company has determined that the statute of limitations to file a claim to seek
repayment on the Debentures has passed and that no such claim has been filed.
Accordingly, On October 30, 2006, the Company wrote off the Debenture balance of
$199,202.

OFF BALANCE SHEET TRANSACTIONS

         We have no off balance sheet arrangements and has not entered into any
transactions involving unconsolidated, limited purpose entities.

RECENT ACCOUNTING PRONOUNCEMENTS

         The Company continues to assess the effects of recently issued
accounting standards. The impact of all recently adopted and issued accounting
standards has been disclosed in the Notes to the audited Consolidated Financial
Statements.

CRITICAL ACCOUNTING ESTIMATES

         The Company is a shell company and, as such, the Company does not
employ critical accounting estimates. Should the Company resume operations it
will employ critical accounting estimates and will make any disclosures that are
necessary and appropriate.





                                       14
<PAGE>
ITEM 7.  FINANCIAL STATEMENTS


               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)




                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




                                                                         PAGE(S)

Report of Independent Registered Public Accounting Firm                   16-17

Consolidated Financial Statements:

         Balance Sheets as of September 30, 2006 and 2005                  18

         Statements of Operations for the Years
         Ended September 30, 2006 and 2005                                 19

         Statements of Changes in Stockholders' (Deficit)
         for the Years Ended September 30, 2006 and 2005                   20

         Statements of Changes in Temporary Equity for the
         Years Ended September 30, 2006 and 2005                           21

         Statements of Cash Flows for the Years Ended
         September 30, 2006 and 2005                                       22

         Notes to Consolidated Financial Statements                        23
























                                       15
<PAGE>
                    BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
                          Certified Public Accountants

                               High Ridge Commons
                                 Suites 400-403
                           200 Haddonfield Berlin Road
                           Gibbsboro, New Jersey 08026
                        (856) 346-2828 Fax (856) 346-2882

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders of
National Realty & Mortgage Inc. and Subsidiaries
(Formerly National Residential Properties, Inc. and Subsidiaries)
Ocala, Florida

We have audited the accompanying consolidated balance sheets of National Realty
& Mortgage Inc. and Subsidiaries (Formerly National Residential Properties, Inc.
and Subsidiaries) (the "Company") as of September 30, 2006 and 2005 and the
related consolidated statements of operations, changes in stockholders'
(deficit), changes in temporary equity, and cash flows for the years then ended.
These consolidated financial statements are the responsibility of management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
National Realty & Mortgage Inc. and Subsidiaries as of September 30, 2006 and
2005, and the consolidated results of its operations, changes in stockholders'
(deficit), changes in temporary equity, and cash flows for the years then ended
in conformity with accounting principles generally accepted in the United States
of America.
















                                       16
<PAGE>
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 12 to the
consolidated financial statements, the Company has sustained operating losses
and capital deficits that raise substantial doubt about its ability to continue
as a going concern. Management's operating and financing plans in regard to
these matters are also discussed in Note 12. The financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.


/s/ BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Gibbsboro, New Jersey
January 16, 2007


           MEMBER OF:  AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
                       NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
                       PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS








































                                       17
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
                           CONSOLIDATED BALANCE SHEETS
                           SEPTEMBER 30, 2006 AND 2005

                                     ASSETS


<TABLE>
<CAPTION>
                                                                                       2006                   2005
                                                                                --------------------   -------------------
<S>                                                                             <C>                    <C>
  Cash and cash equivalents                                                      $            1,681     $         241,248
  Fixed assets, net of depreciation                                                               -                19,168
  Loan origination fees, net                                                                      -                 4,635
  Loans receivable - related party                                                                -               114,600
  Mortgages receivable and other                                                                  -                37,482
                                                                                --------------------   -------------------

TOTAL ASSETS                                                                     $            1,681     $         417,133
                                                                                ====================   ===================


            LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' (DEFICIT)


LIABILITIES
  Accounts payable and accrued expenses                                          $           39,822     $         317,989
  Convertible debentures payable                                                            199,202               199,202
  Notes payable                                                                                 787                20,786
                                                                                --------------------   -------------------

      Total Liabilities                                                                     239,811               537,977
                                                                                --------------------   -------------------

TEMPORARY EQUITY                                                                                  -             4,417,938
                                                                                --------------------   -------------------

STOCKHOLDERS' (DEFICIT)
Preferred Stock, $.0000001 par value; 1,000,000,000
shares authorized and 0 issued and outstanding                                                    -                     -
  Common stock, $.0000001 par value; 8,000,000,000 shares authorized
     and 6,472,766 shares issued and outstanding,  respectively                                   1                     1
  Common stock class A voting, $.0000001 par value; 1,000,000,000
      shares authorized, 666,667 issued and outstanding                                           -                     -
  Additional paid-in capital                                                              8,034,046             3,607,579
  Accumulated deficit                                                                    (8,272,177)           (8,146,362)
                                                                                --------------------   -------------------

              TOTAL STOCKHOLDERS' (DEFICIT)                                                (238,130)           (4,538,782)
                                                                                --------------------   -------------------

TOTAL LIABILITIES, TEMPORARY EQUITY
   AND STOCKHOLDERS' (DEFICIT)                                                   $            1,681     $         417,133
                                                                                ====================   ===================
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.
                                       18
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2006 AND 2005
<TABLE>
<CAPTION>
                                                                                         2006                    2005
                                                                                  -------------------    ----------------------
<S>                                                                               <C>                    <C>
OPERATING REVENUES
  Revenue                                                                                        $ -               $ 1,407,800
                                                                                  -------------------    ----------------------

COST OF SALES                                                                                      -                 1,294,286
                                                                                  -------------------    ----------------------

GROSS PROFIT                                                                                       -                   113,514
                                                                                  -------------------    ----------------------

OPERATING EXPENSES
   Professional fees and compensation expenses                                                58,818                   491,426
   Bad debt                                                                                        -                     2,548
   Travel and automobile expenses                                                                  -                   122,155
   Telephone and utilities                                                                         -                       616
   Real estate taxes and property maintenance                                                  5,460                    38,515
   Office expenses                                                                            30,461                    44,873
   Miscellaneous                                                                               9,957                    41,614
   Depreciation and amortization                                                              23,803                    21,497
                                                                                  -------------------    ----------------------
       Total Operating Expenses                                                              128,499                   763,244
                                                                                  -------------------    ----------------------

(LOSS) BEFORE OTHER INCOME (EXPENSE)                                                        (128,499)                 (649,730)
                                                                                  -------------------    ----------------------

OTHER INCOME (EXPENSE)
   Interest expense                                                                                -                   (41,064)
   Interest income                                                                             2,684                     4,135
                                                                                  -------------------    ----------------------
       Total Other Income (Expense)                                                            2,684                   (36,929)
                                                                                  -------------------    ----------------------

LOSS BEFORE PROVISION FOR INCOME TAXES                                                      (125,815)                 (686,659)
Provision for Income Taxes                                                                         -                         -
                                                                                  -------------------    ----------------------

NET LOSS APPLICABLE TO COMMON SHARES                                                      $ (125,815)               $ (686,659)
                                                                                  ===================    ======================

NET LOSS PER BASIC AND DILUTED SHARES                                                        $ (0.02)                  $ (0.11)
                                                                                  ===================    ======================

WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                                                                     6,465,707                 6,458,553
                                                                                  ===================    ======================
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.
                                       19
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT)
                 FOR THE YEARS ENDED SEPTEMBER 30, 2006 AND 2005

<TABLE>
<CAPTION>
                                                              Class A                         Additional
                                 Common Stock              Common Stock                         Paid-in   Accumulated
                                    Shares        Amount      Shares      Amount   Discount     Capital     Deficit       Totals
                               --------------- ----------- ------------- -------- ---------- ------------ ------------ ------------
<S>                            <C>             <C>         <C>           <C>      <C>        <C>          <C>          <C>
Balance, September 30, 2004         1,000,000     $ 1,000             -      $ -        $ -   $3,606,580  $(7,459,703) $(3,852,123)

Net loss                                    -           -             -        -          -            -     (686,659)    (686,659)
                               --------------- ----------- ------------- -------- ---------- ------------ ------------ ------------

Balance, September 30, 2005         1,000,000       1,000             -       -          -     3,606,580   (8,146,362)  (4,538,782)

Reclass of Temporary Equity
  to Permanent Deficit on
  November 17, 2005             1,937,566,046   1,937,566             -        -   (687,311)   3,167,683            -    4,417,938

Common stock issued for
  compensation                              -           -   200,000,000   20,000          -            -            -       20,000

1:300 Stock Split & Change
  in Par value to $.0000001    (1,932,104,159) (1,938,565) (199,333,333) (20,000)         -    1,958,565            -            -

Shares issued for services             10,879           -             -        -          -          176            -          176

Forgiveness (Release) of debt
  to related parties, net                   -           -             -        -          -      (11,647)           -      (11,647)

Net loss                                    -           -             -        -          -            -     (125,815)    (125,815)
                               --------------- ----------- ------------- -------- ----------------------- ------------ ------------

Balance, September 30, 2006         6,472,766         $ 1       666,667      $ -  $(687,311)  $8,721,357  $(8,272,177)  $ (238,130)
                               =============== =========== ============= ======== ========== ============ ============ ============
</TABLE>

















              The accompanying notes are an integral part of these
                       consolidated financial statements.
                                       20
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
              CONSOLIDATED STATEMENT OF CHANGES IN TEMPORARY EQUITY
                    FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005



<TABLE>
<CAPTION>
                                                                      Class A                             Additional
                                       Common Stock                 Common Stock                           Paid-In
                                          Shares         Amount        Shares       Amount    Discount     Capital       Totals
                                     ---------------  -----------  --------------  --------  ----------  ------------  -----------


<S>                                  <C>              <C>          <C>             <C>       <C>         <C>           <C>
Balance, September 30, 2004           1,937,566,046    1,937,566       1,000,000     1,000    (687,311)    3,166,683    4,417,938

No activity                                       -            -               -         -           -             -            -
                                     ---------------  -----------  --------------  --------  ----------  ------------  -----------

Balance, September 30, 2005           1,937,566,046    1,937,566       1,000,000     1,000    (687,311)    3,166,683    4,417,938

Adjustment of invalid shares                      -            -      (1,000,000)   (1,000)          -         1,000            -

Transfer of Temporary equity to
  Permanent Deficit                  (1,937,566,046)  (1,937,566)              -         -     687,311    (3,167,683)  (4,417,938)
                                     ---------------  -----------  --------------  --------  ----------  ------------  -----------

Balance, September 30, 2006                       -          $ -               -       $ -         $ -           $ -          $ -
                                     ===============  ===========  ==============  ========  ==========  ============  ===========
</TABLE>



Note: Temporary Equity cured November 17, 2005





















              The accompanying notes are an integral part of these
                       consolidated financial statements.
                                       21
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2006 AND 2005


<TABLE>
<CAPTION>
                                                                                               2006                   2005
                                                                                        -------------------     ------------------
<S>                                                                                     <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                                     $ (125,815)            $ (686,659)
                                                                                        -------------------     ------------------
Adjustments to reconcile net loss to net cash
provided by operating activities:

     Depreciation and amortization                                                                  23,803                 21,497
     Common stock issued for compensation and services                                              20,176                      -

  Changes in assets and liabilities
     Decrease in inventory - real estate holdings                                                        -              1,300,000
     Increase (decrease) in accounts payable and
       and accrued expenses                                                                       (175,214)               285,357
                                                                                        -------------------     ------------------
     Total adjustments                                                                            (131,235)             1,606,854
                                                                                        -------------------     ------------------

     Net cash provided by (used in) operating activities                                          (257,050)               920,195
                                                                                        -------------------     ------------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Decrease in mortgage and notes receivable                                                      37,482                 31,124
     Decrease in investment securities                                                                   -                  2,523
                                                                                        -------------------     ------------------

     Net cash provided by investing activities                                                      37,482                 33,647
                                                                                        -------------------     ------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Decrease loans to/from others                                                                       -                  2,000
    Net change in notes and mortgages payable                                                      (19,999)              (739,614)
                                                                                        -------------------     ------------------
        Net cash (used in) financing activities                                                    (19,999)              (737,614)
                                                                                        -------------------     ------------------

NET INCREASE (DECREASE) IN
    CASH AND CASH EQUIVALENTS                                                                     (239,567)               216,228

CASH AND CASH EQUIVALENTS -
    BEGINNING OF YEAR                                                                              241,248                 25,020
                                                                                        -------------------     ------------------

CASH AND CASH EQUIVALENTS - END OF YEAR                                                            $ 1,681              $ 241,248
                                                                                        ===================     ==================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

CASH PAID DURING THE YEAR FOR:
    Interest expense                                                                                   $ -               $ 41,064
                                                                                        ===================     ==================

Supplemental Schedule of noncash
    investing and financing activities:
Temporary Equity cured November 17, 2005                                                       $ 4,417,938                    $ -
                                                                                        ===================     ==================
Common stock issued for services                                                                     $ 176                    $ -
                                                                                        ===================     ==================
Common stock issued for compensation                                                              $ 20,000                    $ -
                                                                                        ===================     ==================
Forgiveness (release) of debt to related parties, net                                             $ 11,647                    $ -
                                                                                        ===================     ==================
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.
                                       22
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2006 AND 2005

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
         --------------------------------------

         National Realty & Mortgage Inc. and Subsidiaries (Formerly National
         Residential Properties, Inc. and Subsidiaries) (the "Company") was
         originally incorporated in the State of Nevada on October 18, 1971
         under the name of Mister Las Vegas, Inc. On December 15, 1994, the
         Company merged with a privately owned company, National Rehab
         Properties, Inc., a Florida corporation formed on October 1, 1993. The
         surviving Nevada corporation changed its name to National Rehab
         Properties, Inc. and became authorized to conduct business in the State
         of Florida on August 17, 1995. On October 10, 2000, the Company changed
         its name to National Residential Properties, Inc.

         The Company's business was residential real estate development and
         building construction services. From 1993 to 1999 the Company's
         business concentrated in investing in and revitalizing single family
         homes in established older residential neighborhoods in urban areas.
         The Company bought either single unit vacant properties and built
         single family homes or it bought abandoned homes and completed all
         renovations to the home followed by a sale of the home. During 1999,
         while retaining its efforts in the renovation of urban single family
         homes as one aspect of the business, the Company entered a second phase
         of business, the development, construction and ownership of multifamily
         housing projects.

         Beginning in the fiscal year ending September 30, 1999, the Company
         initiated a program of acquisition of properties suitable for
         development as multifamily housing or multiple unit single-family
         development tracts. Since 1999, the Company has purchased four tracts
         with the intention of building from 60 to 72 apartment units on each
         tract and one twenty acre citrus grove for single family home
         development. In April 2000, the Company acquired Encore Services, Inc.
         ("Encore Services").

         On May 4, 2001, the Company's wholly-owned subsidiary, Connecticut
         Acquisition Corp. No. 1, ("Connecticut Acquisition") entered into a
         joint venture to develop a parcel of land located in Hebron,
         Connecticut, (the "Hebron Parcel") as a senior adult community pursuant
         to a land development agreement with Mr. Nathan Kahn and various
         entities controlled by Mr. Nathan Kahn. The objective of this
         development was to either sell developed lots to builders, or erect
         dwellings themselves.

         Mr. Kahn's entities had obtained options to purchase and develop other
         properties, and the Kahn entities advised that they would need
         additional funding to pay for the expenses in connection with the
         obtaining and maintenance of these options.






                                       23
<PAGE>
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
         --------------------------------------------------

         The land development agreement called for Connecticut Acquisition to
         fund the initial costs of acquisition and development, and, after
         deduction of expenses from gross revenues, profits would be divided
         50-50 between the parties.

         In contemplation of the financing of this project, on April 12, 2001,
         Connecticut Acquisition, obtained a loan from accredited investors
         evidenced by its 8% Series A Senior Subordinated Convertible Redeemable
         Debentures due April 13, 2003 (the "Connecticut Acquisition
         Debentures"), which were convertible from time to time into shares of
         Connecticut Acquisition's Class A Common Stock. On May 8, 2001,
         following the acquisition of the Hebron Parcel, Connecticut Acquisition
         was merged into the Company. As a result, all rights and obligations of
         Connecticut Acquisition inured to the benefit of and became binding
         upon the Company. Pursuant to the merger, the Connecticut Acquisition
         Debentures were surrendered and canceled, and new debentures, identical
         to the Connecticut Acquisition Debentures, together with accompanying
         conversion rights into authorized but unissued shares of the Company's
         common stock, par value $.001 per share ("NRES Common Stock"), were
         issued by the Company to the holders of the Connecticut Acquisition
         Debentures.

         Pursuant to an agreement executed on December 26, 2001, made effective
         as of October 31, 2001 and a Statutory Warranty Deed dated October 31,
         2001, the Company sold to Senior Adult Lifestyle, Inc ("Senior Adult
         Lifestyle") a related entity through common corporate officers, all of
         the rights, title and interest in (i) the Hebron Parcel; and (ii)
         contracts to purchase certain parcels of real property in Watertown,
         New Milford, Granby and East Windsor, Connecticut. As additional
         consideration for the conveyance to Senior Adult Lifestyle, the Company
         received on February 1, 2002, 20 million shares of common stock of
         Genesis Capital Corporation of Nevada ("Genesis"), the parent of Senior
         Adult Lifestyles. These shares were based on a value of $0.10 per
         share, the value the stock was trading for in December 2001, for an
         agreed consideration of $2 million. Should the value at the earlier of
         (a) the time the Company sells these shares or (b) the expiration of
         three years from the date of the conveyance fall below $2 million,
         Genesis will be required to issue to the Company, additional shares of
         Genesis Common Stock to make up the difference in value. The value of
         the Genesis Common Stock was $.009 ($180,000) on February 1, 2002.

         On October 17, 2001, the Company's other wholly-owned subsidiary, DC
         Power Products Acquisition Corp, ("DC Power"), obtained a loan from
         accredited investors evidenced by its 8% Series A Senior Subordinated
         Convertible Redeemable Debentures due October 17, 2003 (the "DC Power
         Debentures"), which were convertible from time to time into shares of
         DC Power's common stock. DC Power was merged into the Company on
         November 1, 2001.








                                       24
<PAGE>
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

         As a result, all rights and obligations inured to the benefit of and
         became binding upon the Company. Pursuant to the merger, the DC Power
         Debentures were surrendered and canceled, and new debentures, identical
         to the DC Power Debentures, together with accompanying conversion
         rights into authorized but unissued shares of NRES Common Stock, were
         issued by the Company to the holders of the DC Power Debentures.

         In October 2003, the Company began lending money to individuals in the
         form of mortgage notes. The Company acts as a broker on some of these
         transactions and receives loan origination fees for its services.

         In November 2005, the Company changed its name to National Realty &
         Mortgage Inc. The Company with its name change in fiscal year 2006
         changed its trading symbol from NRES to NRMG.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------

         Principles of Consolidation

         The consolidated financial statements include the accounts of the
         Company and all of its wholly owned subsidiaries. All significant
         intercompany accounts and transactions have been eliminated in
         consolidation.

         Use of Estimates

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

         Revenue and Cost Recognition

         Sales of real estate are generally recognized under the full accrual
         method. Under that method, gain is not recognized until the
         collectibility of the sales price is reasonably assured and the
         earnings process is virtually complete. When a sale does not meet the
         requirements for income recognition a gain is deferred until those
         requirements are met.














                                       25
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         Revenue and Cost Recognition (continued)

         The Company recorded the sale of property to Genesis Capital
         Corporation of Nevada under the cost recovery method. When this method
         is used, no profit is recognized on the sales transaction until the
         cost of the property sold is recovered (See Note 1).

         Acquisition and other direct costs, interest, and other indirect costs
         related to acquisition and development of lots are capitalized.
         Capitalized costs are allocated based on the relative sales value of
         each lot. The capitalized costs are charged to earnings when the
         relative revenue is recognized.

         The Company follows SFAS 91, whereby loan origination fees are deferred
         and recognized over the life of the loan as an adjustment of yield
         (interest income).

         Cash and Cash Equivalents

         The Company considers all highly liquid debt instruments and other
         short-term investments with an initial maturity of three months or less
         to be cash equivalents.

         The Company maintains cash and cash equivalent balances at several
         financial institutions, which are insured by the Federal Deposit
         Insurance Corporation up to $100,000.

         Fixed Assets

         Fixed assets are stated at cost. Depreciation is computed primarily
         using the straight-line method over the estimated useful life of the
         assets.

                  Equipment and other                              3 to 5 Years
                  Vehicle                                          3      Years

                  Income Taxes

         The income tax benefit is computed on the pretax loss based on the
         current tax law. Deferred income taxes are recognized for the tax
         consequences in future years of differences between the tax basis of
         assets and liabilities and their financial reporting amounts at each
         year-end based on enacted tax laws and statutory tax rates.













                                       26
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         Earnings (Loss) Per Share of Common Stock

         Historical net income (loss) per common share is computed using the
         weighted average number of common shares outstanding. Diluted earnings
         per share (EPS) includes additional dilution from common stock
         equivalents, such as stock issuable pursuant to the exercise of stock
         options and warrants. Common stock equivalents were not included in the
         computation of diluted earnings per share when the Company reported a
         loss because to do so would be antidilutive for periods presented.

         The following is a reconciliation of the computation for basic and
         diluted EPS:


                                                        2006           2005

         Net Loss                                  ($  125,815)     ($  686,659)
                                                    -----------      -----------


         Weighted-average common shares
           outstanding (Basic)                       6,465,707        6,458,553

         Weighted-average common stock equivalents:
               Stock options                                -                -
               Warrants                                     -                -

         Weighted-average common shares
             outstanding (Diluted)                   6,465,707        6,458,659

         Options and warrants outstanding to purchase stock were not included in
         the computation of diluted EPS because inclusion would have been
         antidilutive.

         There are no options and warrants outstanding to purchase stock at
         September 30, 2006 and 2005.




















                                       27
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         Fair Value of Financial Instruments

         The carrying amount reported in the consolidated balance sheets for
         cash and cash equivalents, loans receivable, accounts payable and
         accrued expenses approximate fair value because of the immediate or
         short-term maturity of these financial instruments. The carrying amount
         reported for notes and mortgages payable approximates fair value
         because, in general, the fair value of the notes and mortgages payable
         is estimated based on interest rates for the same or similar debt
         offered to the Company having the same or similar remaining maturities
         and collateral requirements.

         Loan Origination Fees

         Represent fees in connection with obtaining mortgages on the various
         properties. The loan origination fees are being amortized straight-line
         over a two-year period. Amortization expense for the years ended
         September 30, 2006 and 2005 is $4,635 and $13,052, respectively.

         Recent Accounting Pronouncement

         In December 2004, the Financial Accounting Standards Board ("FASB")
         issued Statement of Financial Accounting Standards ("SFAS") No. 151,
         "Inventory Costs." SFAS No. 151 requires abnormal amounts of inventory
         costs related to idle facility, freight handling and wasted material
         expenses to be recognized as current period charges. Additionally, SFAS
         No. 151 requires that allocation of fixed production overheads to the
         costs of conversion be based on the normal capacity of the production
         facilities. The standard is effective for fiscal years beginning after
         June 15, 2005. The adoption of SFAS No. 151 did not have a material
         impact on the Company's financial position or results of operations.

         In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
         Error Corrections." SFAS No. 154 replaces Accounting Principles Board
         ("APB") Opinion No. 20, "Accounting Changes" and SFAS No. 3, "Reporting
         Accounting Changes in Interim Financial Statements." SFAS No. 154
         requires retrospective application to prior periods' financial
         statements of a voluntary change in accounting principle unless it is
         impracticable. APB No. 20 previously required that most voluntary
         changes in accounting principle be recognized by including the
         cumulative effect of changing to the new accounting principle in net
         income














                                       28
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         Recent Accounting Pronouncement (Continued)

         in the period of the change. SFAS No. 154 is effective for accounting
         changes and corrections of errors made in fiscal years beginning after
         December 15, 2005. The adoption of SFAS No. 154 did not have a material
         impact on the Company's financial position or results of operations.

         In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
         Hybrid Financial Instruments, an amendment of FASB Statements No. 133
         and 140." SFAS No. 155 resolves issues addressed in SFAS No. 133
         Implementation Issue No. D1, "Application of Statement 133 to
         Beneficial Interests in Securitized Financial Assets," and permits fair
         value remeasurement for any hybrid financial instrument that contains
         an embedded derivative that otherwise would require bifurcation,
         clarifies which interest-only strips and principal-only strips are not
         subject to the requirements of SFAS No. 133, establishes a requirement
         to evaluate interests in securitized financial assets to identify
         interests that are freestanding derivatives or that are hybrid
         financial instruments that contain an embedded derivative requiring
         bifurcation, clarifies that concentrations of credit risk in the form
         of subordination are not embedded derivatives and amends SFAS No. 140
         to eliminate the prohibition on a qualifying special-purpose entity
         from holding a derivative financial instrument that pertains to a
         beneficial interest other than another derivative financial instrument.
         SFAS No. 155 is effective for all financial instruments acquired or
         issued after the beginning of the first fiscal year that begins after
         September 15, 2006. The Company is currently evaluating the effect the
         adoption of SFAS No. 155 will have on its financial position or results
         of operations.

         In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing
         of Financial Assets, an amendment of FASB Statement No. 140." SFAS No.
         156 requires an entity to recognize a servicing asset or liability each
         time it undertakes an obligation to service a financial asset by
         entering into a servicing contract under a transfer of the servicer's
         financial assets that meets the requirements for sale accounting, a
         transfer of the servicer's financial assets to a qualified
         special-purpose entity in a guaranteed mortgage securitization in which
         the transferor retains all of the resulting securities and classifies
         them as either available-for-sale or trading securities in accordance
         with SFAS No. 115, "Accounting for Certain Investments in Debt and
         Equity Securities" and an acquisition or assumption of an obligation to
         service a financial asset that does not relate to financial assets of
         the servicer or its consolidated affiliates. Additionally, SFAS No. 156
         requires all separately recognized servicing assets and servicing
         liabilities to be initially










                                       29
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         Recent Accounting Pronouncement (Continued)

         measured at fair value, permits an entity to choose either the use of
         an amortization or fair value method for subsequent measurements,
         permits at initial adoption a one-time reclassification of
         available-for-sale securities to trading securities by entities with
         recognized servicing rights and requires separate presentation of
         servicing assets and liabilities subsequently measured at fair value
         and additional disclosures for all separately recognized servicing
         assets and liabilities. SFAS No. 156 is effective for transactions
         entered into after the beginning of the first fiscal year that begins
         after September 15, 2006. The Company is currently evaluating the
         effect the adoption of SFAS No. 156 will have on its financial position
         or results of operations.

         In September 2006, The Financial Accounting Standards Board ("FASB")
         issued Statement of Financial Accounting Standards ("SFAS") No. 157,
         "Fair Value Measurement" ("SFAS No. 157"). This standard provides
         guidance for using fair value to measure assets and liabilities. SFAS
         No. 157 applies whenever other standards require (or permit) assets or
         liabilities to be measured at fair value but does not expand the use of
         fair value in any new circumstances. Prior to SFAS No. 157, the methods
         for measuring fair value were diverse and inconsistent, especially for
         items that are not actively traded. The standard clarifies that for
         items that are not actively traded, such as certain kinds of
         derivatives, fair value should reflect the price in a transaction with
         a market participant, including an adjustment for risk, not just the
         company's mark-to-model value. SFAS No. 157 also requires expanded
         disclosure of the effect on earnings for items measured using
         unobservable data. SFAS No. 157 is effective for financial statements
         issued for fiscal years beginning after November 15, 2007, and interim
         periods within those fiscal years. The Company is currently evaluating
         the impact of this statement on its financial statements and expects to
         adopt SFAS No.157 on December 31, 2007.

         In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting
         for Defined Benefit Pension and Other Postretirement Plans -- An
         Amendment of FASB Statements No. 87, 88, 106, and 132R." This standard
         requires an employer to: (a) recognize in its statement of financial
         position an asset for a plan's overfunded status or a liability for a
         plan's underfunded status; (b) measure a plan's assets and its
         obligations that determine its funded status as of the end of the
         employer's fiscal year (with limited exceptions); and (c) recognize
         changes in the funded status of a defined benefit postretirement plan
         in the year in which the changes occur. Those changes will be reported
         in comprehensive income. The requirement to recognize the funded status
         of a benefit plan and the disclosure requirements are effective as of
         the end of the fiscal year ending after December 15, 2006.








                                       30
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         Recent Accounting Pronouncement (Continued)

         The requirement to measure plan assets and benefit obligations as of
         the date of the employer's fiscal year-end statement of financial
         position is effective for fiscal years ending after December 15, 2008.
         The Company is evaluating the impact of this statement on its financial
         statements and does not believe that it will have a material impact on
         the company's financial position or results of operations.

         Securities Issued for Services

         The Company accounts for common stock issued for compensation services
         of Officers, Directors and employees by reference to the fair market
         value of the Company's stock on the date of stock issuance. Consulting
         services and commission expenses to non-employees are recorded at the
         fair market value of the Company's stock on the date of stock issuance.

         Reclassifications

         Certain amounts for the year ended September 30, 2005 have been
         reclassified to conform with the presentation of the September 30, 2006
         amounts. The reclassifications have no effect on the net income for the
         year ended September 30, 2006 and 2005.

NOTE 3 - MORTGAGES RECEIVABLE AND OTHER

         Amount represent due from individuals who purchased property from the
         Company and other various amounts due the Company. Amounts due at
         September 30, 2006 and 2005 were $0 and $37,482, respectively.

NOTE 4 - FIXED ASSETS

         Fixed assets consist of the following at September 30, 2006 and 2005:

                                                   2006             2005
                                             ---------------   ---------------

Office equipment and other                    $      30,969     $      30,969
Vehicles                                             31,509            31,509
                                             ---------------   ---------------
                                                     62,478            62,478
Less: accumulated depreciation                      (62,478)          (43,310)
                                             ---------------   ---------------

              Total                           $           -     $      19,168
                                             ===============   ===============


         Depreciation expense was $19,168 and $8,445 for the years ended
         September 30, 2006 and 2005, respectively.






                                       31
<PAGE>
NOTE 5 - NOTES AND MORTGAGES PAYABLE


         Notes and mortgages payable consist of the following at September 30,
         2006 and 2005, respectively:

<TABLE>
<CAPTION>
                                                                           2006                 2005
                                                                     -----------------   ------------------
<S>                                                                   <C>                 <C>
Open credit line with a bank with interest at 8.50%
unsecured.                                                            $           786     $            786

Advance payable on demand to an officer at 6% interest
per annum.                                                                          -               20,000
                                                                     -----------------   ------------------

              Total                                                   $           786     $         20,786
                                                                     =================   ==================
</TABLE>

         The Company has a line of credit up to $50,000 available with the above
         institution expiring February 2008.

NOTE 6 - CONVERTIBLE DEBENTURES PAYABLE

         The Company has convertible debentures outstanding at September 30,
         2006 and 2005 in the amount of $199,202. These debentures accrue
         interest at 8% per annum. These debentures mature along with the
         related interest at November 2003. The debentures are convertible at
         the investors' discretion pursuant to the convertible debenture
         agreement. As of September 30, 2005 these debentures are in default.
         The investors have not contacted the Company about new payment terms.
         The convertible debentures expired October 2006.

NOTE 7 - CONTINGENCY/UNCERTAINTY

         The Company during the year ended September 30, 2001, became aware that
         some or all of the capital changes were not validly adopted by the
         Company's board of directors, approved by the Company's shareholders,
         or filed with the Secretary of State of the State of Nevada as required
         by the laws of the State of Nevada. As a result, it appears that the
         Company never has been authorized to issue more than 1,000,000 shares
         of its common stock. All shares of the Company's common stock issued in
         excess of 1,000,000 shares appear to have been issued in excess of the
         Company's authorized amount, therefore, these shares have been
         reclassified to temporary equity (See Notes 8 and 9).











                                       32
<PAGE>
NOTE 7 - CONTINGENCY/UNCERTAINTY (Continued)

         Additionally, the Company issued common stock above the Company's
         authorized amount and issued shares that at the time may not have been
         in compliance with the registration provisions of Section 5 of the
         Securities Act of 1933, as amended. The full impact of these items are
         unknown at this time. As a result, the Company had reclassified
         $3,927,047 to temporary equity as of September 30, 2001. Subsequent to
         September 30, 2001, the Company issued 843,265,695 shares of stock in
         connection with the conversion of debentures that have been classified
         as temporary equity. This resulted in an increase to temporary equity
         of $490,891 for the year ended September 30, 2002. This account acts as
         a reserve for capital that the Company may be required to repay. The
         Company has cured the uncertainty as October 2006.

NOTE 8 - TEMPORARY EQUITY

         The Company had recorded on its balance sheet as a temporary equity
         those securities issued that had not been in compliance with the
         registration provisions of Section 5 of the Securities Act of 1933, as
         amended and for the issuance of common stock issued above its
         authorized amount. All related amounts that were previously included in
         common stock and additional paid-in capital of the permanent
         stockholders' (deficit) section had been reclassified to temporary
         equity as their redemption may not have been solely within the control
         of the issuer.

         Temporary equity at September 30, 2006 and 2005 was $0 and $4,417,938,
         respectively. Substantially all the shares issued in connection with
         the conversion of debentures have been reclassified as temporary
         deficit as the contingency was cured.

NOTE 9 - STOCKHOLDERS' (DEFICIT)

         As of September 30, 2006 and 2005, there were 1,000,000,000 shares
         authorized, and 0 shares issued and outstanding of the Company's
         preferred stock with a par value of $.0000001.

         As of September 30, 2006 and 2005, there were 8,000,000,000 shares
         authorized, and 6,472,766 shares issued and outstanding of the
         Company's common stock with a par value of $.0000001.


















                                       33
<PAGE>
NOTE 9 - STOCKHOLDERS' (DEFICIT) (Continued)

         As of September 30, 2006 and 2005, there were 1,000,000,000 shares
         authorized 666,667 issued and outstanding of the Company's Class A
         Voting common stock with a par value of $.0000001.

         The Company has retroactively restated its shares to account for a
         1:300 reverse stock split for both classes of common stock effective
         December 19, 2005.

         The Company issued 10,879 shares of stock for services at a par value
         of $.0000001 and a fair value of $176.00 to various individuals during
         the fiscal year ended September 30, 2006. In addition, the Company
         issued 666,667 shares of stock as compensation with a fair value of
         $20,000 to an officer of the Company.

         The Company had accounts receivable loans forgiven and forgave accounts
         payable from related parties during the fiscal year ended September 30,
         2006 with a net fair value of $11,647 charged to additional paid-in
         capital.

NOTE 10 - INCOME TAXES

         The net deferred tax assets in the accompanying consolidated balance
         sheets include the following components at September 30, 2006 and 2005.

                                                      2006           2005

         Deferred tax assets                       $2,895,262     $2,831,248
         Deferred tax valuation allowance          (2,895,262)    (2,831,248)
                                                 -------------  -------------

         Net deferred tax assets                  $       -0-    $       -0-
                                                 =============  =============


         Due to the uncertainty of utilizing the approximate $8,272,177 and
         $8,146,362 in net operating losses, respectively, and recognizing the
         deferred tax assets, an offsetting valuation allowance has been
         established.

NOTE 11 - RELATED PARTY TRANSACTIONS

         During the year ended September 30, 2006 the Company wrote-off $114,600
         of receivables due from a related corporation and had debt forgiven due
         from a related party in the amount of $102,953, which was debited to
         additional paid-in capital.

NOTE 12 - GOING CONCERN

         As shown in the accompanying financial statements, the Company incurred
         substantial net losses for the years ended September 30, 2006 and 2005.
         There is no guarantee that the Company will be able to generate enough
         revenue and/or raise enough capital to support those operations. This
         raises substantial doubt about the Company's ability to continue as a
         going concern.



                                       34
<PAGE>
NOTE 12 - GOING CONCERN (Continued)

         The Company's future success is dependent upon its ability to achieve
         profitable operations, and generate enough revenue and/or raise capital
         to support those operations. There is no guarantee that the Company
         will be able to raise enough capital or generate enough revenues to
         sustain its operations.

         Management believes they can raise the funds needed to support their
         business plan and acquire an operating, cash flow positive company.

         The financial statements do not include any adjustments relating to the
         recoverability or classification of recorded assets and liabilities
         that might result should the Company be unable to continue as a going
         concern.

NOTE 13- SUBSEQUENT EVENTS

         On October 17, 2006 the Company's Board of Directors unanimously
         approved the amendment of its capital structure to increase the
         authorized shares of capital stock to 102,000,000 shares, of which
         100,000,000 shares will be classified as Common Stock, $.0000001 par
         value, 1,000,000 shares will be classified as Class A Common Stock,
         $.0000001 par value and 1,000,000 shares will be classified as
         Preferred Stock, $.0000001 par value.


































                                       35
<PAGE>
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         NONE

ITEM 8A. CONTROLS AND PROCEDURES

         The Company maintains a set of disclosure controls and procedures
designed to ensure that information required to be disclosed by the Company in
the reports filed under the Securities Exchange Act, is recorded, processed,
summarized and reported within the time periods specified by the SEC's rules and
forms. Disclosure controls are also designed with the objective of ensuring that
this information is accumulated and communicated to the Company's management,
including the Company's chief executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding required disclosure.

         Based upon their evaluation as of the end of the period covered by this
report, the Company's chief executive officer and chief financial officer
concluded that, the Company's disclosure controls and procedures are not
effective to ensure that information required to be included in the Company's
periodic SEC filings is recorded, processed, summarized, and reported within the
time periods specified in the SEC rules and forms.

         The Company's board of directors was advised by Bagell, Josephs, Levine
& Company, L.L.C., the Company's independent registered public accounting firm,
that during their performance of audit procedures for 2006 Bagell, Josephs,
Levine & Company, L.L.C. identified a material weakness as defined in Public
Company Accounting Oversight Board Standard No. 2 in the Company's internal
control over financial reporting.

         This deficiency consisted primarily of inadequate staffing and
supervision that could lead to the untimely identification and resolution of
accounting and disclosure matters and failure to perform timely and effective
reviews. However, the size of the Company prevents us from being able to employ
sufficient resources to enable us to have adequate segregation of duties within
our internal control system. Management is required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

         No changes in the Company's internal control over financial reporting
have come to management's attention during the Company's last fiscal quarter
that have materially affected, or are likely to materially affect, the Company's
internal control over financial reporting.


ITEM 8B.  OTHER INFORMATION

None

                                    PART III

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

Executive Officers

         The following individuals were serving as our executive officers on
September 30, 2006 and January 10, 2007:

Name                        Age      Title

Richard Astrom              60       President, Chief Executive Officer,
                                     Director

Christopher Astrom          36       Vice President, Secretary, Chief Financial
                                     Officer, Director


                                       36
<PAGE>
     Our board of directors currently consists of two persons. The following
information with respect to the principal occupation or employment, other
affiliations and business experience during the last five years of the directors
has been furnished to us such directors. Except as indicated, the directors have
had the same principal occupation for the last five years. We have no standing
audit committee and as such do not have an audit committee financial expert
serving on the audit committee.

         Richard Astrom (60). Mr. Astrom has been a director of the Company
since 1994. Richard Astrom Secretary of Capital Solutions I and has served as
one of its directors since September of 2001. Mr. Astrom has served as President
and a director of Genesis Capital Corporation of Nevada since September of 2001.
Mr. Astrom earned a Bachelors Degree in Business Administration from the
University of Miami. Richard Astrom is the father of Christopher Astrom

         Christopher Astrom (36). Christopher Astrom has been a director of the
Company since June of 1995. Christopher Astrom is currently President, Chief
Executive Officer and Chief Financial Officer of Capital Solutions I, and has
served as one of its directors since August of 2001. Mr. Astrom has served as
Secretary and Treasurer of Genesis Capital Corporation of Nevada since September
of 2001. He graduated from the University of Florida with a Bachelors Degree in
Business Administration. Christopher Astrom is the son of Richard Astrom

         Capital Solutions I, Inc. and Genesis Capital Corporation of Nevada are
public Companies trading on the over the counter bulletin board. They file
periodic reports pursuant to the Securities Exchange Act of 1934.

         All executive officers are elected by the Board and hold office until
the next Annual Meeting of stockholders and until their successors are elected
and qualify.

         Richard Astrom is Christopher Astrom's father.

         Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Exchange Act requires our directors, executive
officers and ten percent beneficial owners to file reports of ownership and
changes in ownership of their equity securities of us with the SEC and to
furnish to us copies of such reports. Based solely upon review of the copies of
such reports received by us, we believes that, during the 206 fiscal, all
directors, executive officers and ten percent beneficial owners complied with
such filing requirements.

         Code of Ethics

         We have not yet adopted a code of ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. Our two directors, Richard
and Christopher Astrom, have chosen not to adopt such a code of ethics because
they are also our executive officers and principal financial officer.









                                       37
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION

(a) Compensation.

         The following table sets forth compensation awarded to, earned by or
paid to our Chief Executive Officer and the four other most highly compensated
executive officers with compensation in excess of $100,000 for the years ended
September 30, 2006, 2005 and 2004 (collectively, the "Named Executive
Officers").


<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                       Annual Compensation             Long Term Compensation Awards
                                 ---------------------------     --------------------------------------------
                                                                                  Securities
                                                                 Restricted       Underlying     All other
Name and Principal                        Salary       Bonus       Stock          Options/       compensation
  Position                       Year       ($)         ($)       Award(s)        Warrants          ($)
------------------               ----     ------       -----     ----------       ----------     ------------
<S>                              <C>         <C>         <C>                          <C>            <C>
Christopher Astrom               2006       702                     20,000
                                 2005        0           0                            0              0
                                 2004        0           0                            0              0

Richard Astrom                   2006    13,734.18
                                 2005        0           0                            0              0
                                 2004        0           0            0               0              0
</TABLE>

EMPLOYMENT CONTRACTS

         We do not have an employment contract with any executive officers. Any
obligation to provide any compensation to any executive officer in the event of
his resignation, retirement or termination, or a change in control of the
Company, or a change in any Named Executive Officers' responsibilities following
a change in control would be negotiated at the time of the event.

         We may in the future create retirement, pension, profit sharing and
medical reimbursement plans covering our Executive Officers and Directors.

         We do not have a compensation committee. Decisions concerning the
compensation of our executive officers are made by the Board of Directors. The
Board during fiscal 2006 participated in the Board's deliberations concerning
executive officer compensation during the fiscal year ended September 30, 2006.

         The following tables show, as to the named executive officers, certain
information concerning stock options:









                                       38
<PAGE>
                            OPTION GRANTS DURING 2006

                         PERCENT OF
                         TOTAL
         NUMBER OF       OPTIONS
         SECURITIES      GRANTED TO       EXERCISE OR
         UNDERLYING      EMPLOYEES IN     BASE PRICE
NAME     OPTIONS         FISCAL YEAR      ($/SH)         EXPIRATION DATE
----     ----------      ------------     -----------    ---------------

NONE


<TABLE>
<CAPTION>
                AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR
                            AND FY-END OPTION VALUES

         SHARES                         NUMBER OF SECURITIES
         ACQUIRED        VALUE          UNDERLYING UNEXERCISED          VALUE OF UNEXERCISED IN
NAME     ON EXERCISE     REALIZED       OPTIONS AT FY-END (#)           THE MONEY OPTIONS
----     -----------     --------       --------------------------      --------------------------
                                        EXERCISABLE  UNEXERCISABLE      EXERCISABLE  UNEXERCISABLE
                                        -----------  -------------      -----------  -------------
<S>      <C>             <C>            <C>          <C>                <C>          <C>
NONE

</TABLE>





Compensation of Directors

         Our directors are not compensated for their services as directors of
the Company.

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

         The following table sets forth as of September 30, 2006, the number of
outstanding common and preferred shares of the Company beneficially owned by (i)
each person known to the Company to beneficially own more than 5% of its
outstanding common shares, (ii) each director, (iii) each nominee for director,
(iv) each executive officer listed in the Summary Compensation Table, and (iv)
all executive officers and directors as a group.

<TABLE>
<CAPTION>
                                                  PERCENT OF CLASS                        PERCENT OF CLASS
                                                SHARES BENEFICIALLY                      SHARES BENEFICIALLY
  NAME OF BENEFICIAL OWNER       NUMBER(1)              OWNED              NUMBER               OWNED
----------------------------   -------------   ---------------------   --------------   ---------------------
                                         Common Stock                            Class A Common Stock
                               -------------------------------------   --------------------------------------
<S>                            <C>             <C>                     <C>              <C>
Richard Astrom (2)                   2,544              0.04%                      -              0%
Christopher Astrom (3)              60,100(4)           0.93%                666,667             100%
All directors and
executive officers as a
group (2 persons)                   62,644              0.97%                666,667             100%
</TABLE>

                                       39
<PAGE>
         (1) The percent and number of shares beneficially owned reflected in
the table set forth above reflects (i) the ratification of the Capital Changes
by the Company's board of directors and shareholders, (ii) the issuance of 200
million shares of Class A common stock to Christopher Astrom by the Company on
November 15, 2005 (each share of which is entitled to 20 votes) and (iii) the
2005 Reverse Stock Split effected by the Company on December 19, 2005.

         (2) Richard Astrom serves as President, Chief Executive Officer and a
director of the Company.

         (3) Christopher Astrom serves as a Vice President, Secretary, Chief
Financial Officer and a director of the Company.

         (4) Each share of Class A common stock held by Christopher Astrom is
convertible, at his option, into 20 shares of common stock. If Christopher
Astrom were to convert his 666,667 shares of Class A common stock, he would hold
approximately 67.66% of the common stock of Company.

INDIVIDUAL COMPENSATION ARRANGEMENTS

         NONE

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
         INDEPENDENCE

         Richard Astrom is the father of Christopher Astrom.

         We own approximately 5.39% of the outstanding shares of commons stock
of Genesis Capital Corporation of Nevada. Christopher and Richard Astrom are
officers and directors of Genesis.

ITEM 13. EXHIBITS

     (A) EXHIBITS.

The following Exhibits are incorporated herein by reference or are filed with
this report as indicated below.

EXHIBIT
NUMBER            DESCRIPTION
------            -----------

3.1*          Amended and Restated Articles of Incorporation of the Company

3.2**         Amended and Restated Bylaws of the Company

4.1***        8% Series SPB Senior Subordinated Convertible Redeemable
              Debentures due November 3, 2002

4.2***        8% Series SPC Senior Subordinated Convertible Redeemable
              Debentures due April 12, 2003

4.3***        8% Series SPD Senior Subordinated Convertible Redeemable
              Debentures due October 17, 2003

10.1***       Securities Subscription Agreement dated as of October 10, 2000 by
              and between 2217 Acquisition Inc. and Louvre Investors LLC, Yellow
              Stream Company LLC and Carlsbad LLC

                                       40
<PAGE>
10.2***       Assignment and Assumption Agreement dated as of November 3, 2000
              by and between 2217 Acquisition Inc. and National Residential
              Properties, Inc.

10.3***       Securities Subscription Agreement dated as of April 12, 2001 by
              and between Connecticut Acquisition Corp. No. 1 and Louvre
              Investors LLC, Yellow Stream Company LLC and Carlsbad Capital LLC

10.4***       Assignment and Assumption Agreement dated as of April 19, 2001 by
              and between Connecticut Acquisition Corp. 1 and National
              Residential Properties, Inc.

10.5***       Securities Subscription Agreement dated as of October 17, 2001 by
              and between DC Power Products Acquisition Corp. and Equity
              Planners LLC, Sea Lion Investors LLC and Myrtle Holdings LLC

10.6***       Assignment and Assumption Agreement dated as of November 5, 2001by
              and between DC Power Acquisition Corp. and National Residential
              Properties, Inc.

10.7****      Agreement for Purchase and Sale by and between the Company and Bay
              Harbor Island Associates, L.P.

31.1          Certification of the Principal Executive Officer pursuant to Rule
              13a-14(a)

31.2          Certification of the Principal Financial Officer pursuant to Rule
              13a-14(a)

32.1          Certifications of the Principal Executive Officer and Principal
              Financial Officer pursuant to 18 U.S.C. Section 1350

*             Filed as an attachment to the Company's revised information
              statement on Schedule 14C, filed with the Securities and Exchange
              Commission on September 20, 2005.

**            Filed as an exhibit to the Company's current report on Form 8-K,
              filed with the Securities and Exchange Commission on November 18,
              2005.

***           Filed as an exhibit to the Company's quarterly report on Form
              10-QSB for the period ended June 30, 2002, filed with the
              Securities and Exchange Commission on January 8, 2004.

****          Filed as an exhibit to the Company's quarterly report on Form
              10-QSB for the period ended March 31, 2005, filed with the
              Securities and Exchange Commission on May 16, 2005.












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<PAGE>
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Audit and Non-Audit Fees

         Aggregate fees for professional services rendered by Bagell, Josephs &
Company, L.L.C for the fiscal years ended September 30, 2006 and 2005 are set
forth below. The aggregate fees included in the Audit category are fees billed
for the fiscal years for the audit of our annual financial statements and review
of financial statements and statutory and regulatory filings or engagements. The
aggregate fees included in each of the other categories are fees billed in the
fiscal years. (All references to "$" in this Proxy Statement are to United
States dollars.)

                                Fiscal Year Ending     Fiscal Year Ending
                                September 30, 2006     September 30, 2005

Audit Fees                           19,300                 15,000

Audit-Related Fees                    8,000                  7,500

Tax Fees                              1,500                    0

TOTAL                                28,800                 22,500

         Audit Fees for the fiscal years ended September 30, 2006 and 2005 were
for professional services rendered for the audits of the consolidated financial
statements, quarterly review of the financial statements included in Quarterly
Reports on Form 10-QSB, consents, and other assistance required to complete the
year end audit of the consolidated financial statements.

         Audit-Related Fees as of the fiscal years ended September 30, 2006 and
2005 were for assurance and related services reasonably related to the
performance of the audit or review of financial statements and not reported
under the caption Audit Fees.

         Tax Fees as of the fiscal years ended September 30, 2006 and 2005 were
for professional services related to tax compliance, tax authority audit support
and tax planning.

         There were no fees that were classified as All Other Fees as of the
fiscal years ended September 30, 2006 and 2005.

         As we do not have a formal audit committee, the services described
above were not approved by the audit committee under the de minimus exception
provided by Rule 2- 1(c)(7)(i)(C) under Regulation S-X. Further, we do not have
audit committee pre-approval policies and procedures.

            Our Board of Directors reviews and approves audit and permissible
non-audit services performed by its independent accountants, as well as the fees
charged for such services. In its review of non-audit service fees and its
appointment of Bagell, Josephs & Levine as our independent accountants, the
Board of Directors considered whether the provision of such services is
compatible with maintaining independence. All of the services provided and fees
charged by Bagell, Josephs & Levine in 2006 were approved by the Board of
Directors.




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<PAGE>
SIGNATURES

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

National Realty and Mortgage, Inc.

Date: January 16, 2007

By: /s/ RICHARD ASTROM
   ----------------------------
   Richard Astrom
   Chief Executive Officer
   Date: January 16, 2007

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

                 /s/ RICHARD ASTROM
                 -------------------------
                 By:  Richard Astrom
                 Director
                 Date:  January 16, 2007


                  /s/ CHRISTOPHER ASTROM
                  -------------------------
                  By:  Christoper Astrom
                  Director
                  Date:  January 16, 2007
























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