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

                                   FORM 10-KSB

            [X] Annual Report Pursuant to Section 13 or 15(d) of the
            Securities Exchange Act of 1934 For the Fiscal Year Ended
                               September 30, 2000
                           Commission File No. 0-27159

                      National Residential Properties, Inc.
                 (Name of Small Business Issuer in its charter)

                        Nevada                      65-439467
           State or other jurisdiction of        (I.R.S. Employer
           Incorporation or organization        Identification No.)

                      2921 NW 6th Ave, Miami, Florida 33127
                    (Address of principal executive offices)

                                 (305) 573-8882
                 (Issuer's Telephone Number Including Area Code)

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

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

                          Common Stock $.001 par value
                                (Title of Class)

     Check whether the issuer (1) filed all reports required to be filed by
 Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
     shorter period that the registrant was required to file such reports),
    and (2) has been subject to such filing 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:[ ]

   State the aggregate market value of the voting stock (Common Stock) held by
  non-affiliates computed by reference to the price at which the stock was sold
    or the average bid and asked price of such stock, as of a specified date
   within the past sixty days. As of the close of business, January 10, 2001,
 the aggregate market value of the Company's Common Stock (based on the average
       of the ($.019) bid and ($..02) asked price) held by non-affiliates
                                 was $1,373,965.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

     Number of shares outstanding of each of the issuer's classes of Common
               Stock as of January 4, 2001, was 76,974,119 shares.

        State issuer's revenues for its most recent fiscal year. $62,500.

      ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

    Check whether the issuer has filed all documents and reports required to
       be filed by Sections 12, 13 or 15(d) of the Exchange Act after the
          distribution of securities under a plan confirmed by a court
                                 Yes        No
                                     -----     -----
                    DOCUMENTS INCORPORATED BY REFERENCE: None

                                       1
<PAGE>


        FORM 10-KSB ANNUAL REPORT - FISCAL YEAR ENDED SEPTEMBER 30, 2000

                      NATIONAL RESIDENTIAL PROPERTIES, INC.


TABLE OF CONTENTS                                                          Page

PART I

Item 1.   Description of Business                                           3.
Item 2.   Description of Property                                          10.
Item 3.   Legal Proceedings                                                10.
Item 4. Submission of Matters to a Vote of Security Holders                10.

PART II

Item 5.   Market for Common Stock Equity and Related Stockholder Matters   11.
Item 6.   Management's Discussion and Analysis or Plan of Operation        13.
Item 6a.  Quantitative And Qualitative Disclosures About Market Risk       17.
Item 7.   Financial Statements                                             17.
Item 8.   Changes in and Disagreements with Accountants on Accounting
                  and Financial Disclosure                                 17.
PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section  16(a) of the Exchange Act       18.
Item 10. Executive Compensation                                            19.
Item 11. Security Ownership of Certain Beneficial Owners and Management    20.
Item 12. Certain Relationships and Related Transactions                    21.
Item 13. Exhibits and Reports on Form 8-K                                  23.

SIGNATURE PAGE                                                             24.

Attachment:

INDEPENDENT AUDITOR'S REPORT AND
CONSOLIDATED FINANCIAL STATEMENTS, SEPTEMBER 30, 2000 AND 1999.





                                       2
<PAGE>


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

(a)  BUSINESS DEVELOPMENT:

1.   GENERAL CORPORATE

National  Residential  Properties,  Inc. was incorporated on October 18, 1971 in
the State of Nevada, originally under the name of Mister Las Vegas, Inc. It is a
fully reporting 12(g), 34 Act publicly traded company. The Company's business is
residential  real estate  development and building  construction  services.  The
Company   has   undergone   many   changes  to  date  as  a  result  of  certain
reorganizations  and changes in management.  The current  business  evolved when
National  Rehab  Properties,  Inc.  which was  incorporated  in Florida in 1993,
completed a reverse  merger with Mister Las Vegas,  Inc. in 1994 and changed the
name of the surviving Nevada  Corporation to National Rehab Properties,  Inc. On
September 12, 2000, pursuant to a vote of the shareholders at the annual meeting
of  shareholders  held at the offices of the Company,  the  shareholders  of the
Company  voted to amend the Articles of  Incorporation  of the Company to change
the name of the Company  from  National  Rehab  Properties,  Inc.  to  "National
Residential  Properties,  Inc."  Effective after the September 12, 2000 meeting,
the name of the Company is "National Residential Properties, Inc." The change of
name was made in order to more  clearly  reflect the  business  of the  Company.
Historical  changes  are more  fully  disclosed  in prior  34 Act  filings.  The
Company's  principal  office is located at 2921 NW 6th  Avenue,  Miami,  Florida
33127;  its telephone  number is (305) 573-8882;  its facsimile  number is (305)
571-8357.  The Company has one operating  subsidiary,  Encore Services,  Inc., a
Florida Corporation, licensed as a Florida building contractor, and one inactive
subsidiary, MAS Acquisition XV Corp., an Indiana Corporation.

The Company is currently  authorized to issue 250,000,000 common shares,  $0.001
par value,  76,974,119 of which are outstanding at the date of this report,  and
the Company is also has authorized  2,000,000  shares of $.001 par value Class A
common,  "super voting shares," with voting right equivalent to 20 common shares
for each Class A share,  1,000,000 of which are  outstanding at the date of this
report.  In January 1999, the Company completed a reverse split of its $.001 par
value Common Stock on a 1 for 10 basis. All references to shares of Common Stock
in this report take into account this 1 for 10 reverse  split of $.001 par value
Common Stock.

2.   CURRENT OPERATIONS

The  Company's  business is  residential  real estate  development  and building
construction services. From 1993 until 1999, the Company's business concentrated
in investing  in and  revitalizing  single  family  homes in  established  older
residential  neighborhoods  in urban areas.  The Company either buys single unit
vacant  properties and builds single family homes or it buys abandoned homes and
completes 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 its business,  the Company  entered a second phase of business,
the  development,  construction and ownership of multifamily  housing  projects.
Beginning  in the Fiscal Year ended  September  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., a
bonded  general  construction  contractor.  The  Company  has  four  multifamily
apartment projects and one single family home subdivision development as work in
progress in various stages of development.

     OPERATING SUBSIDIARY
     --------------------

In April 2000, the Company acquired eighty percent of the outstanding  shares of
Encore  Services,  Inc.,  ("Encore") a licensed and bonded general  construction
contractor. Encore was incorporated in Florida on February 12, 1996. Encore acts
as the general construction contractor for the Company's real estate development
projects.

     PRINCIPAL OFFICE OF REGISTRANT
     ------------------------------

The Company's principal office is at 2921 NW 6th Avenue,  Miami,  Florida 33127.
The  Company's  phone  number  is  (305)  573-8882.   The  Company's   operating
subsidiary,  Encore  Services,  Inc.,  is  also  located  at such  address.  The
principal offices of the Company and Encore are leased on a month to month basis
by Encore Services.

                                       3
<PAGE>


     INACTIVE SUBSIDIARIES
     ---------------------

On February 10, 2000, the Company acquired all of the outstanding  equity shares
of MAS  Acquisition XV Corp., an Indiana  Corporation.  MAS Acquisition XV Corp.
was  incorporated  in 1998. At the time of the  acquisition,  MAS Acquisition XV
Corp.  had no active  operations  and the  Company has yet to develop a business
plan or operations  within MAS Acquisition XV Corp. MAS Acquisition XV Corp. has
no material  assets or liabilities.  In March 2000, the Company  acquired all of
the  outstanding  equity shares of Granada Grand,  Inc. and  Conquistador  Maza,
Inc., both Florida corporations. Granada Grand, Inc. and Conquistador Maza, Inc.
have no material assets or liabilities.

3.   MANAGEMENT

On April 1, 2000, in conjunction with the acquisition of Encore Services,  Inc.,
a Florida  Corporation,  Braulio  Gutierrez,  the previous sole  shareholder  of
Encore, and an individual previously unaffiliated with the Company other than as
a contractor on the Company's housing  refurbishing  projects,  was appointed to
the Board of Directors as a Director.

On September 12, 2000, the shareholders reelected Richard Astrom and Christopher
Astrom,  each of whom has been a Director of the Company since 1994, and Braulio
Gutierrez,  who was originally  appointed as a board member on April 1, 2000, to
the Board of Directors.

At a Board of Directors  meeting held September 29, 2000, the Board of Directors
voted to retain the following officers,  each of whom has been an officer of the
Company since 1994:  Richard Astrom as President,  CEO and Chairman of the Board
of Directors, and Christopher Astrom as Secretary and Treasurer.

Current management of the Company consists of President and CEO, Richard Astrom,
Secretary/Treasurer,  Christopher Astrom, and Braulio Gutierrez as a non-officer
Director of the Company.  Please see Part III Item 9(b)  "Business  Experience."
The  Company  is  seeking  unaffiliated  persons  willing  to serve  as  outside
Directors.

4. ACQUISITIONS,  ASSET  FORFEITURES,  DISPOSITIONS AND TERMINATIONS OF CONTRACT
RIGHTS

On  April  1,  2000,  the  Company  acquired,   in  a  transaction  exempt  from
registration,  eighty  percent of the common stock of Encore  Services,  Inc., a
Florida  Corporation,  in exchange for (a) 250,000 shares of the Company's $.001
par value Common Stock issued to Braulio  Gutierrez,  and (b) an assignment  and
assumption agreement with Encore Services, Inc. whereby, with the assent of HLKT
Holdings,  L.L.C., Encore Services, Inc. assigned to the Company and the Company
irrevocably and unconditionally assumed all the rights and obligations of Encore
Services,  Inc. under a $1,000,000  Convertible  Debenture  previously issued by
Encore Services,  Inc. to HLKT Holdings,  L.L.C.,  a Colorado Limited  Liability
Company,  on March 15, 2000. On April 1, 2000, Mr.  Gutierrez was appointed as a
Director of the Company.  Commencing April 12, 2000, and continuing through June
28, 2000,  the total  $1,000,0000  face amount of the Debenture was presented to
the Company's  transfer agent for conversion in accordance with the terms of the
Debenture to unrestricted  $.001 par value Common Stock of the Company  pursuant
to the assignment and assumption agreement with Encore Services, Inc. A total of
28,856,464  shares of the Company's  $.001 par value Common Stock were exchanged
for the $1,000,000 Debenture,  and an additional 140,023 shares of the Company's
$.001 par value Common  Stock were issued in payment of accrued  interest on the
Debenture.

As was  reported  on Form 8-K  dated  February  14,  2000,  pursuant  to a Stock
Exchange  Agreement  (the  "Exchange  Agreement")  dated as of February 10, 2000
between MRC Legal Services Corporation,  a California Corporation,  which entity
is the  controlling  shareholder  of MAS  Acquisition  XV Corp.  ("MAS XV"),  an
Indiana corporation,  and National Rehab Properties, Inc., a Nevada corporation,
approximately 96.8% (8,250,000 shares) of the outstanding shares of common stock
of MAS Acquisition XV Corp. were exchanged for 1,000,000  shares of Common Stock
of National Rehab Properties,  Inc. in a transaction in which the Company became
the parent corporation of MAS XV. The additional shares representing 3.2% of MAS
XV were  subsequently  acquired  by the  Company,  making MAS XV a wholly  owned
subsidiary of the Company.

In March 2000,  the Company  acquired all of the  outstanding  equity  shares of
Granada Grand, Inc. and Conquistador Maza, Inc., both Florida corporations,  for
a total of $2,000 in cash.  Granada Grand, Inc. and Conquistador Maza, Inc. have
no material assets or liabilities.

As was reported on Form 8-K dated  November 14, 2000, on September 25, 2000, the
Company's subsidiary,  2217 Acquisition Inc. ("2217 Acquisition"),  entered into
an  arm's-length  contract  (the "Real Estate  Contract")  with an  unaffiliated
entity to purchase a parcel of real estate (the "Real  Estate")  located at 2270
Southwest 32nd Avenue, Miami, Florida. To fund the acquisition of the Real

                                       4
<PAGE>


Estate,  on  October  10,  2000,  2217  Acquisition   issued  its  8%  Series  A
$1,000,000.00 Senior Subordinated  Convertible  Redeemable Debenture due October
10, 2002 (the "2217 Acquisition Debenture"),  together with underlying shares of
2217  Acquisition's  common  stock,  par  value  $0.001,  into  which  the  2217
Acquisition  Debenture is  convertible  from time to time.  After  deducting the
expenses of the  investment,  including  projected  interest  payments,  the net
proceeds   to  be  received  by  2217   Acquisition   aggregated   approximately
$795,000.00.  The first  installment  of proceeds  were  received on October 27,
2000; the second have yet to be received.  From these net proceeds,  $300,000.00
was used to make the down  payment on the Real  Estate,  with the balance of the
purchase  price to be funded by a  purchase  money  first  mortgage  on the Real
Estate given to the Seller and a new  mortgage  from a Miami,  Florida,  lending
institution,  the terms of which have yet to be decided upon. The balance of the
net proceeds were allocated to, and will be used as, working capital.

Following the acquisition of the real estate by 2217 Acquisition, on October 31,
2000, 2217  Acquisition,  Inc. was merged into the Company.  By operation of law
and  pursuant  to the  Plan  of  Merger,  the  rights  and  obligations  of 2217
Acquisition  with respect to the Real Estate  Contract and the 2217  Acquisition
Debenture will inure to the benefit of and be binding upon the Company.  In that
connection, the 2217 Acquisition Debenture,  together with the underlying shares
of 2217  Acquisition's  common stock, par value $0.001 per share, into which the
2217 Acquisition  Debenture is convertible from time to time, shall be converted
into an identical new debenture (the "New  Debenture"),  together with shares of
underlying  Common Stock,  par value $0.001 per share, of the Company into which
the New Debenture may be converted.

There were no asset  forfeitures,  dispositions  and  terminations  of  contract
rights other than in the ordinary course of business of the Company

(b)  BUSINESS OF ISSUER:

The  Company's  business is  residential  real estate  development  and building
construction services. From 1993 until 1999, the Company's business concentrated
in investing  in and  revitalizing  single  family  homes in  established  older
residential  neighborhoods in urban areas. The Company either bought single unit
vacant  properties and built resale single family homes on individual lots 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 its business,  the Company  entered a
second  phase of  business,  the  development,  construction  and  ownership  of
multifamily housing projects. Beginning in the fiscal year ended September 1999,
the Company  initiated  a program of  acquisition  of  properties  suitable  for
development  as  multifamily  housing or single family  subdivision  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 a  single  family  subdivision  development.  The  Company  has  four
multifamily  apartment projects and on single family subdivision  development as
work in progress in various stages of development.

In April 2000,  the Company  acquired  Encore  Services,  Inc., a bonded general
construction  contractor.  Encore,  an eighty  percent  owned  subsidiary of the
Company,  was  incorporated  under  the  laws  of  the  State  of  Florida.  The
construction  portion of  Company's  building and  development  projects are now
conducted  through  Encore with Encore as the  general  contractor.  Encore is a
licensed  building  contractor  and with such status is able to secure  building
permits throughout the state of Florida.  The Company's management believes that
the  acquisition of Encore will enable the Company to be more  successful in the
control of building costs, construction schedules and project costs.

     CURRENT STATUS AND OPERATIONS
     -----------------------------

The  Company  has two phases of  business  operations.  In the first phase which
began in 1993,  the Company  acquires  single unit vacant  properties and builds
resale  single family homes on individual  lots or it buys  abandoned  homes and
renovates the home for resale.  During 1999,  while retaining its efforts in the
renovation  of urban  single  family  homes as one aspect of its  business,  the
Company entered a second phase of business,  the  development,  construction and
ownership of multifamily  housing  projects.  Beginning in the fiscal year ended
September  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 as well as a
twenty acre citrus grove which the Company has successfully rezoned for a single
family home subdivision development.

In 1999, the Company purchased land to build a sixty unit apartment  building at
the northern border of Coral Gables, a prestigious area of Miami.  This project,
known as Granada Grand, is in the permitting  stage,  with the construction loan
scheduled to close in January 2001.

                                       5
<PAGE>


Also in 1999,  the Company  contracted  to  purchase  land to build a sixty unit
apartment  building in a quality  status  neighborhood  in Miami,  Florida.  The
closing for the acquisition of the project as well as the construction  loan for
this project, to be known as Conquistador Plaza, is scheduled for January 2001.

In 2000,  the Company  purchased  a site  permitted  for a sixty unit  apartment
building on Bay Harbor Island near Miami Beach,  Florida. The Company intends to
construct a sixty unit apartment  project on this site.  This project,  known as
Cosata del Sol, is in the planning and permitting stage.

Also in 2000,  the Company  purchased a  multifamily  housing site in Miami upon
which the Company  intends to build a seventy two unit apartment  project.  This
project, called Barcelona Apartments, is in the planning and permitting stage.

In 2000,  the  Company  closed  on a twenty  acre  citrus  grove in Vero  Beach,
Florida.  The  Company  successfully  rezoned the  property  to a single  family
development.  It is  anticipated  that lots will be marketed to home buyers from
northern  states seeking to retire in Florida.  In this project,  known as Eagle
Trace, the Company will either sell bare lots,  allowing the buyer to employ his
own  architect and  contractor,  or build the home for the buyer as a total home
package on a lot selected by the buyer.

(c)  GOVERNMENT REGULATION:

The Company's operations are subject to government  regulation primarily by city
and  local  zoning  regulations,  plat  restrictions  and  housing  quality  and
component  requirements.   These  regulations  and  requirements  determine  the
available  locations for multifamily  housing  projects,  the size of individual
lots,  the  number of  apartment  units  which  can be built on a project  site,
building heights, and various other specifications related to housing projects.

Under federal, state, and local environmental laws, ordinances, and regulations,
the  Company may be liable for removal or  remediation  costs,  as well as other
costs (such as fines or injuries to persons and  property)  where our  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 the Company for personal injury associated with those materials.

Legislation  or  materially  different  rules may be proposed and enacted at any
time and may have a material adverse affect on the operations of the Company. At
this time,  the Company is unaware of any  pending  legislation  or  rule-making
proceedings that would have a material adverse affect on the current  operations
of the Company.

     COMPETITION
     -----------

The Company has not experienced difficulty in locating investment opportunities.
Management believes that ownership of properties in which the Company invests is
highly   fragmented  among   individuals,   partnerships,   public  and  private
corporations,  and REITs.  No single  entity or person  dominates the market for
such properties. At any given time, a significant number of apartment properties
as well as  individual  lots and tracts  suitable  for single  family  homes are
available  for  purchase  in the  various  markets  where the  Company  may seek
additional acquisitions.  Management believes that there is and will continue to
be a strong demand for well-maintained,  affordable housing in these markets and
that the factors  discussed above provide a market where a sufficient  number of
attractive  investment  opportunities  will be available to allow the Company to
continue to expand through  acquisitions  as well as through the  development of
new  properties.  However,  since the  success of any  multifamily  real  estate
investment is affected by factors  outside of the Company's  control,  including
general demand for home purchases,  apartment living,  interest rates, operating
costs,  and job growth,  there can be no assurance that we will be successful in
the  Company's   strategy  to  continue  to  expand  through   acquisitions  and
development.

     RESEARCH AND DEVELOPMENT
     ------------------------

The Company has not incurred, and does not expect to incur, significant research
and development expenses.

     COPYRIGHTS, PATENTS, PROPRIETARY INFORMATION, AND TRADEMARKS
     ------------------------------------------------------------

The Company has no registered service marks, copyrights, or patents.

                                       6

<PAGE>


(d)  EMPLOYEES AND CONSULTANTS:

As of the date of this  filing,  the  Company  and its wholly  owned  subsidiary
Encore employs a total of three (3) persons on a full time basis: Richard Astrom
is the  President  and Chief  Executive  Officer of the Company and  Christopher
Astrom is the Secretary/Treasurer of the Company.  Braulio Gutierrez is employed
as the President of Encore, a subsidiary of the Company.

The  Company   periodically  retains  outside  consultants  such  as  attorneys,
accountants,  engineers,  technicians  and  subcontractors  to  perform  certain
corporate administrative tasks as well as actual construction and development of
real estate projects.

(e)  REAL ESTATE DEVELOPMENT INDUSTRY:

Ownership of properties in the categories of which the Company invests is highly
fragmented among individuals, partnerships, public and private corporations, and
REITs. No single entity or person dominates the market for such  properties.  At
any  given  time,  a  significant  number  of  apartment  properties  as well as
individual  lots and tracts  suitable for single  family homes are available for
purchase  in  the  various   markets  where  the  Company  may  seek  additional
acquisitions.  Industry risks include environmental hazards;  changes in general
or local economic conditions;  changes in interest rates and the availability of
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;  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 control of
any firm involved in the real estate  development  industry.  The illiquidity of
real estate investments  generally may impair an industry  participant's ability
to respond promptly to changing circumstances.

     RISK FACTORS
     ------------

Certain Factors Associated with Real Estate and Related Investments. The Company
is 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 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; 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,
the  Company may be liable for removal or  remediation  costs,  as well as other
costs (such as fines or injuries to persons and  property)  where our  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 the Company for personal injury associated with those materials.

Certain Factors Associated with the Company and its Business.  The securities of
the Company are  speculative and involve a high degree of risk,  including,  but
not necessarily  limited to, the factors  affecting  operating results described
below.  The statements  which are not historical facts contained in this report,
including statements containing words such as "believes,"  "expects," "intends,"
"estimates,"  "anticipates,"  or  similar  expressions,   are  "forward  looking
statements" (as defined in the Private Securities Litigation Reform Act of 1995)
that involve risks and uncertainties  including, but not limited to, the factors
set forth below (see also "Forward Looking Statements").

Limited Revenues; Limited Relevant Operating History; Significant and Continuing
Operating Losses;  Negative Cash Flow; Accumulated Deficit. Since its inception,
the Company has been engaged  primarily in development  of real estate,  and has
had limited revenues from sales of its properties.  Accordingly, the Company has
a limited relevant  operating  history upon which an evaluation of its prospects
can be made.  Such prospects must be considered in light of the risks,  expenses
and difficulties frequently encountered in the establishment of a relatively new
business  in the  real  estate  development  industry,  which  is a  continually
evolving  industry  characterized by an increasing number of market entrants and
intense competition, as well as the risks, expenses and difficulties encountered
in the real estate development and building construction  business.  The Company
has incurred  operating  losses in each quarter since inception and on September
30, 2000,  the Company had an  accumulated  deficit of  approximately  $959,212.
There can be no assurance  that the Company  will be  successful  in  generating
revenues  at a  sufficient  quantity  or  margin or that the  Company  will ever
achieve profitable operations.

                                       7
<PAGE>


Significant  Capital  Requirements;  Need for  Additional  Capital;  Explanatory
Paragraph in Accountant's  Report. The Company's capital  requirements have been
and will continue to be significant. The Company has been dependent primarily on
the private  placement of equity  securities  and debt  financings.  The Company
anticipates, based on its current proposed growth plans and assumptions relating
to its  growth and  operations,  that the  proceeds  from the  existing  private
placements and borrowings and planned revenues will be sufficient to satisfy the
Company's  contemplated  cash  requirements for the next 12 months. In the event
that the Company's plans change or its  assumptions  prove to be inaccurate (due
to unanticipated expenses, delays, problems, or otherwise), the Company would be
required to seek additional funding sooner than anticipated. Any such additional
funding  could be in the form of  additional  equity  capital.  The  Company  is
currently pursuing  potential funding  opportunities.  However,  there can be no
assurance that any of such  opportunities  will result in actual funding or that
additional   financing  will  be  available  to  the  Company  when  needed,  on
commercially  reasonable  terms,  or at all.  If the Company is unable to obtain
additional  financing if needed,  it will likely be required to curtail its real
estate  development plans and may possibly cease its operations.  Any additional
equity   financings   may  involve   substantial   dilution  to  the   Company's
then-existing shareholders.

Management of Growth and Attraction  and Retention of Key Personnel.  Management
of the  Company's  growth  may  place a  considerable  strain  on the  Company's
management,  operations and systems. The Company's ability to execute any future
business  strategy will depend in part upon its ability to manage the demands of
a growing business.  Any failure of the Company's management team to effectively
manage growth could have a material  adverse  affect on the Company's  business,
financial  condition or results of  operations.  The  Company's  future  success
depends in large part on the continued service of its key management  personnel.
The Company  believes  that its future  success  also  depends on its ability to
attract  and retain  skilled  technical,  managerial  and  marketing  personnel.
Competition  for  qualified  personnel is intense.  The Company has from time to
time experienced difficulties in recruiting qualified personnel.  Failure by the
Company to attract and retain the  personnel  it requires  could have a material
adverse  affect on the  financial  condition  and results of  operations  of the
Company.

Lack of Dividend History; No Dividends.  The Company has never paid dividends on
its Common Stock and intends to utilize any earnings for growth of its business.
Therefore, the Company does not intend to pay cash dividends for the foreseeable
future.  This lack of dividends and a dividend  history may adversely affect the
liquidity and value of the Company's Common Stock.

Possible  Volatility of Market Price. The Company's Common Stock has been traded
on the OTC Bulletin Board since 1994. The Company  believes that factors such as
(but not limited to)  announcements  of  developments  related to the  Company's
business,  fluctuations in the Company's  quarterly or annual operating results,
failure to meet securities  analysts'  expectations,  general  conditions in the
international   marketplace  and  the  worldwide   economy,   announcements   of
technological  innovations or new systems or  enhancements by the Company or its
competitors, interest rate changes or money supply fluctuations and developments
in the Company's  relationships with clients and suppliers could cause the price
of the Company's  Common Stock to fluctuate,  perhaps  substantially.  In recent
years the stock market has experienced  extreme price  fluctuations,  which have
often been unrelated to the operating  performance of affected  companies.  Such
fluctuations  could  adversely  affect the market price of the Company's  Common
Stock.

OTC  Bulletin  Board  Listing  Requirements.  Under the new rules for  continued
listing on the  Bulletin  Board,  OTC traded  firms are  required  to become and
remain fully reporting under Section 12 of the 1934 Securities and Exchange Act.
Although the Company intends to complete all future required filings on a timely
basis,  there can be no  assurance  that its $.001 par value Common Stock (NRPI)
will not be de-listed  from the Bulletin  Board.  If de-listed,  the market will
almost  certainly  reflect a  depressive  effect  on the price of the  Company's
Common Stock.

Penny Stock  Regulations and  Requirements  for Low Priced Stock. The Commission
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 the  Company's  Common  Stock as
currently  traded on the OTC Bulletin  Board,  the Company's stock is subject to
Rule 15g-9  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 purchasers  written  consent to the  transaction
prior to sale. Consequently,  the Rule may have a negative effect on the ability
of shareholders to sell common shares of the Company in the secondary market.

Stock  prices  are  unpredictable.  General  market  price  declines  or  market
volatility  in the future  could be  negative  with  respect to the price of our
Common Stock. In recent years,  the stock markets in general,  and securities of
small  capitalization  companies in particular,  have experienced  extreme price
fluctuations  in  response  to  such  occurrences  as  quarterly  variations  in
operating results,  changes in earnings estimates,  and announcements concerning
strategic relationships and other events or facts. This pattern of

                                       8
<PAGE>


extreme  volatility  in the stock  market,  which in many cases was unrelated to
actual  operating  performance,  could cause the price of the  Company's  Common
Stock to go down.

The Company Will Need  Additional  Funds.  The Company will require  substantial
additional   funding  to  further  its  real  estate   operations  and  business
objectives.  Although  management believes that such funds will become available
from sources including cash flow from business operations,  bank loans, mortgage
loans or sale of additional  stock,  it has not formulated any specific plan for
raising additional funds, including sale of additional equity securities,  as of
the date of this report. If the Company's capital is insufficient to conduct its
business  and if the Company is unable to obtain  needed  financing,  it will be
unable to pursue its business plan.  Management has not thoroughly  investigated
whether  this  capital  would be  available,  who would  provide it, and on what
terms.  If the  Company  is  unable to raise the  capital  required  to fund its
proposed projects,  on acceptable terms, its business may be seriously harmed or
even  terminated.  It is not  certain  that the  Company  will be able to obtain
additional  funding or, if  obtained,  that the terms of such  funding  would be
favorable.  This means that investor's shares of Common Stock could lose much of
their value.

Management  Controls the Company's  Funds.  Management has broad discretion over
how to spend the funds held by the Company. Although management will endeavor to
act in the best  interests of the  shareholders,  there can be no assurance that
the decision to utilize proceeds will prove profitable to the Company.

The Company May Not be Successful.  The Company competes in a competitive market
of real estate development and housing construction. The Company's prospects for
success will depend on management's  ability to successfully  market its lots or
houses to buyers and its apartment projects to renters. As a result,  demand and
market  acceptance  for our houses and  apartment  projects is subject to a high
level of uncertainty. The Company currently has limited financial, personnel and
other resources to undertake the extensive  activities that will be necessary to
acquire property and build apartment  complexes,  houses and related real estate
projects.  If the Company is unable to expand its marketing efforts, it will not
generate substantial additional revenues.  Investors should be aware that if the
Company is not  successful  in the  operation  of its current  business,  or any
future  acquisition  endeavors,  each investors entire  investment in the Common
Stock of the Company could become  worthless.  Even if the Company is successful
in our operations and potential  acquisitions,  it is not certain that investors
will derive a profit from investment in the Company.

The Company Relies on its Management.  The Company is dependent upon the members
of management set forth herein.  If the current  management is no longer able to
provide services to the Company,  its business will be negatively  affected.  No
member of management is currently serving under a written employment agreement.

Additional Equity Financing May Affect Investor's  Ability to Sell Common Stock.
The Company's  Common Stock currently trades on the OTC Bulletin Board under the
symbol  NRPI.  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 the Company raises additional money from
the sale of its Common Stock, the market price could drop and investor's ability
to sell stock could be diminished.

Super Voting Rights  Granted to Current  Management.  Our board of Directors can
issue "super voting" Class A Common Stock without shareholder consent and dilute
the voting  rights or  otherwise  significantly  affect  the rights of  existing
shareholders. The present principal shareholders will maintain voting control of
the Company based on the issuance of 1,000,000 Class A common shares on June 17,
1999, which entitle the holder thereof  (Christopher  Astrom) to 20 Common Stock
equivalent  votes for every  Class A share held.  The  purpose of issuing  these
shares is to ensure that current management will maintain control of the Company
despite maintaining  beneficial  ownership of less than a majority of the shares
of the  Company's  Common  Stock.  An  additional  1,000,000  of the  authorized
2,000,000 shares of Class A Common Stock is available for issuance.  The Class A
Common Stock is  non-transferable  except to a family member.  Furthermore,  the
disproportionate  vote  afforded the Class A Common Stock will prevent or impede
potential acquirers from seeking to acquire control of the Company,  which could
have a depressive effect on the price of our Common Stock.

FORWARD-LOOKING  STATEMENTS. A number of the matters and subject areas discussed
in the foregoing "Risk Factors" section and elsewhere in this Form 10-KSB Report
that  are  not   historical  or  current  facts  deal  with   potential   future
circumstances and developments. The discussion of such matters and subject areas
is  qualified  by  the  inherent  risks  and  uncertainties  surrounding  future
expectations generally, and also may materially differ from the Company's actual
future  experience  involving any one or more of such matters and subject areas.
The Company has attempted to identify,  in context,  certain of the factors that
it currently  believes may cause actual future  experience and results to differ
from the Company's current expectations regarding the relevant matter or subject
area.  The  operation  and  results of the  Company's  real  estate  development
business also may be subject to the effect of other risks and  uncertainties  in
addition  to  the  relevant  qualifying  factors  identified  elsewhere  in  the
foregoing  "Risk  Factors"  section,  including,  but not  limited  to,  general
economic  conditions in the geographic  areas and  occupational  market segments
(such as,  for  example,  construction,  delivery,  and real  estate  management
services) that the Company is targeting for its apartment units, the

                                       9
<PAGE>


ability to achieve  adequate  occupancy  levels,  access to  sufficient  debt or
equity capital to meet the Company's  operating and financing needs, the quality
and price of  similar  or  comparable  housing  offered  or to be offered by the
Company's competitors, future legislative or regulatory actions relating to real
estate activities and real estate financing,  other housing trends generally and
other  risks and  uncertainties  described  from  time to time in the  Company's
reports filed with the Commission.

ITEM 2.  DESCRIPTION OF PROPERTY

CORPORATE OFFICE:

The Company  shares  offices with Encore  Builders,  Inc., a corporation  wholly
owned by a Director  of the  Company.  The  Company  pays no rent for its space.
Encore  Builders,  Inc.  leases  approximately  4000 square feet of  combination
warehouse  and  executive  office  space at 2921 NW 6th Avenue,  Miami,  Florida
33127.  The  lease is a month to month  lease.  All  corporate,  administrative,
accounting  and  operational  functions  are  carried  out  from  the  corporate
headquarters.  The leased facility consists of approximately 4000 square feet of
a combination  office and  warehouse;  approximately  six hundred square feet of
office space is utilized by the Company and eight hundred  square feet of office
space and twenty six  hundred  feet of  warehouse  space is  utilized  by Encore
Builders, Inc. in its operations.  This leased space is 90% utilized for Company
purposes and is adequate for the Company's current needs.

At December 31, 1999, our real estate portfolio  consisted of five properties in
various stages of development, all of which were owned by the Company, including
four apartment communities in various stages of construction and one subdivision
development  of lots for single  family  homes.  We believe our  properties  are
adequately covered by liability and casualty insurance, consistent with industry
standards.

The  following  summarizes  certain  information  about our apartment and single
family home properties:

In 1999, the Company purchased land to build a sixty unit apartment  building at
the northern border of Coral Gables, a prestigious area of Miami.  This project,
known as Granada Grand, is in the permitting  stage,  with the construction loan
scheduled to close in January 2001.

Also in 1999,  the Company  contracted  to  purchase  land to build a sixty unit
apartment  building in a quality  status  neighborhood  in Miami,  Florida.  The
closing for the acquisition of the project as well as the construction  loan for
this project, to be known as Conquistador Plaza, is scheduled for January 2001.

In 2000,  the Company  purchased  a site  permitted  for a sixty unit  apartment
building on Bay Harbor Island near Miami Beach,  Florida. The Company intends to
construct a sixty unit apartment  project on this site.  This project,  known as
Cosata del Sol, is in the planning and permitting stage.

Also in 2000,  the Company  purchased a  multifamily  housing site in Miami upon
which the Company  intends to build a seventy two unit apartment  project.  This
project, called Barcelona Apartments, is in the planning and permitting stage.

In 2000,  the  Company  closed  on a twenty  acre  citrus  grove in Vero  Beach,
Florida.  The  Company  successfully  rezoned the  property  to a single  family
development.  It is  anticipated  that lots will be marketed to home buyers from
northern  states seeking to retire in Florida.  In this project,  known as Eagle
Trace, the Company will either sell bare lots,  allowing the buyer to employ his
own  architect and  contractor,  or build the home for the buyer as a total home
package on a lot selected by the buyer.

The Company also has in inventory six single  family homes,  three of which have
buyers  with  purchase  contracts  awaiting  buyer  qualification  and home loan
approval.

ITEM 3.  LEGAL PROCEEDINGS

No  non-course of business or other  material  legal  proceedings,  to which the
Company  is a party or to which the  property  of the  Company  is  subject,  is
pending or known by the Company to be contemplated.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

On  September  12,  2000  pursuant to a vote of the  shareholders  at the annual
meeting of shareholders held at the offices of the Company,  the shareholders of
the  Company  voted to amend the  Articles  of  Incorporation  of the Company to
change the name of the

                                       10
<PAGE>


Company  from  National  Rehab  Properties,  Inc.  to  "National  Residential
Properties,  Inc." Effective  after the September 12, 2000 meeting,  the name of
the Company is "National  Residential  Properties,  Inc." The change of name was
made in order to more clearly reflect the business of the company. Additionally,
at the same annual meeting, the following persons,  each of whom was an existing
Director,  were elected to the board of Directors:  Richard Astrom,  Christopher
Astrom and  Braulio  Gutierrez,  by a majority of the votes  represented  at the
meeting.

On October 10, 2000, the Company  amended the Articles of  Incorporation  of the
Company by increasing  the  authorized  shares of the Company's  $.001 par value
Common Stock from  40,000,000  to  250,000,000  shares.  No proxy  statement was
issued and no shareholder proxies were solicited or accepted,  such action being
adopted by written  consent in lieu of a combined  special  meeting of Directors
and shareholders.

The  results of the special  combined  Director  and  shareholder  meeting  were
previously reported in the Form 8-K filed October 17, 2000. No matters have been
submitted to the  shareholders  since the September  12, 2000 annual  meeting of
shareholders.

                                     PART II

ITEM 5.  MARKET FOR COMMON STOCK EQUITY AND RELATED STOCKHOLDER MATTERS.

(a)  MARKET INFORMATION.

The  principal  market of the Company's  $.001 par value Common Stock,  its only
trading  class of  equity  securities,  is the NASD  Electronic  Bulletin  Board
over-the-counter  market.  The Company's Common Stock currently trades under the
symbol "NRPI. The Company has approximately  2,400  shareholders of record.  The
Company's  transfer agent is High Country Transfer Agency,  Inc. 914 W. Cheyenne
Road, P.O. Box 60371, Colorado Springs, Colorado 80906.

The following table indicates the quarterly high and low bid market price ranges
of the Company's Common Stock in the  over-the-counter  market on the Electronic
Bulletin  Board for the fiscal years ended  September 30, 1999 and September 30,
2000,  as  reported  by the  Nasdaq-Amex  Market  Group,  an NASD  company.  The
information supplied represents quotations between dealers that does not include
retail  markups,   markdowns  or  commissions,   actual   transactions  and  any
adjustments  for stock  dividends.  In January  1999,  the  Company  completed a
reverse  split of its  $.001  par value  Common  Stock on a 1 for 10 basis.  All
references to shares of Common Stock in this report take into account this 1 for
10 reverse split of $.001 par value Common Stock.

                                                                  BID       BID
                                                                HIGH ($)  LOW($)
                                                               --------   ------

FISCAL 1999:
     First Quarter: October 1, 1998 through December 31, 1998   $0.53     $0.48
     Second Quarter: January 1, 1999 through March 31, 1999     $0.49     $0.42
     Third Quarter: April 1, 1999 through June 30, 1999         $0.25     $0.22
     Fourth Quarter: July 1, 1999 through September  30, 1999   $0.36     $0.11

FISCAL 2000:
     First Quarter: October 1, 1999 through December 31, 1999   $0.36     $0.10
     Second Quarter: January 1, 2000 through March 31, 2000     $0.31     $0.13
     Third Quarter: April 1, 2000 through June 30, 2000         $0.16     $0.05
     Fourth Quarter: July 1, 2000 through September 30, 2000    $0.07     $0.03

(b)  HOLDERS:

As of January 4, 2001, the approximate  number of holders of record of shares of
the Company's Common Stock,  $.001 par value per share, the Company's only class
of trading securities, was believed by management to be as follows:

                  Title of Class           Number of Record Holders
                  --------------           ------------------------

              Common Stock, $.001 par               2,400


                                       11
<PAGE>


(c)  DIVIDENDS:

The Company has paid no dividends  during fiscal years ended September 30, 2000,
September 30, 1999, or to the present date.  Other than the  requirements of the
Nevada Revised  Statutes that dividends be paid out of capital  surplus only and
that the declaration and payment of a dividend not render the Company insolvent,
there are no  restrictions  on the  Company's  present or future  ability to pay
dividends.

The payment by the Company of dividends,  if any, in the future rests within the
discretion of its Board of Directors and will depend,  among other things,  upon
the Company's earnings, its capital requirements and its financial condition, as
well as other relevant factors. There is no current plan to pay dividends.

     UNREGISTERED SHARES ISSUED
     --------------------------

The following  shares of the Company's  $.001 par value Common Stock were issued
without  registration  to the  named  entities  during  the  fiscal  year  ended
September 30, 2000,  which the Company  believed to be exempt from  registration
requirement as a nonpublic offering.

<TABLE>

<CAPTION>
     DATE     NUMBER OF SHARES               ISSUED TO                          CONSIDERATION

<S>              <C>           <C>                                    <C>
10/01/1999 to    5,056,818     Bondholders                            Debenture Conversions
  12/31/2000
  10/13/1999       227,272     Consultant                             Consulting Services
  11/30/2000       308,333     Consultant                             Consulting Services
  12/07/1999       250,000     Consultant                             Consulting Services
  02/10/2000       455,000     MRC Legal Services LLC                 MAS XV Acquisition Agreement*
  02/10/2000       140,000     Brian A. Lebrecht                      MAS XV Acquisition Agreement*
  02/10/2000       105,000     Vi Bui                                 MAS XV Acquisition Agreement*
  02/10/2000       125,000     MAS Capital, Inc.                      MAS XV Acquisition Agreement*
  02/10/2000        87,500     James Stubler                          MAS XV Acquisition Agreement*
  02/10/2000        87,500     Portfolio Investment Strategies, Inc.  MAX XV Acquisition Agreement*
  02/10/2000       260,000     M. Richard Cutler                      Consulting Agreement**
  02/10/2000        80,000     Brian Lebrecht                         Consulting Agreement**
  02/10/2000        60,000     Vi Bui                                 Consulting Agreement**
  02/10/2000        50,000     James Stubler                          Consulting Agreement**
  02/10/2000        50,000     Samuel Eisenberg                       Consulting Agreement**
  04/01/2000       250,000     Braulio Gutierrez                      80% of Equity in Encore Services, Inc.
  04/03/2000     6,000,000     Christopher Astrom                     $6,000,000 Option Price of Shares***
  04/12/2000    29,136,510     HLKT Holdings, L.L.C.                  Assignment of $1,000,000 Debenture****
  05/02/2000       250,000     Yeshiva Gedoluh of Midwood             Charitable Donation

</TABLE>

----------------------
*Pursuant to a Stock Exchange  Agreement (the "Exchange  Agreement") dated as of
February  10,  2000,  between  MRC  Legal  Services  Corporation,  a  California
Corporation,  which entity is the controlling  shareholder of MAS Acquisition XV
Corp.  ("MAS  XV"),  an  Indiana   corporation,   and  the  Company,   in  which
approximately 96.8% (8,250,000 shares) of the outstanding shares of common stock
of MAS Acquisition XV Corp.  were exchanged with the  shareholders of MAS XV for
1,000,000  shares of Common Stock of the Company.  in a transaction in which the
Company became the parent corporation of MAS XV.

**On February 10, 2000, the Company entered into a consulting  agreement between
the  Company  and the  following  individual  professional  persons who acted as
consultants to the Company: M. Richard Cutler, Brian A. Lebrecht,  Vi Bui, James
Stubler and Samuel  Eisenberg for services  involving  consultation,  advice and
counsel with respect to the  negotiation  and  completion of the stock  exchange
between the Company and MAS XV. In addition to cash compensation,  the agreement
called for issuance of a total of 500,000  shares of the Company to be issued to
the  consultants  together with an  obligation  for the Company to register such
shares on Form S-8 at the Company's sole expense.  This obligation was completed
in February 2000.

***On March 1, 1999, Christopher Astrom was granted options to acquire 6,000,000
shares of Common  Stock at a price of $.001 per  share.  On April 3,  2000,  Mr.
Astrom exercised his option and acquired 6,000,000 shares of the Company's $.001
par value Common Stock for payment of $6,000.  These options were authorized and
awarded to Mr. Christopher Astrom by a written consent

                                       12
<PAGE>


in lieu of combined special meeting of Directors and Shareholders  held on
March 1, 1999. The options were granted to Christopher  Astrom in  consideration
for waiver of compensation during 1996 and 1997.

**** On April 1, 2000,  the  Company  acquired,  in a  transaction  exempt  from
registration,  eighty  percent of the common stock of Encore  Services,  Inc., a
Florida  Corporation,  and,  with the assent of HLKT  Holdings,  L.L.C.,  Encore
Services,  Inc.  assigned  to  the  Company  and  the  Company  irrevocably  and
unconditionally  assumed all the rights and obligations of Encore Services, Inc.
under a $1,000,000  Convertible  Debenture previously issued by Encore Services,
Inc. to HLKT Holdings,  L.L.C., a Colorado Limited Liability  Company,  on March
15, 2000.  Commencing April 12, 2000, and continuing  through June 28, 2000, the
total  $1,000,000  face amount of the  Debenture  was presented to the Company's
transfer agent for  conversion in accordance  with the terms of the Debenture to
unrestricted  $.001  par  value  Common  Stock of the  Company  pursuant  to the
assignment  and  assumption  agreement  with  Encore  Services,  Inc. A total of
28,856,464  shares of the Company's  $.001 par value Common Stock were exchanged
for the $1,000,000 Debenture,  and an additional 140,023 shares of the Company's
$.001 par value Common  Stock were issued in payment of accrued  interest on the
Debenture.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS
--------------------------

The  foregoing  and  subsequent  discussion  contains  certain   forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section 21E of the  Securities  Exchange  Act of 1934,  which are intended to be
covered by the safe harbors created thereby.  These  forward-looking  statements
include the plans and objectives of management for future operations,  including
plans  and  objectives  relating  to the  possible  further  capitalization  and
potential   acquisitions   of  or  mergers   with   operating   companies.   The
forward-looking  statements  included  herein are based on current  expectations
that  involve  numerous  risks and  uncertainties.  Assumptions  relating to the
foregoing  involve  judgments  with  respect  to,  among  other  things,  future
economic,  competitive and market conditions and future business decisions,  all
of which are difficult or impossible to predict accurately and many of which are
beyond the  control of the  Company.  Although  the  Company  believes  that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could be inaccurate and,  therefore,  there can be no assurance that
the  forward-looking  statements  included  in this Form 10-KSB will prove to be
accurate.   In  light  of  the   significant   uncertainties   inherent  in  the
forward-looking  statements  included herein,  the inclusion of such information
should not be regarded as a  representation  by the Company or any other  person
that the objectives and plans of the Company will be achieved.

The  following is a  discussion  of the  consolidated  financial  condition  and
results of  operations  of the Company for the fiscal years ended  September 30,
2000, and September 30, 1999,  which should be read in conjunction  with, and is
qualified in its entirety by, the  consolidated  financial  statements and notes
thereto included elsewhere in this report.

Statements  contained herein that are not historical  facts are  forward-looking
statements as that term is defined by the Private  Securities  Litigation Reform
Act of 1995.  Although the Company believes that the  expectations  reflected in
such forward-looking  statements are reasonable,  the forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ
from those projected.  The Company cautions  investors that any  forward-looking
statements made by the Company are not guarantees of future performance and that
actual  results  may  differ  materially  from  those  in  the   forward-looking
statements.   Such  risks  and  uncertainties   include,   without   limitation,
fluctuations in demand, loss of subscribers, the quality and price of similar or
comparable housing projects,  the existence of well-established  competitors who
have substantially  greater financial resources and longer operating  histories,
regulatory  delays  or  denials,  ability  to  complete  intended  construction,
termination  of proposed  transactions,  access to sources of  capital,  adverse
results in  litigation,  consequences  of actions by  regulatory  or housing and
mortgage   authorities,   general   economics  and  the  risks  discussed  under
"Business--Risk Factors" in this report.

(a)  PLAN OF OPERATION:

     CURRENT STATUS AND OPERATIONS
     -----------------------------

Subsequent  to the year ended  September  30,  1999,  the  Company  changed  its
operational  direction  from that of building or remodeling  relatively low cost
"starter" homes to the business of developing multifamily housing projects. As a
result of this change in operations,  although  projects are in the  development
stage,  only limited  revenues  were  generated in the twelve month period ended
September  30, 2000.  The  Company's  financial  statements  are  therefore  not
indicative of anticipated  revenues which may be attained or expenditures  which
may be incurred  by the  Company in future  periods.  The  Company's  ability to
achieve profitable  operations is subject to the validity of its assumptions and
risk factors within the industry and  pertaining to the Company.  The market for
real estate  development  and housing  construction  is highly  competitive  and
subject to economic changes, regulatory

                                       13
<PAGE>


developments  and emerging  industry  standards.  We believe that the  principal
competitive  factors in its  markets  are  conformance  to  building  standards,
reliability,  safety,  price and quality of its final  product.  There can be no
assurance that the Company will compete  successfully in the future with respect
to these or other factors.

The  Company  has two phases of  business  operations.  In the first phase which
began in 1993,  the Company  acquires  single unit vacant  properties and builds
resale  single family homes on individual  lots or it buys  abandoned  homes and
renovates the home for resale.  During 1999,  while retaining its efforts in the
renovation  of urban  single  family  homes as one aspect of its  business,  the
Company entered a second phase of business,  the  development,  construction and
ownership of multifamily  housing  projects.  Beginning in the fiscal year ended
September  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 as well as a
twenty acre citrus grove which the Company has  successfully  rezoned for single
family home  development.  In April 2000, the Company  acquired Encore Services,
Inc., a bonded general construction contractor.  Encore, an eighty percent owned
subsidiary  of the  Company,  was  incorporated  under  the laws of the State of
Florida.  The  Company's  building and  development  projects are now  conducted
through Encore. Encore is a licensed building contractor and with such status is
able to secure building permits  throughout the state of Florida.  The Company's
management believes that the acquisition of Encore will enable the Company to be
more  successful in the control of building  costs,  construction  schedules and
project costs.

In 1999, the Company purchased land to build a sixty unit apartment  building at
the northern border of Coral Gables, a prestigious area of Miami.  This project,
known as Granada Grand, is in the permitting  stage,  with the construction loan
scheduled to close in January 2001.

Also in 1999,  the Company  contracted  to  purchase  land to build a sixty unit
apartment  building in a quality  status  neighborhood  in Miami,  Florida.  The
closing for the acquisition of the project as well as the construction  loan for
this project, to be known as Conquistador Plaza, is scheduled for January 2001.

In 2000,  the Company  purchased  a site  permitted  for a sixty unit  apartment
building on Bay Harbor Island near Miami Beach,  Florida. The Company intends to
construct a sixty unit apartment  project on this site.  This project,  known as
Cosata del Sol, is in the planning and permitting stage.

Also in 2000,  the Company  purchased a  multifamily  housing site in Miami upon
which the Company  intends to build a seventy two unit apartment  project.  This
project, called Barcelona Apartments, is in the planning and permitting stage.

In 2000,  the  Company  closed  on a twenty  acre  citrus  grove in Vero  Beach,
Florida.  The  Company  successfully  rezoned the  property  to a single  family
development.  It is  anticipated  that lots will be marketed to home buyers from
northern  states seeking to retire in Florida.  In this project,  known as Eagle
Trace, the Company will either sell bare lots,  allowing the buyer to employ his
own  architect and  contractor,  or build the home for the buyer as a total home
package on a lot selected by the buyer.

The Company anticipates  completing and marketing these projects during the next
two fiscal years.  Managements intends to secure additional apartment and single
family  housing  projects  similar to the  previously  described  development in
progress over the next two years in order to bring the Company's  total projects
in  development  to a total of eight projects in various stages of completion at
all times.  In the future it is anticipated  that one project would be completed
and marketed in each quarter in order to establish  consistent  cash flow to the
Company.

(b) MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS OF
OPERATIONS.

The Company  reported a net loss of $541,757  for the year ended  September  30,
2000, and a net loss of $259,509 for the year ended  September 30, 1999, and has
reported net losses of approximately  $1,000,000 from inception to September 30,
2000.  As reported on the  consolidated  statements  of cash flows,  the Company
incurred  deficient  cash  flows  from  operating  activities  of  $759,185  and
$2,113,174  for the years ended  September 30, 1999 and 2000,  respectively.  To
date,  these losses and cash flow  deficiencies  have been financed  principally
through the sale of Common Stock and issuance of short and long-term  debt which
includes  related  party debt.  Additional  capital  and/or  borrowings  will be
necessary  in order for the  Company to continue in  existence  until  attaining
profitable  operations.  Although a portion of  convertible  debt was liquidated
through  the  issuance  of Common  Stock,  no  assurances  can be given that the
sources of  borrowings  would  continue.  The Company is highly  leveraged and a
number of  developments  over the past year had material  adverse effects on the
Company.  The  Company  has a  significant  investment  in  real  estate  in the
development  stage, the recoverability of which is dependent upon the success of
future events.

                                       14
<PAGE>


Management is endeavoring to develop a strategic plan to raise private  mortgage
financing, develop a management team, maintain reporting compliance and complete
its existing real estate  projects.  Richard Astrom and  Christopher  Astrom are
required  by lenders to  personally  guarantee  mortgage  loans  obtained by the
Company in its real estate development projects.

Should the  Company be  successful  in  obtaining  substantial  additional  debt
financing,  management plans to seek  acquisitions of additional real estate for
development  projects.  Managements  intends to secure sufficient  apartment and
single family housing projects similar to the previously  described  development
in  progress  over the next two  years  in order to bring  the  Company's  total
projects  in  development  to a total of eight  projects  in  various  stages of
completion  at all times.  There can be no  assurances  that the Company will be
successful  in the  implementation  of its plan for  expansion  and its  overall
business plan.

From October 1, 2000, to the end of fiscal year ended  September  30, 2001,  the
Company  estimates  its cash  needs to  maintain  operations  under its  current
negative  cash flow  situation is $240,000.  This amount is composed of $240,000
for working  capital  assuming that current  operations  continue in its present
status and mortgage  funding now in place for various  projects  remains viable.
These amounts include offsets for anticipated amounts of cash generated from the
current operations.  The monthly costs of our corporate offices are estimated to
be  approximately  $20,000 per month.  The monthly  expense of $20,000  includes
payroll,  payroll  taxes,  dues and  subscriptions,  utilities for the corporate
offices, health insurance for the employees, general liability insurance, office
supplies, postage and freight, professional fees for accounting, legal and other
consultants, corporate office rent, repairs and maintenance primarily for office
equipment,  telephone  expenses  and travel and  entertainment.  There can be no
assurances that the Company will be able to  successfully  obtain the additional
financings  or  will  be  otherwise  able  to  obtain  sufficient  financing  to
consummate the Company's business plan.

The Company has  limited  capitalization  and is  dependent  on the  proceeds of
private or exempt  offerings to continue as a going concern and  implementing  a
business  plan.  All  during  fiscal  2000 and to the date of this  filing,  the
Company has had and continues to have a substantial need for working capital for
normal  operating  expenses  associated  with the Company  continuing as a going
concern.  This lack of cash has slowed its  ability  to  acquire  and  construct
properties or other productive assets and initiate revenue producing operations.
Any activity in the real estate development industry requires adequate financing
and on-going funding sources. The Company has entered this industry with limited
financing and funding sources.  The Company is currently in discussions with one
or more entities for private mortgage funding financing package(s).

     LIQUIDITY AND CAPITAL RESOURCES
     -------------------------------

Prior to inception as a publicly  owned company,  the Company  relied  primarily
upon loans originated by the Company's  President,  Richard Astrom.  These loans
helped to finance  working  capital needs when operations did not provide enough
cash flow.  Additionally,  the Company has relied upon bank financing to acquire
properties  and pay  operational  costs.  The bank  financing  has  required the
personal guarantees of Richard Astrom and Christopher Astrom. In the future, the
Company  will need to acquire  additional  financing  for the  Company  with the
proceeds of  mortgage  funding or public or private  offerings  of stock or debt
instruments.  Future  funding  needs will arise from business  expansion  and/or
improvements  to our financial  lending  structure.  The Company does not have a
schedule of future funds to be acquired and  quantified  because it is difficult
to  estimate  when,  or if,  business  expansion  will  occur , or when,  or if,
financial lucrative  opportunities present themselves.  If funds are required in
the future,  they may be generated  from stock sales,  debt issuance or from the
mortgaging of real estate. There can be no assurance that any such funds will be
available on favorable terms and conditions when the capital is required.

From January  through  August,  1999, the Company raised  $557,500 from the sale
and/or  conversion  into  Common  Stock of senior  subordinated  debentures.  In
addition,  the Company  raised  $211,500 from the sale of its  restricted  stock
during the 1999 fiscal year.

On  April  1,  2000,  the  Company  acquired,   in  a  transaction  exempt  from
registration,  eighty  percent of the common stock of Encore  Services,  Inc., a
Florida  Corporation,  in exchange for (a) 250,000 shares of the Company's $.001
par value Common Stock issued to Braulio  Gutierrez,  and (b) an assignment  and
assumption agreement with Encore Services, Inc. whereby, with the assent of HLKT
Holdings,  L.L.C., Encore Services, Inc. assigned to the Company and the Company
irrevocably and unconditionally assumed all the rights and obligations of Encore
Services,  Inc. under a $1,000,000  Convertible  Debenture  previously issued by
Encore Services,  Inc. to HLKT Holdings,  L.L.C.,  a Colorado Limited  Liability
Company,  on March 15, 2000.  Commencing  April 12, 2000 and continuing  through
June 28, 2000, the total  $1,000,000  face amount of the Debenture was presented
to the Company's  transfer agent for conversion in accordance  with the terms of
the  Debenture  to  unrestricted  $.001 par value  Common  Stock of the  Company
pursuant to the assignment and assumption agreement with Encore Services, Inc. A
total of 28,856,464  shares of the  Company's  $.001 par value Common Stock were
exchanged for the $1,000,000 Debenture,  and an additional 140,023 shares of the
Company's  $.001 par value  Common  Stock  were  issued in  payment  of  accrued
interest on the Debenture.

                                       15
<PAGE>


On September 25, 2000, the Company's wholly owned  subsidiary,  2217 Acquisition
Inc.  ("2217  Acquisition"),  entered into an  arm's-length  contract (the "Real
Estate  Contract")  with an  unaffiliated  entity to  purchase  a parcel of real
estate  (the  "Real  Estate")  located at 2270  Southwest  32nd  Avenue,  Miami,
Florida.  To fund the acquisition of the Real Estate,  on October 10, 2000, 2217
Acquisition  issued its 8% Series A $1,000,000 Senior  Subordinated  Convertible
Redeemable  Debenture due October 10, 2002 (the "2217  Acquisition  Debenture"),
together with underlying  shares of 2217  Acquisition's  common stock, par value
$0.001,  into which the 2217  Acquisition  Debenture is convertible from time to
time.  After  deducting  the  expenses of the  investment,  including  projected
interest  payments,  the  net  proceeds  to  be  received  by  2217  Acquisition
aggregated  approximately  $795,000.  The first  installment  of  proceeds  were
received on October 27, 2000; the second have yet to be received. From these net
proceeds,  $300,000 was used to make the down  payment on the Real Estate,  with
the  balance  of the  purchase  price to be funded  by a  purchase  money  first
mortgage on the Real Estate given to the Seller and a new mortgage from a Miami,
Florida,  lending  institution,  the terms of which have yet to be decided upon.
The balance of the net proceeds were  allocated to, and will be used as, working
capital.

     ENVIRONMENTAL MATTERS
     ---------------------

Under federal, state, and local environmental laws, ordinances, and regulations,
the  Company may be liable for removal or  remediation  costs,  as well as other
costs  (such as  fines or  injuries  to  persons  and  property)  where  Company
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 the Company for personal injury  associated with those  materials.
The Company is not aware of any  liability  relating to these matters that would
have a material adverse effect on our business,  financial position,  or results
of operations.

     INCOME TAXES
     ------------

Deferred tax assets and liabilities are recognized for the estimated  future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases. The Company has net operating losses (NOL) of approximately $1,000,000.

        Deferred tax benefit (34% statutory rate)            $340,000
        Valuation Allowance                                  $340,000
                                                             --------
        Net Benefit                                          $  - 0 -
                                                             ========

Due to the  uncertainty  of utilizing the NOL and  recognizing  the deferred tax
benefit, an offsetting valuation allowance has been provided.

(e)  RESULTS OF OPERATIONS:

Fiscal Year Ended September 30, 2000

Subsequent  to the year ended  September  30,  2000,  the  Company  changed  its
operational  direction  from that of building or remodeling  relatively low cost
"starter" homes to the business of developing multifamily housing projects. As a
result of this change in operations,  although  projects are in the  development
stage,  only limited  revenues  were  generated in the twelve month period ended
September  30, 2000.  The  Company's  financial  statements  are  therefore  not
indicative of anticipated  revenues which may be attained or expenditures  which
may be incurred by the Company in future  periods.  For the year ended September
30,  2000,  the Company  recorded a net loss before  other income and expense of
$588,712  and a net loss of $541,757  with a net loss per common share of $0.02.
For the year ended  September 30, 1999,  the Company  recorded a net loss before
other income and expense of $253,873 and a net loss of $259,509  with a net loss
per common share of $0.08. As of September 30, 2000, the Company incurred direct
operating  expenses of $591,066  associated with the  administration and limited
operations  of the  Company  compared  to  $509,543  reported  in the year ended
September 30, 1999, an increase of $81,523 from similar expenses incurred during
the year ended September 30, 1999. The major reasons for the increase in expense
were due to  increased  size of real estate  development  operations,  legal and
consulting  fees  related to  subsidiary  acquisitions,  fees related to capital
acquired through debenture conversion transactions and compensation to officers.
The Company had net other income of $17,950 after interest expense from interest
earned and other miscellaneous sources.

Fiscal Year Ended September 30, 1999

During the year ended  September 30, 1999, the Company  changed its  operational
direction  from that of building or  remodeling  relatively  low cost  "starter"
homes to the business of developing multifamily housing projects. As a result of
this change in

                                       16
<PAGE>


operations,  although  projects  were in the  development  stage,  only  limited
revenues were generated in the twelve month period ended September 30, 1999. For
the year ended September 30, 1999, the Company  recorded a net loss before other
income and  expense of $253,873  and a net loss of $259,509  with a net loss per
common  share of $0.08.  For the year ended  September  30,  1998,  the  Company
recorded a net loss before  other  income and expense of $347,396 and a net loss
of $344,064 with a net loss per common share of $0.35.  As of September 30, 1999
the Company incurred direct operating  expenses of $509,543  associated with the
administration  and  limited  operations  of the  Company  compared  to $118,459
reported  in the year  ended  September  30,  1998.  The major  reasons  for the
increase  in  expense  were due to  increased  size of real  estate  development
operations,  legal and consulting fees related to subsidiary acquisitions,  fees
related  to capital  acquired  through  debenture  conversion  transactions  and
increases  in  compensation  to officers.  The Company had net other  expense of
$5,636 after interest income from interest expense.

     Impact of Recently Issued Accounting Standards

The Company has adopted the Statement of Financial  Accounting  Standards  Board
(SFAS)  No.  130,  "Reporting   Comprehensive  Income,"  issued  in  June  1997.
Comprehensive  income  includes  net income and all  changes in an  enterprise's
other  comprehensive  income  including,  among other things,  foreign  currency
translation  adjustments and unrealized gains and losses on certain  investments
in  debt  and  equity  securities.  The  Company  also  adopted  SFAS  No.  131,
"Disclosures  about  Segments of an Enterprise  and Related  Information."  This
Statement  establishes  standards  for  reporting  information  about  operating
segments in annual financial statements,  and requires that an enterprise report
selected  information  about  operating  segments in interim  reports  issued to
shareholders.  The Company does not expect the adoption of these  statements  to
have a material impact on its financial condition or results of operations.

The Company  adopted SFAS No. 128,  "Earnings  Per Share,"  which  specifies the
method of computation,  presentation and disclosure for Earnings Per Share. SFAS
No. 128 requires the presentation of two EPS amounts,  basic and diluted.  Basic
EPS is calculated by dividing net income (loss) by the weighted  average  number
of common shares  outstanding for the period.  Diluted EPS includes the dilution
that would occur if outstanding stock options and other dilutive securities were
exercised and is comparable  to the EPS the Company has  historically  reported.
The diluted EPS  calculation  excludes  the effect of stock  options  when their
exercise  prices  exceed the average  market price over the period.  There is no
change in loss per share because diluted EPS is anti-dilutive.

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities,"  which defines
derivatives,  requires  derivatives  be carried at fair value,  and provides for
hedge  accounting when certain  conditions are met. This statement was effective
beginning  in the year 2000.  The  adoption  of this  statement  did not have an
impact on the Company's its consolidated financial statements.

In April 1998, the AICPA finalized SOP 98-5, "Reporting on the Costs of Start-Up
Activities,"  which  requires that costs  incurred for start-up  activities,  be
expensed as incurred.  This SOP,  which was  effective  in the first  quarter of
1999, is not expected to have a material  impact on the  consolidated  financial
statements.

ITEM 6A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of the date hereof,  all the  Company's  long term debt bears fixed  interest
rates;  however,  the fair market  value of this debt is sensitive to changes in
prevailing  rates.  The Company runs the risk that market rates will decline and
the required  payments will exceed those based on the current  market rate.  The
Company does not use interest rate derivative instruments to manage its exposure
to interest rate changes.

ITEM 7.  FINANCIAL STATEMENTS

Financial statements meeting the requirements of Item 310 of Regulation S-B, for
the years ending  September  30, 1999 and  September  30, 2000,  which have been
audited and reported upon by Baum & Company,  Certified Public Accountants,  are
annexed as a separate section to this Report, designated pages F-1 through F-12.

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

None


                                       17
<PAGE>



                                    PART III

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

(a)  IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS.

The following table sets forth:  (1) names and ages of all persons who presently
are  Directors of the Company;  (2) all  positions  and offices with the Company
held by each  such  person;  (3) the term or office  of each  person  named as a
Director; and (4) any period during which he or she has served as such:

             NAME               AGE          POSITIONS WITH THE COMPANY

     Richard Astrom             53       Director, CEO and President
                                         Since 1994

     Christopher Astrom         28       Director, VP,  Secretary, Treasurer
                                         Since 1994

     Braulio Gutierrez          47       Director
                                         Since April 2000

There is no understanding or arrangement  between any Directors or any person or
persons pursuant to which such individual was or is to be selected as a Director
or nominee of the Company.

Each Director is serving a term of office,  which shall  continue until the next
annual meeting of Shareholders and until his successor has been duly elected and
qualified.  Officers  of the  Company  serve  at the  pleasure  of the  Board of
Directors.

(b)  BUSINESS EXPERIENCE:

The following is a brief account of the experience,  during the past five years,
of each Director and executive officer of the Company:

Richard Astrom - Qualifications

Richard  Astrom  currently  serves as  President,  Chief  Executive  Officer and
Chairman of the Board of Directors of the Company.  He has extensive  experience
in the first-time home buyer's market.  Throughout his career in real estate, he
has  devoted  himself  to the  needs  of  people  seeking  to own a piece of the
American  dream.  Mr.  Astrom is a graduate  of the  University  of Miami with a
Bachelor's  degree  in  Business  Administration  and a major in  Finance.  As a
certified  real estate broker,  he has been active as a salesperson,  developer,
and real estate  investor since 1969. For more than 25 years, he has specialized
in rehabilitating  the existing housing stock of Miami, one of America's largest
and fastest growing cities. He gained invaluable experience outside of the Miami
area in the roll of vice  president and sales  manager of a 200 home  retirement
community in Ocala, Florida,  selling land and home packages. He was the primary
developer of the land,  recreation  facilities,  and housing stock. He also sold
commercial  properties  and land in the same  area,  including  40 to 100  acres
parcels for horse farms.  He has directed  the Company  through a December  1994
merger  with a  publicly  owned and  traded  company.  Richard  Astrom  has been
President of the Company since 1993.

Christopher Astrom - Qualifications

Christopher Astrom currently serves as Vice President,  Secretary, Treasurer and
Director of the Company. Christopher manages all corporate acquisitions.  He has
experience  in the  analysis  of  market  areas  and their  resale  ability.  In
addition,  he has developed  management  systems to control costs of acquisition
and rehab thereby helping to ensure our profitability.  He received his Bachelor
of Arts in Business Administration from the School of Business at the University
of Florida. Christopher Astrom has been employed by the Company since 1995.

Braulio Gutierrez  - Qualifications

Braulio Gutierrez currently serves as a Director of the Company and President of
Encore Services,  Inc., a subsidiary of the Company.  Mr. Braulio has twenty two
years of  supervisory  and  construction  management  experience  in the  Miami,
Florida area and has been a

                                       18
<PAGE>


Florida Certified  Construction  Contractor since 1980. Mr. Braulio has been the
qualifying  agent and  President  of Encore  Services,  Inc.,  a custom home and
residential apartment builder since 1988. Encore Services,  Inc. was acquired as
an  eighty  percent  owned  subsidiary  of the  Company  on April 1,  2000.  Mr.
Gutierrez was appointed as a Director of the Company on April 1, 2000.

(c)  IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES AND CONSULTANTS:

None

(d)  FAMILY RELATIONSHIPS:

Richard Astrom and Christopher  Astrom, both of whom are officers and Directors,
are father and son.

(e)  INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS:

No event listed in Subparagraphs (1) through (4) of Subparagraph (d) of Item 401
of Regulation S-B, has occurred with respect to any present executive officer or
Director  of the  Company  during the past five years  which is  material  to an
evaluation of the ability or integrity of such Director or officer.

(f)  COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT:

To the date of this filing and to the best of knowledge  of the Company,  Form 3
has been filed by its current  officers and  Directors,  Form 4 filings have not
been  required,  and no  supplemental  Form 5 had been filed with the Securities
Exchange  Commission  (SEC)  by any of its  current  officers  or  Directors  at
September  30, 2000.  As of the date of this  report,  the SEC has not taken any
additional action with regard to any failure to file reports

ITEM 10.  EXECUTIVE COMPENSATION.

(a)  GENERAL:

(1) through (7) All Compensation Covered. During the fiscal year ended September
30, 2000, the Company  employed the following  senior  management  personnel who
served pursuant to employment agreements further described in Section (g) below.

(b)  SUMMARY COMPENSATION TABLE:

No employee of the Company other than Richard Astrom,  its CEO, earned in excess
of $100,000  during the fiscal years ended  September 30, 1999 and September 30,
2000.

                           SUMMARY COMPENSATION TABLE

                           ANNUAL COMPENSATION   LONG TERM COMPENSATION
                          --------------------   ----------------------

Name and Position   Year  Salary  Bonus  Other   SAR    Options    LTIP    Other
-----------------   ----  ------  -----  -----   ---    -------    ----    -----

Richard Astrom,     2000 $50,000  None   None    None     None     None    None
CEO and President   1999 $60,000  None   None    None     None     None    None

 (c )  OPTION/SAR  GRANT  TABLE:

During the fiscal years ended  September 30, 1999 and 2000, no effective  grants
of stock options or freestanding SAR's were made by the Company.

(d)  AGGREGATE OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE:

No stock options or freestanding  SAR's are issued or outstanding.  Accordingly,
and  during the  fiscal  year ended  September  30,  2000,  no stock  options or
freestanding SAR's were exercised.


                                       19
<PAGE>


(f)  COMPENSATION  OF DIRECTORS:

(1) and (2). During the fiscal year ended September 30, 2000, no Director of the
Company received any compensation in his capacity as Director.

(g) EMPLOYMENT  CONTRACTS AND TERMINATION OF EMPLOYMENT,  AND CHANGE-IN  CONTROL
ARRANGEMENTS:

Report on Repricing of Options/SAR's.

No stock options or freestanding SAR's were issued or outstanding.  Accordingly,
during  the  fiscal  year  ended   September  30,  2000,  no  stock  options  or
freestanding SAR's were repriced.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:

The  information  is furnished as of January 4, 2001, as to the number of shares
of the Company's Common Stock, $.001 par value per share owned beneficially,  or
is known by the Company to be owned beneficially, by persons owning more than 5%
of any class of such  security  who is not also an  Officer or  Director  of the
Company:

The Company is currently  authorized to issue 250,000,000 common shares,  $0.001
par value,  76,974,119 of which are outstanding at the date of this report,  and
the  Company is also  authorized  to issue  2,000,000  shares of $.001 par value
Class A common "super voting shares",  with voting right equivalent to 20 common
shares for each Class A share, 1,000,000 of which are outstanding at the date of
this report.

<TABLE>
<CAPTION>
                         Name and Address of      Amount and Nature of
   Title of Class        Beneficial Owner (1)     Beneficial Ownership   Percent of Class
   --------------        --------------------     --------------------   ----------------

<S>                   <C>                               <C>                   <C>
Common Stock          Richard and Pamela Astrom           254,350               0.3%
                      11415 NW 123 Lane
Class A Common Stock  Reddick, FL  32686                        0               0.0%

Common Stock          Christopher Astrom                6,010,000(1)            7.8%
                      11415 NW 123 Lane
Class A Common Stock  Reddick, FL  32686                1,000,000(2)          100.0%

Common Stock          Braulio Gutierrez                   250,000               0.3%
                      2921 N.W. 6th Avenue
Class A Common Stock  Miami, FL  33127                          0               0.0%

Common Stock          All Officers and Directors        6,514,350               8.5%
                      As a Group (3 persons)
Class A Common Stock                                    1,000,000             100.0%

--------------------
<FN>
(1)  Includes  Common  Stock  obtained  by the  exercise  of  options to acquire
     6,000,000  shares of Common Stock at a price of $.001 per share on April 3,
     2000.  The  options  recently  exercised  by Mr.  Christopher  Astrom  were
     authorized and awarded to him on March 1, 1999 in consideration  for waiver
     of compensation during 1996 and 1997.
</FN>
<FN>

(2)  Each share of Class A Common Stock entitles Mr.  Christopher  Astrom to the
     equivalent  of 20 common  share  votes in any  matter to be voted on by the
     shareholders  of the Company.  The Class A Common Stock was  authorized  on
     June 17, 1999,  and 1,000,000  shares issued to Mr.  Christopher  Astrom on
     June 17, 1999.  The Class A Common Stock may not be  transferred  to anyone
     other than a family member.
</FN>

</TABLE>



                                       20
<PAGE>


(b)  SECURITY OWNERSHIP OF MANAGEMENT:

The  information  is furnished as of January 4, 2001, as to the number of shares
of the Company's  Common  Stock,  $.001 par value per share as well as shares of
the $.001 par value Class A common  "super  voting  shares",  with voting  right
equivalent to 20 common shares for each Class A share,  owned by each  executive
officer and Director of the Company and by all executive  officers and Directors
as a group:

<TABLE>
<CAPTION>

                         Name and Address of      Amount and Nature of
   Title of Class        Beneficial Owner (1)     Beneficial Ownership   Percent of Class
   --------------        --------------------     --------------------   ----------------
<S>                    <C>                              <C>                    <C>
Common Stock           Richard and Pamela Astrom          254,350                0.3%
                       11415 NW 123 Lane
Class A Common Stock   Reddick, FL  32686                       0                0.0%

Common Stock           Christopher Astrom               6,010,000(1)             7.8%
                       11415 NW 123 Lane
Class A Common Stock   Reddick, FL  32686               1,000,000(2)           100.0%

Common Stock           Braulio Gutierrez                  250,000                0.3%
                       2921 N.W. 6th Avenue
Class A Common Stock   Miami, FL  33127                         0                0.0%

Common Stock           All Officers and Directors       6,514,350                8.5%
                       As a Group (3 persons)
Class A Common Stock                                    1,000,000              100.0%

--------------------
<FN>
(1)  Includes  Common  Stock  obtained  by the  exercise  of  options to acquire
     6,000,000  shares of Common Stock at a price of $.001 per share on April 3,
     2000.  The  options  recently  exercised  by Mr.  Christopher  Astrom  were
     authorized and awarded to him on March 1, 1999 in consideration  for waiver
     of compensation during 1996 and 1997.
</FN>
<FN>

(2)  Each share of Class A Common Stock entitles Mr.  Christopher  Astrom to the
     equivalent  of 20 common  share  votes in any  matter to be voted on by the
     shareholders  of the Company.  The Class A Common Stock was  authorized  on
     June 17, 1999,  and 1,000,000  shares issued to Mr.  Christopher  Astrom on
     June 17, 1999.  The Class A Common Stock may not be  transferred  to anyone
     other than a family member.
</FN>
</TABLE>

(c)  CHANGES IN CONTROL:

As of the date of this Report,  the Company has not entered into any agreements,
the operation of which may at a subsequent date result in a change of control of
the Company.

The  Company  knows of no  arrangement,  including  the  pledge by any person of
securities of the Company,  which may at a subsequent date result in a change of
control of the Company.

ITEM   12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     CERTAIN TRANSACTIONS
     --------------------

Richard  Astrom,  President,  CEO and  Director,  is the  father of  Christopher
Astrom,  Vice  President,  Secretary,  Treasurer and  Director,  of the Company.
Richard  Astrom and  Christopher  Astrom  make up the  majority  of the Board of
Directors of the Company and control the  activities and actions of the Company.
Richard  Astrom and  Christopher  Astrom are  required by lenders to  personally
guarantee  mortgage loans obtained by the Company in its real estate development
projects.

On March 1, 1999,  Christopher  Astrom was granted options to acquire  6,000,000
shares of Common  Stock at a price of $.001 per  share.  On April 3,  2000,  Mr.
Astrom exercised his option and acquired 6,000,000 shares of the Company's $.001
par value Common Stock for payment of $6,000.  These options were authorized and
awarded to Mr. Christopher Astrom by a written consent

                                       21
<PAGE>


in lieu of combined special meeting of Directors and Shareholders  held on March
1, 1999. The options were granted to  Christopher  Astrom in  consideration  for
waiver of compensation during 1996 and 1997.

In April  1999,  the  Company  sold and issued  senior  subordinated  debentures
convertible into shares of Common Stock. As of July 31, 1999,  restricted Common
Stock  totaling  approximately  $211,500 was issued and paid for. An  additional
amount  of  approximately  $257,500  worth  of  Common  Stock  was  issued  upon
conversion  of the April 1999  debentures,  and in August  1999,  an  additional
amount of approximately $300,000 was received from the debenture conversion.  As
of the date of this  report,  6,000,000  shares of our  Common  Stock  have been
issued  as a result of  conversion  of  previously  issued  senior  subordinated
convertible debentures.

On June 17, 1999, by a written  consent in lieu of combined  special  meeting of
Directors and Shareholders,  a new class of Common Stock, "Class A Common Stock"
was authorized on June 17, 1999. On that same date, 1,000,000 shares were issued
to Mr.  Christopher  Astrom.  Each share of Class A Common  Stock  entitles  Mr.
Astrom to the  equivalent  of 20 common share votes in any matter to be voted on
by the  shareholders of the Company.  The present  principal  shareholders  will
maintain  voting control of the Company based on the issuance of 1,000,000 Class
A common shares on June 17, 1999, which entitle the holder thereof  (Christopher
Astrom) to 20 votes for every Class A share held.  The purpose of issuing  these
shares is to ensure that current management will maintain control of the Company
despite maintaining  beneficial  ownership of less than a majority of the shares
of the  Company's  Common  Stock.  An  additional  1,000,000  of the  authorized
2,000,000 shares of Class A Common Stock is available for issuance.  The Class A
Common Stock is non-transferable except to a family member.

On February 10, 2000, the Company  entered into a consulting  agreement  between
the  Company  and the  following  individual  professional  persons who acted as
consultants to the Company: M. Richard Cutler, Brian A. Lebrecht,  Vi Bui, James
Stubler,  and Samuel Eisenberg for services involving  consultation,  advice and
counsel with respect to the  negotiation  and  completion of the stock  exchange
between the Company and MAS XV. In addition to cash compensation,  the agreement
called for issuance of a total of 500,000  shares of the Company to be issued to
the  consultants  together with an  obligation  for the Company to register such
shares on Form S-8 at the Company's sole expense.  This obligation was completed
in February 2000.

As was  reported  on Form 8-K  dated  February  14,  2000,  pursuant  to a Stock
Exchange  Agreement  (the "Exchange  Agreement")  dated as of February 10, 2000,
between MRC Legal Services Corporation,  a California Corporation,  which entity
is the  controlling  shareholder  of MAS  Acquisition  XV Corp.  ("MAS XV"),  an
Indiana corporation,  and National Rehab Properties, Inc., a Nevada corporation,
approximately 96.8% (8,250,000 shares) of the outstanding shares of common stock
of MAS Acquisition XV Corp. were exchanged for 1,000,000  shares of Common Stock
of National Rehab Properties,  Inc. in a transaction in which the Company became
the parent corporation of MAS XV. The additional shares representing 3.2% of MAS
XV were  subsequently  acquired  by the  Company,  making MAS XV a wholly  owned
subsidiary of the Company.

On  April  1,  2000,  the  Company  acquired,   in  a  transaction  exempt  from
registration,  eighty  percent of the common stock of Encore  Services,  Inc., a
Florida  Corporation,  in exchange for (a) 250,000 shares of the Company's $.001
par value Common Stock issued to Braulio  Gutierrez,  and (b) an assignment  and
assumption agreement with Encore Services, Inc. whereby, with the assent of HLKT
Holdings,  L.L.C., Encore Services, Inc. assigned to the Company and the Company
irrevocably and unconditionally assumed all the rights and obligations of Encore
Services,  Inc. under a $1,000,000  Convertible  Debenture  previously issued by
Encore Services,  Inc. to HLKT Holdings,  L.L.C.,  a Colorado Limited  Liability
Company,  on March 15, 2000. On April 1, 2000, Mr.  Gutierrez was appointed as a
Director of the Company.  Commencing April 12, 2000, and continuing through June
28, 2000, the total $1,000,000 face amount of the Debenture was presented to the
Company's  transfer  agent for  conversion in  accordance  with the terms of the
Debenture to unrestricted  $.001 par value Common Stock of the Company  pursuant
to the assignment and assumption agreement with Encore Services, Inc. A total of
28,856,464  shares of the Company's  $.001 par value Common Stock were exchanged
for the $1,000,000 Debenture,  and an additional 140,023 shares of the Company's
$.001 par value Common  Stock were issued in payment of accrued  interest on the
Debenture.

The President of the Company,  Richard Astrom owed the Company $302,000 pursuant
to a note which  matured  September  20, 2000.  Pursuant to an  agreement  dated
September  29,  2000,  entitled  "Prepaid  Management  Agreement,"  the previous
$302,000  note was  cancelled  and a new  arrangement  for the  repayment of the
$302,000  note was  created.  The  Company and  Richard  Astrom  agreed that the
$302,000  debt by  Richard  Astrom  to the  Company  will be  repaid  under  the
following terms:  Beginning  January 1, 2001, for the next five years, the first
$60,400 (plus an additional amount equal to the accrued interest on the unearned
portion of the contract balance,  calculated at the rate of 8% per annum) of his
annual  compensation  from the  Company  will be  withheld by the Company and be
applied  against the $302,000 item each year.  This  agreement is made a part of
any existing  agreements,  whether oral or written, for compensation between the
Company and Richard Astrom as well as any future compensation agreements between
the Company and Richard Astrom.

                                       22
<PAGE>


On  September  22, 2000,  the Company  formed a wholly  owned  subsidiary,  2217
Acquisition  Inc.,  a Florida  Corporation.  As was  reported  on Form 8-K dated
November  14, 2000,  on  September  25, 2000,  the  Company's  subsidiary,  2217
Acquisition  Inc. ("2217  Acquisition"),  entered into an arm's-length  contract
(the "Real Estate Contract") with an unaffiliated entity to purchase a parcel of
real estate (the "Real Estate")  located at 2270  Southwest 32nd Avenue,  Miami,
Florida.  To fund the acquisition of the Real Estate,  on October 10, 2000, 2217
Acquisition  issued its 8% Series A $1,000,000 Senior  Subordinated  Convertible
Redeemable  Debenture due October 10, 2002 (the "2217  Acquisition  Debenture"),
together with underlying  shares of 2217  Acquisition's  common stock, par value
$0.001,  into which the 2217  Acquisition  Debenture is convertible from time to
time.  After  deducting  the  expenses of the  investment,  including  projected
interest  payments,  the  net  proceeds  to  be  received  by  2217  Acquisition
aggregated  approximately  $795,000.  The first  installment  of  proceeds  were
received on October 27, 2000; the second have yet to be received. From these net
proceeds,  $300,000 was used to make the down  payment on the Real Estate,  with
the  balance  of the  purchase  price to be funded  by a  purchase  money  first
mortgage on the Real Estate given to the Seller and a new mortgage from a Miami,
Florida,  lending  institution,  the terms of which have yet to be decided upon.
Following the acquisition of the Real Estate by 2217 Acquisition, on October 31,
2000,  2217  Acquisition  was merged into the  Company.  By operation of law and
pursuant to the Plan of Merger,  the rights and obligations of 2217  Acquisition
with respect to the Real Estate Contract and the 2217 Acquisition Debenture will
inure to the benefit of and be binding upon the Company. In that connection, the
2217  Acquisition  Debenture,  together  with  the  underlying  shares  of  2217
Acquisition's  Common  Stock,  par value  $0.001 per share,  into which the 2217
Acquisition  Debenture is convertible from time to time, shall be converted into
an identical debenture (the "New Debenture"), together with shares of underlying
Common  Stock,  par value  $0.001 per share,  of the Company  into which the New
Debenture may be converted.

The Company has entered into construction  contracts  totaling  $10,934,000 with
Encore  Builders,  Inc.,  a  corporation  wholly owned by Braulio  Gutierrez,  a
Director of the Company.  Mr. Gutierrez is also a minority shareholder of Encore
Services,  Inc. Encore Services,  Inc. is a subsidiary of the Company,  in which
the Company owns 80% equity and Mr. Gutierrez owns 20% equity.

The Company  shares  offices with Encore  Builders,  Inc., a corporation  wholly
owned by, Braulio Gutierrez, a Director of the Company. The Company pays no rent
for its space.  Encore Builders,  Inc. leases  approximately 4000 square feet of
combination  warehouse and executive office space at 2921 NW 6th Avenue,  Miami,
Florida 33127. Approximately six hundred square feet of office space is utilized
by the Company.

Except for the foregoing and during the fiscal year ended September 30, 2000, no
officer, Director or relative or spouse of the foregoing persons or any relative
of such person who has the same home as such  person,  or is a Director or other
officer of any parent or subsidiary of the Company,  or any shareholder known by
the Company to own of record or beneficially  more than five (5%) percent of the
Company's  Common  Stock,  had a direct or  indirect  material  interest  in any
transaction or presently proposed transaction to which the Company or any of its
parents or subsidiaries was or is a party.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.  The following documents are filed herewith or incorporated herein
by reference as Exhibits:

2.0     Acquisition of Encore Services, Inc. dated April 1, 2000.

2.1     Merger  Agreement  between  2217  Acquisition,  Inc.  and National Rehab
Properties, Inc. dated October 11, 2000.  Incorporated by  reference to Form 8-K
filed November 17, 2000.

3.1     Articles of  Incorporation.  (1)

3.2     Articles of Amendment to Articles of Incorporation.

3.3     Certificate of Change in Number of Authorized Shares.

3.4     By-laws.  (1)

10.01   Consulting Agreement dated February 10, 2000. (1)

10.02   Written  Consent  in  Lieu  of Combined Special Meeting of Directors and
Shareholders dated June 17, 1999. (1)

10.03   Written  Consent  in  Lieu  of Combined Special Meeting of Directors and
Shareholders dated March 1, 1999. (1)

                                       23
<PAGE>


10.04   Prepaid Management Agreement dated September 29, 2000.

16.1    Consent of Baum & Company, P.A., Certified Public Accountants.

21      Subsidiaries of the registrant.

21.1    Mas Acquisition  XV Corp., an Indiana Corporation.

21.2    Encore Services, Inc., a Florida Corporation.

21.3    Granada Grand, Inc., a Florida Corporation.

21.4    Conquistador Maza, Inc., a Florida Corporation.

27      Financial Data Schedule.
--------------------
(1)  Incorporated  by reference to exhibits  filed with the  Company's  Form 8-K
filed February 14, 2000.

(b) The Company filed one report on Form 8-K during the quarter ended  September
30,  2000,  and two reports on Form 8-K from  September  30, 2000 to the date of
this report.


                                   SIGNATURES

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

                                      NATIONAL RESIDENTIAL PROPERTIES, INC.

Date:   01/11/01                      By       s/s Richard Astrom
                Chief Executive Officer, ___________________________________
                                         Richard Astrom, President and CEO

                                      By:      s/s Christopher Astrom
                Chief Financial Officer, ___________________________________
                                         Christopher Astrom, Secretary
                                         and Treasurer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by each Director.

Date:   01/11/01

                                       By       s/s Richard Astrom
                                         -----------------------------------
                                         Richard Astrom, Director

                                       By:      s/s Christopher Astrom
                                          -----------------------------------
                                          Christopher Astrom, Director

                                       By:      s/s Braulio Gutierrez
                                          -----------------------------------
                                          Braulio Gutierrez, Director


                                       24
<PAGE>


Exhibit 2.0
                            SHARE EXCHANGE AGREEMENT


SHARE EXCHANGE  AGREEMENT dated as of April 1, 2000 (Agreement),  among National
Rehab Properties,  Inc., a Nevada corporation (NRPI), Encore Services, Inc. (the
Company), a Florida corporation,  and Braulio Gutierrez, the sole shareholder of
the Company (Shareholder).

BACKGROUND

The  respective  Boards of Directors of NRPI and the Company have each approved,
upon the terms and subject to the  conditions set forth in this  Agreement,  the
share exchange  between NRPI and the Company whereby eighty (80%) percent of the
issued and  outstanding  shares of stock of the Company  will be  exchanged  for
shares of Common Stock,  as defined below,  to be issued by NRPI as set forth in
Article 11 and by which the Company shall become a subsidiary of NRPI.

In consideration of the respective  representations,  warranties,  covenants and
agreements  contained in this Agreement,  NRPI, the Company, and the Shareholder
hereby agree as follows:


                                    ARTICLE I
                               THE SHARE EXCHANGE

1.01 The Share  Exchange.  Upon the terms and subject to the conditions  hereof,
     the  Company  shall  become  a  subsidiary  of NRPI  upon  closing  of this
     Agreement subject to the conditions set forth in Article VI.

1.02 Effective  Time.  This  Agreement  shall  become  effective  at  such  time
     (Effective Time) as the conditions set forth in Article VI are satisfied or
     waived, if permissible.

1.03 Shares. At or prior to the Effective Time, by virtue of this Agreement, the
     following events shall occur.

     a)   Eighty (80%)  percent of the issued and  outstanding  shares of common
          stock of the Company  shall be assigned,  transferred  and conveyed to
          NRPI.

     b)   In exchange thereof:

          (1)  NRPl shall issue from its treasury  250,000  shares of its common
               stock (Common Stock).  The Common Stock shall be restricted stock
               as  that  term  is  defined  in Rule  144 of the  Securities  and
               Exchange Commission (SEC) and shall be issued to the Shareholder;
               and

          (2)  NRPI  shall  deposit  in the  Company's  brokerage  account to be
               designated  shares  of  stock in a  publicly  traded  company  or
               companies  to be  selected  by NRPI  having  a  market  value  of
               $300,000, which shares shall be held therein and used as security
               for performance  bonds which the Company is required to obtain in
               connection  with  construction  projects to be  undertaken by the
               Company (Security  Shares).  NRPI shall maintain the value of the
               Security  Shares at $300,000  based upon the closing price of the
               Security Shares on the last Friday of each month.

                                       25
<PAGE>



1.04 Private Placement.

     (a)  The Common Stock issued to the  Shareholder  has not been and will not
          be registered with the Securities and Exchange Commission (SEC) or the
          securities  commission  of any  states,  including  but not limited to
          Florida and Nevada,  pursuant to an  exemption  from  registration  by
          virtue of NRPI's intended compliance with the provisions Sections 4(2)
          and 4(6) of the Securities Act of 1933, as amended (Securities Act).

                                   ARTICLE II
                               EXCHANGE OF SHARES

2.01 Issuance of  Certificates.  Promptly after the Effective  Time,  NRPI shall
     issue  to  each  person  set  forth  on  Exhibit   1.03(b)  a   certificate
     representing  the  Common  Stock  to be  issued  to  each  Shareholder  and
     simultaneously  the  Company  shall  exchange  and  surrender  certificates
     representing eighty (80%) of the issued and outstanding shares in Encore.


                                   ARTICLE III
                        REPRESENTATIONS AND WARRANTIES OF
                                      NRPI

NRPI represents and warrants to the Company as of the date of this Agreement and
as of the Effective Time as follows:

3.01 Existence: Good Standing. NRPI is a corporation duly incorporated,  validly
     existing  and in  good  standing  under  the  laws of its  jurisdiction  of
     incorporation.

3.02 Capitalization.  The  authorized  capital  stock  of NRPI  consists  of (i)
     40,000,000  shares of Common Stock,  par value $ 0.001, of which 14,000,000
     shares are issued and  outstanding  (Shares) and (ii)  2,000,000  shares of
     Class A  Stock,  par  value $ 0.001,  of which  1,000,000  are  issued  and
     outstanding.  All issued and outstanding shares of Common Stock and Class A
     Voting  Stock  are duly  authorized,  validly  issued,  free of  preemptive
     rights,  non-assessable and free of preemptive rights.  Except as set forth
     in this section 3.02, (i) NRPI is not a party to or bound by any written or
     oral contract or agreement which grants to any person an option, warrant or
     right of first  refusal or other right of any  character  to acquire at any
     time, or upon the happening of any stated events, any shares of or interest
     in NRPI, whether or not presently  authorized,  issued or outstanding,  and
     (ii) there are  outstanding  (a) no shares of capital stock or other voting
     securities of NRPI,  (b) no  securities of NRPI or any of its  subsidiaries
     convertible  into or  exchangeable  for shares of  capital  stock or voting
     securities of NRPI,  (c) no options or other rights to acquire from NRPI or
     any  of  its  subsidiaries,  and  no  obligations  of  NRPI  or  any of its
     subsidiaries to issue, any capital stock,  voting  securities or securities
     convertible into or exchangeable for capital stock or voting  securities of
     NRPI, and (d) no equity equivalents, interests in the ownership or earnings
     of NRPI or any of its  subsidiaries or other similar rights.  Upon issuance
     of the Common Stock to the  Shareholder,  such shares of Common Stock shall
     be duly authorized, validly issued, fully paid, nonassessable,  and free of
     preemptive rights.

3.03 Authorization:  Validity and Effect of  Agreements.  NRPI has the requisite
     corporate  power and authority to execute and deliver this  Agreement.  The
     consummation by NRPI of the transactions  contemplated hereby has been duly
     authorized by all requisite corporate action. This Agreement

                                       26
<PAGE>


     constitutes the valid and legally binding  obligation of NRPI,  enforceable
     in accordance with its terms, subject to applicable bankruptcy, insolvency,
     moratorium or other similar laws relating to creditors'  rights and general
     principles of equity.

3.04 No  Violation.  To the best of NRPI's  knowledge  neither the execution and
     delivery by NRPI of this  Agreement,  nor the  consummation  by NRPI of the
     transactions contemplated hereby in accordance with the terms hereof, will:
     (i) conflict  with or result in a breach of any  provisions of the Articles
     of  Incorporation  or Bylaws of NRPI (ii)  violate,  or conflict  with,  or
     result in a breach of any  provision  of, or  constitute  a default  (or an
     event  which  with  notice  or lapse of time or both,  would  constitute  a
     default)  under,  or result in the termination or in a right of termination
     or cancellation of, or accelerate the performance required by, or result in
     the  triggering  of any  payment of  compensation  under,  or result in the
     creation of any lien, security interest,  charge or encumbrance (Lien) upon
     any of the material properties of NRPI or its subsidiaries under, or result
     in being declared void, voidable, or without further binding effect, any of
     the terms, conditions or provisions of any note, bond, mortgage, indenture,
     deed of trust or any material license,  franchise permit, lease,  contract,
     agreement or other  instrument,  commitment  or obligation to which NRPI or
     any of NRPI's  subsidiaries  is a party,  or by which NRPI or any of NRPI's
     subsidiaries  or any of their  respective  properties is bound or affected,
     except for any of the  foregoing  matters  which  would not have a material
     adverse effect on the business, results of operations,  financial condition
     or prospects of NRPI and its  subsidiaries  taken as a whole (NRPI Material
     Adverse  Effect);  or (iii)  other  than the  filings  required  under  the
     Securities  Exchange Act of 1934,  (Exchange  Act),  the  Securities Act or
     applicable  state  securities  and "Blue Sky" laws or filings in connection
     with  the  maintenance  of  its  qualification  to  do  business  in  other
     jurisdictions,  and  the  filings  contemplated  by  Section  5.02  of this
     Agreement (collectively Regulatory Filings),  require any material consent,
     approval or authorization of or declaration,  filings or registration with,
     any domestic governmental or regulatory authority, the failure to obtain or
     make which would have a NRPI Material Adverse Effect.

3.05 Documents. NRPI has delivered to the Company an audited financial statement
     for the year ended December 31, 1999.  NRPI  represents  that the financial
     statement was prepared in accordance  with  generally  accepted  accounting
     principles, present fairly in all material respects the financial condition
     of NR.PI as of the dates of such  financial  statements  and the results of
     operations  of NRPI  for such  periods.  None of the  Financial  Statements
     contain  any untrue  statement  of a material  fact or omitted to state any
     material fact  necessary to make the  statements  therein,  in light of the
     circumstances under which they were made, not materially misleading.

3.06 No Governmental Action Required. The execution and delivery by NRPI of this
     Agreement does not and will not, and the  consummation of the  transactions
     contemplated  hereby  will not,  require any action by or in respect of, or
     filing  with,  any  governmental  body,  agency or  governmental  official,
     including  but  not  limited  to the  SEC or the  National  Association  of
     Securities  Dealers  (NASD),  except such actions or filings that have been
     undertaken  or made prior to the date hereof and that will be in full force
     and effect (or as to which all applicable  waiting periods have expired) on
     and as of the date hereof or which are not required to be filed on or prior
     to the Effective Date.

3.07 Compliance  with  Applicable  Laws.  The execution and delivery by NR.PI of
     this  Agreement  did not and will not, and the exchange  NRPI's shares will
     not, contravene or constitute a default under or violation of any provision
     of  applicable  law  or  regulation,  or  (ii)  any  agreement,   judgment,
     injunction,  order,  decree or other  instrument  binding upon NRPI, or its
     assets, or result in the creation or imposition of any lien on any asset of
     NRPI.  NRPI is in  compliance  with and  conforms  to all  statutes,  laws,
     ordinances,  rules, regulations,  orders,  restrictions and all other legal
     requirements of any

                                       27
<PAGE>


     domestic  or  foreign  government  or any  instrumentality  thereof  having
     jurisdiction  over the conduct of its  businesses  or the  ownership of its
     properties.  Shareholders,  or any the Company's  assets,  or result in the
     creation or imposition of any lien on any asset of the Company. The Company
     is in  compliance  with and  conforms to all  statutes,  laws,  ordinances,
     rules, regulations,  orders,  restrictions and all other legal requirements
     of any domestic or foreign government or any instrumentality thereof having
     jurisdiction  over the conduct of its  businesses  or the  ownership of its
     properties.

4.08 Taxes.  All United States federal,  state,  county,  municipality  local or
     foreign  income tax returns and all other  material tax returns  (including
     foreign tax returns)  which are required to be filed by or on behalf of the
     Company  have been filed (or will be filed  prior to the  Closing)  and all
     material  taxes due pursuant to such returns or pursuant to any  assessment
     received by the Company have been paid, except those being disputed in good
     faith and for which adequate reserves have been  established.  The charges,
     accruals  and  reserves  on the books of the Company in respect of taxes or
     other governmental charges have been established in accordance with GAAP.

4.09 Assets and Liabilities. There are no liabilities of the Company of any kind
     whatsoever, whether accrued, contingent, absolute, determined, determinable
     or  otherwise.  and there is no  existing  condition,  situation  or set of
     circumstances  which  could  reasonably  be  expected  to  result in such a
     liability,  other than as set forth on Exhibit 4.09(a). The assets owned by
     the Company,  as set forth in Exhibit 4.09(b)  annexed hereto,  at Closing,
     shall be free and clear of any and all liens, claims or other encumbrances.

4.10 No  Litigation.  Neither the Company nor the  Shareholder  is (and have not
     been) a party to any suit, action, arbitration,  or legal,  administrative,
     or other proceeding,  or pending  governmental  investigation.  To the best
     knowledge  of the  Company,  there  is no  basis  for any  such  action  or
     proceeding  and no such  action or  proceeding  is  threatened  against the
     Company and the Company is not subject to or in default with respect to any
     order, writ, injunction, or decree of any federal, state, local, or foreign
     court, department, agency, or instrumentality

4.11 Survival of  Representations.  The representations and warranties herein by
     the Company will be true and correct in all material  respects on and as of
     the  Effective  Time  with  the  same  force  and  effect  as  though  said
     representations  and  warranties  had been made on and as of the  Effective
     Time and will, except, as otherwise provided herein,  survive the Effective
     Time.

4.12 Directors and Officers'  Compensation;  Bank Accounts;  Powers of Attorney.
     Exhibit  4.12  contains  (i)  the  names,  addresses,  and  titles  of  all
     Directors,  officers,  and  employees  of the  Company  and sets  forth the
     monthly  compensation  paid to each of them;  (ii) the name and  address of
     each bank with which the Company has an account or safety  deposit box, the
     identification  number  thereof,  and  the  names  of all  persons  who are
     authorized to draw thereon or have access  thereto;  and (iii) the names of
     persons who have a power of attorney  from the Company and a summary of the
     terms  thereof.  The  resignations  of Elmo  Zimbelmann as President of the
     Company and of G.  Schweitzer  as  Secretary/Treasurer,  annexed as part of
     Exhibit 4.12, are fully effective, true and correct and have not since been
     amended,  modified  or  rescinded.  The sole  Director  of the  Company  is
     Shareholder  and his status as such is fully in accordance with the by-laws
     of the Company and the law of the State of the Company's incorporation.

4.13 Intellectual Property.  Exhibit 4.13 lists all Intellectual Properties used
     or owned by the Company.  Except as set forth on Exhibit 4.13,  the Company
     is the  sole  and  exclusive  owner  of  all  rights  to  the  Intellectual
     Properties used by it in connection  with its business and operations,  the
     same are fully

                                       28
<PAGE>


     assignable  and the  Company  has the  right  to use the same  without  the
     payment of any license fee,  royalty or similar  charge,  (ii) there are no
     other patents, copyrights, trademarks, service marks (whether registered or
     unregistered),  trade names, brand names, know-how,  trade secrets or other
     intellectual properties of a similar nature, or any applications for any of
     the foregoing, that are owned or used by the Company in connection with the
     Business,  (iii)  there is no written  claim of any other  person,  firm or
     corporation or any proceeding  pending  against the Company or, to the best
     knowledge  of  the  Company,   threatened   that  relates  to  any  of  the
     Intellectual  Properties set forth on such Exhibit and the Company knows of
     no basis for any such claim or proceeding,  (iv) none of such  Intellectual
     Properties is subject to any outstanding order, ruling, decree, judgment or
     stipulation  naming the Company by or with any court,  arbitrator  or legal
     authority,  and (v) to the knowledge of the Company, (x) no other person is
     using any of the  Intellectual  Properties and (y) the Company's  continued
     use of the  Intellectual  Properties in  substantially  the same manner the
     Company  currently uses such  Intellectual  Properties will not infringe or
     violate  the   proprietary   rights  of  any  third  party.   "Intellectual
     Properties" means statutory and common law rights to and in all trademarks,
     service marks, trademark registrations,  service mark registrations,  trade
     names,  brand names and  applications  for  registration  of trademarks and
     service marks, all copyrights, copyright registrations and applications for
     copyrights,  all letters patents,  design patents and utility patents,  all
     applications  for grant of any such patents,  and all reissues,  divisions,
     continuations  in-part and extensions thereof,  all technology,  processes,
     ideas,   concepts,   invention   disclosures,   know-how,   trade  secrets,
     improvements,  design information,  drawings, patterns,  blueprints, plans,
     formulations,  software,  technical  data  and  engineering  documentation,
     engineering notebooks, and other engineering  information,  designer lists,
     vendor lists,  customer lists,  trade lists,  sales force and  distribution
     networks and other marketing service  information,  all licenses granted to
     the Company of rights in or to any Intellectual  Property,  and, all rights
     and incidents of interest of the Company,  in and to all non-competition or
     confidentiality  agreements  in effect as of the  Effective  Time that were
     entered into or made in connection with the Company's business

     has  no  reason  to  believe  that  any  governmental  body  or  agency  is
     considering  limiting,  suspending  or revoking any such  Permit.  All such
     Permits are annexed hereto as Exhibit 4.20.

                                  ARTICLE IV-A
                         REPRESENTATIONS AND WARRANTIES
                               OF THE SHAREHOLDERS

4A.l Authorization,  Validity and Effect of Agreements.  Shareholder  represents
     that he is the sole  shareholder  of the Company and that he has the right,
     power and  authority to execute and deliver this  Agreement  and to perform
     his obligations hereunder. This Agreement constitutes the valid and legally
     binding obligation of such Shareholder,  enforceable in accordance with its
     terms, subject to applicable  bankruptcy,  insolvency,  moratorium or other
     similar  laws  relating  to  creditors'  rights and general  principles  of
     equity.

4A.2 No Violation.  Neither the execution  and delivery by such  Shareholder  of
     this Agreement nor the consummation by such Shareholder of the transactions
     contemplated  hereby in accordance  with the terms hereof will (i) violate,
     or  conflict  with,  or  result  of in a breach  of any  provision  of,  or
     constitute  a default (or an event  which,  with notice or lapse of time or
     both, would constitute a default) under, or result in the termination or in
     a right of termination or  cancellation  of, or accelerate the  performance
     required  by, or result in the  triggering  of any payment or  compensation
     under,  or result in the creation of any Lien upon any of the properties of
     the Company or its  subsidiaries  under,  or result in being declared void,
     voidable,  or without further binding effect, any of the terms,  conditions
     or provisions of any note, bond, mortgage, indenture, deed of trust or any

                                       29
<PAGE>


     material license,  franchise,  permit, lease, contract,  agreement or other
     Instrument,   commitment   or  obligation  to  which  the  Company  or  its
     subsidiaries is a party, or by which the Company or its subsidiaries or any
     of their  respective  properties  or assets is bound or  affected,  or (ii)
     violate any order, writ,  injunction,  decree,  statute, rule or regulation
     applicable to the Company or any of its subsidiaries,  or such Shareholder,
     or any of their assets.

4A.3 Title.  The shares of the Company  that such  Shareholder  will  deliver at
     Closing  (Shareholder  Shares) are owned by such Shareholder free and clear
     of any  liens  or  encumbrances.  All of the  Shareholder  Shares  are duly
     authorized, validly issued, fully paid and non-assessable.  The Shareholder
     Shares  are not  subject  to  preemptive  rights or  similar  rights of the
     stockholders   of  the  Company  or  any  other  person  or  any  liens  or
     encumbrances  imposed  through  the  actions  or  failure  to action of the
     Company or the Shareholder. The Shareholder has not transferred encumbered,
     or granted any liens against the Shareholder  Shares, or agreed to transfer
     encumber or grant a lien  against the  Shareholder  Shares.  As of the date
     hereof  and at  Closing,  there  are and  will be no  outstanding  options,
     warrants,  scrip,  rights to subscribe  for, puts,  calls,  rights of first
     refusal, agreements understandings,  claims, or other commitments or rights
     of  any  character   whatsoever   relating  to,  or  securities  or  rights
     convertible into or exchangeable for the Shareholder Shares.


                                    ARTICLE V
                                    COVENANTS

5.01 Conduct  of  Business.  From and  after  the date of this  Agreement  until
     Closing or this  Agreement  is  terminated,  unless NRPI has  consented  in
     writing thereto, the Company, and, with respect to (e) and (f) below, NRPI:

     a)   Shall,  and shall cause its  subsidiaries  to,  conduct its operations
          according to its usual,  regular and ordinary course in  substantially
          the same manner as heretofore conducted;

     b)   Shall use reasonable efforts,  and shall cause its subsidiaries to use
          reasonable efforts,  to preserve intact its business  organization and
          goodwill,  keep  available  the services of its officers and employees
          and maintain  satisfactory  relationships  with those  persons  having
          business relationships with it;

     c)   Shall confer on a regular  basis with one or more  representatives  of
          NRPI to report operational matters of materiality and any proposals to
          engage in material transactions;

     d)   Shall not amend its Articles of Incorporation or By-laws;

     e)   Shall  promptly  notify  the  other  parties  hereto  of any  material
          emergency or other  material  change in the  condition  (financial  or
          otherwise),  business, properties,  assets, liabilities,  prospects or
          the  normal  course  of  its  businesses  or in the  operation  of its
          properties,   any  material   litigation   or  material   governmental
          complaints,  investigations or hearings (or communications  indicating
          that the same may be  contemplated),  or the  breach  in any  material
          respect of any representation or warranty contained herein;

     f)   Shall  promptly  deliver to the other parties  hereto true and correct
          copies of any report, statement or schedule filed with or delivered to
          the SEC, any other  Governmental  entity (other than routine corporate
          tax and other  filings  in the  ordinary  course of  business)  or any
          shareholder of the

                                       30
<PAGE>


          Company or NRPI,  as the case may be,  subsequent  to the date of this
          Agreement;

     g)   Shall  not (i)  issue,  sell or  pledge,  or agree to  issue,  sell or
          pledge,  any shares of its  capital  stock,  effect any stock split or
          otherwise change its  capitalization as it existed on the date hereof,
          (ii) grant, confer or award any option,  warrant,  conversion right or
          other right to acquire  any shares of its  capital  stock or grant any
          right to convert or exchange any  securities of The Company for Common
          Stock,  (iii)  increase  any  compensation  or enter into or amend any
          employment  agreement  with any of its  present or future  officers or
          Directors,  other than in the  ordinary  course of Encore's  business,
          (iv) adopt any new employee  benefit plan,  other than in the ordinary
          course of Encore's business (including any stock option, stock benefit
          or stock purchase plan) or amend any existing employee benefit plan in
          any material  respect,  other than in the ordinary course of business,
          except,  in each  case,  for  changes  which  are  less  favorable  to
          participants in such plans or as may be required by applicable law, or
          (v)  amend  any  Officer   Employment   Agreement   or  increase   any
          compensation payable pursuant to such Officer Employment Agreements;

     h)   Shall not (i) except in the normal  course of business  as  consistent
          with prior practice,  declare,  set aside or pay any dividend (whether
          in cash, stock or property) or make any other  distribution or payment
          with  respect to any shares of its capital  stock or (ii)  directly or
          indirectly  redeem,  purchase or  otherwise  acquire any shares of its
          capital stock or make any commitment for any such action;

     i)   Shall not, and shall not permit its subsidiaries to (i) sell, lease or
          otherwise  dispose  of any assets of the  Company or its  subsidiaries
          (including capital stock) which are of a material amount, individually
          or in the aggregate, or (ii) make any acquisition,  by means of merger
          or  otherwise,  of any  assets or  securities  which are of a material
          amount, individually or in the aggregate; and

     .j)  Shall not, and shall not permit its  subsidiaries to, agree in writing
          to take or otherwise take (i) any of the foregoing actions or (ii) any
          action which would make any  representation or warranty of the Company
          herein untrue or incorrect.

5.02 Filings; Other Action. Subject to the terms and conditions herein provided,
     the Company and NRPI shall:  (i) use all  reasonable  efforts to  cooperate
     with one another in (a)  determining  which filings are required to be made
     prior to the Effective Time with, and which consents, approvals, permits or
     authorizations  are  required to be obtained  prior to the  Effective  Time
     from,  governmental or regulatory  authorities of the United States and the
     several states,  and other  jurisdictions  in connection with the execution
     and delivery of this  Agreement and the  consummation  of the  transactions
     contemplated  hereby and (b)  timely  making  all such  filings  and timely
     seeking all such consents,  approvals, permits or authorizations;  and (ii)
     use best efforts to take,  or cause to be taken,  all other action arid do,
     or cause to be done, all other things  necessary,  proper or appropriate to
     consummate  and  make  effective  the  transactions  contemplated  by  this
     Agreement.  If, at any time after the Effective Time, any further action is
     necessary  or  desirable  to carry out the purpose of this  Agreement,  the
     proper  officers  and  Directors  of NRPI and the  Company  shall  use best
     efforts to take all such necessary action.

5.03 Inspection of Records From the date hereof to the Effective  Time,  each of
     NRPI and the  Company  shall  allow  all  designated  officers,  attorneys,
     accountants and other  representatives of NRPI and the Company, as the case
     may  be,  access  at  all  reasonable  times  to  the  records  and  files,
     correspondence  audits  and  properties,  as  well  as to  all  information
     relating to  commitments,  contracts,  titles and  financial  position,  or
     otherwise pertaining to the business and affairs of NRPI,

                                       31
<PAGE>


     the Company, and their subsidiaries.

5.04 Indemnification

     (a)  After the Effective  time, the  Shareholder  and the Company shall, to
          the fullest  extent  permitted,  indemnify,  defend and hold  harmless
          NRPI,  and its present and former  Directors and officers  (other than
          Braulio   Gutierrez)   and   their   respective   heirs,    executors,
          administrators   and   legal   representatives    (individually,    an
          "Indemnified  Party"  and,  collectively,  the  "Indemnified  Parties"
          against all losses,  expenses,  claims, damages or liabilities arising
          out of actions or Omissions  occurring  prior to the Effective Time in
          connection   with  the  operation  of  the  business  of  the  Company
          (collectively  "Losses"). In connection with the foregoing obligations
          from and after the Effective Time,  Shareholder shall bear the cost of
          expenses  incurred  in  defending  against  any claim,  action,  suit,
          proceeding or investigation relating to same.

          b) The rights of each Indemnified Party hereunder shall be in addition
          to any other rights such Indemnified Party may have under the Articles
          of  Incorporation or by-laws of NRPI, under any statute or common law,
          or  otherwise.  The  provisions  of this  Section  shall  survive  the
          consummation  of the  Effective  Time and  expressly  are  intended to
          benefit  each of the  Indemnified  Parties  and will be binding on all
          successors and assigns of the Company and the Shareholder.

5.05 Further Action.  Each party hereto shall,  subject to the fulfillment at or
     before the  Effective  Time of each of the  conditions of  performance  set
     forth herein or the waiver  thereof,  perform such further acts and execute
     such documents as may be reasonably required to effect the Closing.

5.06 Expenses. Whether or not the Closing is consummated,  except as provided in
     Section 7.02 hereof or as provided otherwise herein, all costs and expenses
     incurred  in  connection   with  this   Agreement   and  the   transactions
     contemplated hereby shall be paid by the party incurring such expenses.

5.07 Consent of the Company's Shareholders. The Company has obtained the consent
     of Shareholder to the transactions contemplated hereunder.

5.08 Publicity.  The initial press release relating to this Agreement shall be a
     joint press release and thereafter  the Company and NRPI shall,  subject to
     their respective legal  obligations  (including  requirements of the Nasdaq
     National  Market,  stock  exchanges and other similar  regulatory  bodies),
     consult with each other, and use reasonable  efforts to agree upon the text
     of any press  release,  before  issuing any such press release or otherwise
     making  public  statements  with respect to the  transactions  contemplated
     hereby and in making any filings with any federal or state  governmental or
     regulatory   agency  or  with  Nasdaq  National  Market,  or  any  national
     securities exchange with respect thereto.

5.09 Best Efforts to Close.  The parties  hereto agree to use their best efforts
     to close the transactions contemplated hereby by April 1, 2000.


                                   ARTICLE VI
                           CONDITIONS TO CONSUMMATION
                              OF THE SHARE EXCHANGE

6.01 Conditions to Each Party's Obligation to Effect the Share Exchange. The

                                       32
<PAGE>


     respective  obligations  of each  party to effect  the Share  Exchange  are
     subject to the  satisfaction  or waiver,  where  permissible,  prior to the
     Effective Time, of the following conditions:

     a)   If  required,   this  Agreement   shall  have  been  approved  by  the
          affirmative  vote of the  shareholders of the Company by the requisite
          vote in accordance with applicable law, if required,  and by the Board
          of Directors of NRPI by resolution in accordance with applicable law.

     b)   No statute, rule, regulation,  executive order, decree,  injunction or
          other order (whether temporary,  preliminary or permanent), shall have
          been  enacted,  entered,  promulgated  or  enforced  by any  court  or
          governmental  authority  which  is in  effect  and has the  effect  of
          prohibiting the consummation of the Closing;  provided,  however, that
          each of the  parties  shall have used its best  efforts to prevent the
          entry of any  injunction  or other  order and to appeal as promptly as
          possible any injunction or other order that may be entered;

     c)   Each of the consent and  resolution  set forth on Exhibit 6.0 1(c) and
          6.0 1(c) (1) hereto shall have been obtained.

     d)   The Company has, or on or before the Effective  Time of this Agreement
          shall have  completed  the issuance of the  Company's  Series A Senior
          Subordinated  Redeemable  Convertible Debentures (the "Debentures") in
          the face amount of $1,000,000 to HLKT Holdings LLC, a Colorado limited
          liability  company,  upon the  terms and  conditions  set forth in the
          Subscription   Agreement  and  other  documentation  relating  to  the
          issuance  of the  Debentures.  Subject to and upon the Closing of this
          Agreement,  NRPI agrees to assume the  liabilities  and obligations of
          the  Company  under  the  Debentures  as  further  set  forth  in this
          Agreement.  On or prior  to the  Effective  Time,  the  Company  shall
          secure, in writing,  from all of the holders of the Debentures,  their
          consent to NRPI's assumption of Company's liability and obligations to
          perform under the terms and conditions of the Debenture Agreement.

     e)   An  employment  and  covenant  not to  compete  agreement  (Employment
          Agreement)  between  the  Company  and  Shareholder  shall  have  been
          executed,  a copy of which is annexed to this Agreement as Exhibit 6.0
          (f).  The  Employment  Agreement  shall  become an  obligation  of the
          Company  following  the  Closing  of this  Agreement.  The  employment
          agreement shall provide, inter alia the following:

     i)   The term shall be one year.

     ii)  Shareholder's  compensation  (Shareholder's  Compensation) shall be as
          follows:

          (A) (1) the first $150,000 of the Company's gross revenue (First Gross
          Revenue),   less  operating   expenses  and  costs  of  administration
          (Operating Expenses);

               (2)  $100,000  of the next  $200,000  of the  Company's  revenues
          (Second Gross - Revenue); and

               (3) The first $50,000 of the Company's  revenue above First Gross
          Revenue and Second Gross Revenue.

          (B)  All revenue of the Company not distributed as Shareholder

                                       33
<PAGE>


          Compensation  or used for Operating  Expenses  shall be distributed to
          NRPI and Shareholder in accordance with their interests in the Company
          (NRPI - 80%; Shareholder -20%).

          (C) Shareholder shall receive as additional  compensation an option to
          purchase  one  (1)  share  of  NRPI's  Common  Stock  for  each  $2.00
          distributed to NRPI pursuant to section  7(h)(ii)(4) above. The option
          shall be  exercisable  in lots of 100  shares  at the  Common  Stock's
          lowest  closing  price during the 24 months  preceding the exercise of
          the option.

          f) NRPI shall take the corporate  action necessary to have Shareholder
     appointed  to the Board of Directors  of NRPI  effective  at the  Effective
     Time.

          g) The Company shall deliver the Shareholder Statements.

          h) The  Company  shall have  caused  each  person who is a Director or
     officer of the  Company,  as set forth in  Schedule 4. 13, to submit his or
     her written resignation as Director or officer of the Company which will be
     effective upon the Closing.

          i) Each  of the  parties  to  this  Agreement  shall  have  performed,
     satisfied,  and complied with all  covenants,  agreements,  and  conditions
     required by this Agreement to be performed by them and all  representations
     and  warranties  made by each of them pursuant to this  Agreement  shall be
     true on and as of the Closing as if made at that time.


                                   ARTICLE VII
                         TERMINATION; AMENDMENT; WAIVER

7.01 Closing and  Termination.  Except as  otherwise  set forth in this  Section
     7.01, this Agreement shall close by no later than 11:59 p.m. New York Time,
     May 1,  2000,  (Closing  )  provided  that  either  party may  extend  this
     Agreement for an additional  seven (7) day period by written  notice to the
     other party prior to the Closing.  Notwithstanding the foregoing and/or the
     approval of this Agreement by the  shareholders of NRPI, this Agreement may
     be terminated and the Closing  contemplated  hereby may be abandoned at any
     time prior to the Effective Time:

     a)   By mutual written consent,  duly authorized by their respective Boards
          of Directors, by NRPI and the Company;

     .b)  By either NRPI or Encore

          (i)  if any court of competent  jurisdiction or any other governmental
               body  shall have  issued an order,  decree or ruling or taken any
               other  action  permanently  enjoining,  restraining  or otherwise
               permanently  prohibiting  the  Closing  and such  order,  decree,
               ruling   or  other   action   shall   have   become   final   and
               non-appealable;

          (ii) if,  upon a vote at a duly held  meeting or upon any  adjournment
               thereof the  shareholders  of NRPI and the Board of  Directors of
               NRPI shall have failed to give any required approvals; or

     c)   By NRPI if the Company shall have breached any of its  representations
          and  warranties  or covenants  contained  herein and if such breach or
          breaches, either individually or in the aggregate,

                                       34
<PAGE>


          will have, or are reasonably likely to have, a material adverse effect
          on  the  business,  results  of  operations,  financial  condition  or
          prospects  of the  Company  (a  "Company  Material  Adverse  Effect"),
          unless,  in the case of a breach of covenant,  such failure to perform
          has been caused by a breach of this Agreement by NRPI.

                                  ARTICLE VIII
                                     CLOSING

8.01 Closing.  At the  Closing,  the  following  documents,  in form  reasonably
     acceptable  to counsel  to the  parties  or as set forth  herein,  shall be
     delivered:

     (a) By the Company:

          1.   Certificates  representing eighty (80%) percent of all issued and
               outstanding shares of the Company.

          2.   Resolutions  by  the  Company's   Board  of  Directors  and  sole
               shareholder  affirming  the  transactions  contemplated  by  this
               Agreement.

     (b)  By NRPI:

          1.   Certificates for the Common Stock as set forth in Article 1..

          2.   The Employment Agreement.

          3.   A  resolution  by the NRPI's  Board of  Directors  affirming  the
               transactions contemplated by this Agreement.

8.02 Exchange.  At Closing,  the shares of common stock of the Company delivered
     pursuant  to  this   Agreement   will  be  exchanged  for  fully  paid  and
     nonassessable shares of the Common Stock in accordance with this Agreement.

8.04 Appointment  of Directors.  At Closing,  NRPI will cause  Shareholder to be
     appointed as a member of NRPI's Board of Directors.

                                   ARTICLE IX
                                  MISCELLANEOUS

9.01 Survival   of    Representations,    Warranties   and    Agreements.    The
     representations,  warranties  and  agreements  in this  agreement or in any
     instrument delivered pursuant to this Agreement,  including but not limited
     to representations made in Article III and IV, the Shareholder  Statements,
     and in this  Article IX,  shall not survive  the Closing  unless  otherwise
     explicitly stated.

9.02 Assignment,   Binding  Effect;  Benefit;  Entire  Agreement.  Neither  this
     agreement nor any of the rights,  interests or obligations  hereunder shall
     be assigned by any of the parties  hereto  (whether by  operation of law or
     otherwise) without the prior written consent of the other parties.  Subject
     to the preceding  sentence,  this Agreement shall be binding upon and shall
     inure to the benefit of the parties hereto and their respective  successors
     and assigns. Notwithstanding anything contained in this

                                       35
<PAGE>


     Agreement to the contrary, nothing in this Agreement, expressed or implied,
     is intended to confer on any person other than the parties  hereto or their
     respective  heirs,  successors,  executors,  administrators  and assign any
     rights,  remedies,  obligations or  liabilities  under or by reason of this
     Agreement.  This Agreement  arid any documents  delivered by the parties in
     connection  herewith Constitute the entire agreement among the parties with
     respect to the subject matter hereof and supersede all prior agreements and
     understandings  (oral and written) among the parties with respect  thereto.
     No addition to or  modification of any provision of this Agreement shall be
     binding  upon any party  hereto  unless  made in writing  and signed by all
     parties hereto.

9.03 Severability.  Any term or provision of this Agreement  which is invalid or
     unenforceable  in any  jurisdiction  shall,  as to  that  jurisdiction,  be
     ineffective to the extent of such  invalidity or  unenforceability  without
     rendering  invalid or  unenforceable  the remaining terms and provisions of
     this Agreement or otherwise affecting the validity or enforceability of any
     of the terms or provisions of this Agreement in any other jurisdiction.  If
     any provision,  clause, section or part of this Agreement is so broad as to
     be  unenforceable,   the  provision,  clause,  section  or  part  shall  be
     interpreted  to  be  only  so  broad  as  is  enforceable,  and  all  other
     provisions,  clauses,  sections  or parts of this  Agreement  which  can be
     effective without such  unenforceable  provision,  clause,  section or part
     shall, nevertheless, remain in full force and effect.

9.04.Notices.  Any notice  required to be given hereunder shall be sufficient if
     in writing, and sent by facsimile transmission and by courier service (with
     proof of service),  hand delivery or certified or  registered  mail (return
     receipt requested and first-class postage prepaid), addressed as follows:

                   If to NRPI, to:

                   National Rehab Properties, Inc.
                   2921 N.W. 6th Avenue
                   Miami, FL 33127
                   Attn:  Mr. Richard Astrom, President
                   Fax:   305-571-8357

                   With a copy to:

                   John Belash, Esq.
                   110 Wall Street
                   New York, New York 10005
                   Fax:  212-344-4487


                    If to the Company, to

                    Encore Services, Inc.
                    2921 6th Avenue
                    Miami, FL 33127
                    Attn: Mr. Braulio Gutierrez
                    Fax: 305-571-8357

                    With a copy to:

                    Patricia Gutierrez
                    11,100 N.W. 62nd Street

                                       36
<PAGE>


                    Hialeah, FL 33012


     or to such other  address as any party shall  specify by written  notice so
     given,  and such notice  shall be deemed to have been  delivered  as of the
     date it is telecommunicated, personally delivered or mailed.

9.05 Governing  Law.  This  Agreement  shall be  governed  by and  construed  in
     accordance  with the laws of the  State of  Florida  without  regard to its
     rules of conflict of laws.

9.06 Descriptive  Headings.  The  descriptive  headings  herein are inserted for
     convenience  of  reference  only and are not  intended  to be part of or to
     affect the meaning or interpretation of this Agreement.

9.07 Counterparts.  This  Agreement  may be executed  by the  parties  hereto in
     separate  counterparts,  each of which when so executed and delivered shall
     be an original, but all such counterparts shall together constitute one and
     the same instrument.  Each counterpart may consist of a number of copies of
     this Agreement, each of which may be signed by less than all of the parties
     hereto,  but  together all such copies  shall  constitute  one and the same
     instrument.

9.08 Certain  Definitions.  For purposes of this Agreement,  the following terms
     shall have the meanings ascribed to them below:

     (a)  "Affiliate"  of a person means a person that  directly or  indirectly,
          through. one or more intermediaries, controls, is controlled by, or is
          under----------



executed  on its behalf, all as of the day and year first above written.


                                NATIONAL REHAB PROPERTIES INC.


                                  s/s  Richard Astrom, President


                                ENCORE SERVICES, INC.


                                  s/s  Braulio Gutierrez, President



                                SOLE SHAREHOLDER:


                                  s/s Braulio Gutierrez





                                       37
<PAGE>


                        SECURITIES SUBSCRIPTION AGREEMENT
                        ---------------------------------


     THIS  SECURITIES  SUBSCRIPTION  AGREEMENT,  dated  as  of  March  15,  2000
(Agreement  D), is executed in reliance  upon the  exemption  from  registration
afforded  by Rule 504  promulgated  under  Regulation  D by the  Securities  and
Exchange  Commission  (SEC),  under  the  Securities  Act of 1933,  as  amended.
Capitalized  terms used herein and not defined shall have the meanings  given to
them in Rule 504 and Regulation D.

     This  Agreement has been executed by the  undersigned  buyers  (Buyer),  to
purchase  the  amounts set forth on Schedule A hereto,  in  connection  with the
private placement of 9% Series A Senior Subordinated  Convertible  Debentures of
8% Series A Senior Subordinated Convertible Debentures of Encore Services, Inc.,
a  corporation  organized  under the laws of  Florida,  with  executive  offices
located at 2921 NW 6th Avenue,  Miami,  Florida  33127  (Seller).  Buyer  hereby
represents and warrants to, and agrees with Seller:

                   THE  SECURITIES  OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE
                   REGISTERED  WITH THE UNITED  STATES  SECURITIES  AND EXCHANGE
                   COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT
                   TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF
                   THE  SECURITIES  ACT OF 1933,  AS AMENDED,  AND THE RULES AND
                   REGULATIONS  PROMULGATED  THEREUNDER (THE 1933 ACT), AND RULE
                   504 OF REGULATION D PROMULGATED THEREUNDER.

     1. Agreement to Subscribe; Purchase Price

     (a) Subscription. The undersigned Buyer hereby subscribes for and agrees to
purchase the  Seller's 8% Series A Senior  Subordinated  Convertible  Redeemable
Debenture  substantially  in the form of the  Debenture  attached  as  Exhibit A
hereto and having an  aggregate  original  principal  face amount of One Million
United States dollars $1,000,000  (singly, a "Debenture," and collectively,  the
"Debentures"),  at an aggregate purchase price of 90% of the face amount of such
Debentures as set forth in subsection (b) herein.

     (b) Payment.  The  Purchase  Price for the  Debenture  shall be One Million
United States Dollars  ($1,000,000)  (Purchase Price), which shall be payable at
closing,  pursuant  to  paragraph  c herein,  in  accordance  with the terms and
conditions of an Escrow  Agreement which shall be executed  simultaneously  with
this Agreement (Escrow Agreement).

     (c) Closing.  Subject to the  satisfaction  of the  conditions set forth in
Sections 7 and 8 hereof,  the Closing of the  transactions  contemplated by this
Agreement shall take place when (i) Seller delivers the Debentures to the Escrow
Agent,  as defined in an Escrow  Agreement  among  Buyer,  Seller and the Escrow
Agent of even date,  (ii)  Seller  delivers  the  signed  Escrow  Agreement  and
accompanying documents, and (iii) Buyer pays $400,000 towards the Purchase Price
for the Debentures (Closing Date).

     2. Buyer Representations and Covenants; Access to Information

                                       38
<PAGE>


     In connection with the purchase and sale of the Debenture, Buyer represents
and warrants to, and covenants and agrees with Seller as follows:

     (a) Buyer is not,  and on the  closing  date will not be, an  affiliate  of
Seller;

     (b) Buyer is an "accredited  investor" as defined in Rule 501 of Regulation
D  promulgated  under the 1933 Act,  and is  purchasing  the  Shares for its own
account  and Buyer is  qualified  to purchase  the Shares  under the laws of the
State of Washington;

     (c) All offers and sales of any of the Debentures by Buyer shall be made in
compliance with any applicable  securities  laws of any applicable  jurisdiction
and in accordance  with Rule 504, as applicable,  of Regulation D or pursuant to
registration  of securities  under the 1933 Act or pursuant to an exemption from
registration;

     (d) Buyer understands that the Debentures are not registered under the 1933
Act and are being offered and sold to it in reliance on specific exemptions from
the  registration  requirements of Federal and State  securities  laws, and that
Seller  is  relying  upon  the  truth  and  accuracy  of  the   representations,
warranties,  agreements,  acknowledgments  and understandings of Buyer set forth
herein  in order to  determine  the  applicability  of such  exemptions  and the
suitability of Buyer and any purchaser from Buyer to acquire the Debentures;

     (e) Buyer shall comply with Rule 504 promulgated under Regulation D;

     (f)  Buyer  has the full  right,  power and  authority  to enter  into this
Agreement and to consummate the transaction  contemplated herein. This Agreement
has been duly authorized,  validly executed and delivered on behalf of Buyer and
is a valid and  binding  agreement  in  accordance  with its  terms,  subject to
general  principles  of equity and to  bankruptcy  or other laws  affecting  the
enforcement of creditors' rights generally;

     (g) The execution and delivery of this  Agreement and the  consummation  of
the  purchase  of the  Debentures  and  the  transactions  contemplated  by this
Agreement  do not and will not  conflict  with or result in a breach by Buyer of
any of the terms or provisions of, or constitute a default  under,  the articles
of incorporation or by-laws (or similar constitutive  documents) of Buyer or any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which  Buyer is a party or by which it or any of its  properties  or assets  are
bound,  or any existing  applicable law, rule or regulation of the United States
or any State thereof or any applicable decree,  judgment or order of any Federal
or State court. Federal or State regulatory body, administrative agency or other
United States  governmental  body having  jurisdiction  over buyer or any of its
properties or assets;

     (h) All  invitations,  offers  and sales of or in  respect  of,  any of the
Debentures,  by Buyer and any distribution by Buyer of any documents relating to
any  invitation,  offer  or  sale  by it of  any of the  Debentures  will  be in
compliance with applicable laws and  regulations,  will be made in such a manner
that no prospectus need be filed and no other filing need be made by Seller with
any  regulatory  authority  or stock  exchange in any  country or any  political
sub-division  of any  country,  and Buyer  will make no  misrepresentations  nor
omissions of material fact in the invitation, offer or resale of the Debentures;

     (i) The Buyer (or others  for whom it is  contracting  hereunder)  has been
advised to consult its own legal and tax  advisors  with  respect to  applicable
resale restrictions and applicable tax

                                       39
<PAGE>


considerations and it (or others for whom it is contracting hereunder) is solely
responsible  (and the Seller is not in any way  responsible) for compliance with
applicable resale restrictions and applicable tax legislation;

     j) Buyer understands that no Federal or State or foreign  government agency
has passed on or made any recommendation or endorsement of the Debentures;

     (k) Buyer  has had an  opportunity  to  receive  and  review  all  material
information  and financial data and to discuss with the officers of Seller,  all
matters  relating  to  the  securities,   financial  condition,  operations  and
prospects  of Seller and any  questions  raised by Buyer have been  answered  to
Buyer's satisfaction.

     (l) Buyer  acknowledges that the purchase of the Debentures  involve a high
degree  of risk.  Buyer has such  knowledge  and  experience  in  financial  and
business  matters  that it is  capable  of  evaluating  the  merits and risks of
purchasing the Debentures.  Buyer  understands that the Debentures are not being
registered  under  the 1933  Act,  or  under  any  state  securities  laws,  and
therefore,  Buyer  must  bear  the  economic  risk  of  this  investment  for an
indefinite period of time;

     (m)  Buyer  is  not a  "10-percent  Shareholder"  (as  defined  in  Section
871(h)(3)(B) of the U.S. Internal Revenue Code) of Seller; and

     (n) Buyer  acknowledges  and agrees that the  transactions  contemplated by
this  Agreement  have taken  place  solely and  exclusively  within the State of
Colorado.

     3. Seller Representations and Covenants

     (a) Seller is a corporation  duly organized and validly  existing under the
laws of the State of Florida  and is in good  standing  under such laws with its
principal  executive office located in the State of Florida.  The Seller has all
requisite corporate power and authority to own, lease and operate its properties
and assets, and to carry on its business as presently  conducted.  The Seller is
qualified to do business as a foreign  corporation in each jurisdiction in which
the  ownership  of its  property  or the nature of its  business  requires  such
qualification,  except  where  failure to so  qualify  would not have a material
adverse effect on the Seller.

     (b) There are 600,000 shares of Seller's common stock, $0.001 par value per
share (Common Stock),  authorized and 200,0000 outstanding as of March 14, 2000.
All issued and  outstanding  shares of Common  Stock  have been  authorized  and
validly issued and are fully paid and non-assessable.

     (c)  The  execution  and  delivery  of  this  Agreement  do  not,  and  the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both), or give rise to a right of  termination,  cancellation or acceleration
of any obligation or to a loss of a material  benefit,  under,  any provision of
the Articles of Incorporation, and any amendments thereto, By-Laws, Stockholders
Agreements  and any amendments  thereto of the Seller or any material  mortgage,
indenture,   lease  or  other  agreement  or  instrument,   permit,  concession,
franchise,  license,  judgment,  order, decree, statute, law ordinance,  rule or
regulation  applicable  to the Seller,  its  properties  or assets.  There is no
action,  suit  or  proceeding  pending,  or to  the  knowledge  of  the  Seller,
threatened against the Seller,  before any court or arbitrator or any government
body, agency or official, which would have a material adverse affect on Seller's
operations or financial condition.

                                       40
<PAGE>


     (d) The Seller is not subject to the reporting  requirements of Sections 13
or 15(d) of the Securities  and Exchange Act, is not an investment  company or a
developmental  stage  company  that either has no specific  business  plan or no
purpose.  The Debentures and common stock issued upon  conversion  (Shares) when
issued,  will be issued in compliance with all applicable U.S. federal and state
securities  laws.  The Seller  understands  and  acknowledges  that, in certain,
circumstances,  the issuance of the Shares could dilute the ownership  interests
of other stockholders of the Seller. The execution and delivery by the Seller of
this  Agreement and the issuance of the Shares will not contravene or constitute
a default under any provision of applicable law or regulation.  The Seller is in
compliance  with  and  conforms  to  all  statutes,  laws,  ordinances,   rules,
regulations.  orders,  restrictions  and all  other  legal  requirements  of any
domestic  or  foreign   government  or  any   instrumentality   thereof   having
jurisdiction  over  the  conduct  of  its  businesses  or the  ownership  of its
properties

     (e)  There is no fact  known  to the  Seller  that  has not  been  publicly
disclosed  by the  Seller or  disclosed  in  writing  to the Buyer  which  could
reasonably  be  expected  to have a  material  adverse  effect on the  condition
(financial or otherwise) or in the  earnings,  business  affairs,  properties or
assets  of the  Seller,  or could  reasonably  be  expected  to  materially  and
adversely  affect the ability of the Seller to perform its obligations  pursuant
to this Agreement. The information furnished by the Seller to Buyer for purposes
of or in connection with this Agreement or any transaction  contemplated  hereby
does not  contain  any  untrue  statement  of  material  fact or omit to state a
material fact necessary in order to make the statements  contained  therein,  in
light of the circumstances under which they are made, not misleading.

     (f) No consent, approval or authorization of or designation, declaration or
filing with any governmental  authority on the part of the Seller is required in
connection  with the valid  execution  and  delivery of this  Agreement,  or the
offer,  sale or issuance of the Debentures or Common Stock, or the  consummation
of any other transaction  contemplated hereby, except the filing with the SEC of
Form D.

     (g) There is no action,  proceeding  or  investigation  pending,  or to the
Seller's knowledge,  threatened,  against the Seller which might result,  either
individually  or in  the  aggregate,  in  any  material  adverse  change  in the
business, prospects, conditions, affairs or operations of the Seller. The Seller
is not a party to or subject to the provisions of any order,  writ,  injunction,
judgment or decree of any court or government agency or  instrumentality.  There
is no action,  suit proceeding or investigation by the Seller currently  pending
or which the  Seller  intends  to  initiate.  The SEC has not  issued  any order
suspending  trading  in the  Seller's  Common  Stock and the Seller is not under
investigation by the SEC or the National  Association of Securities Dealers, and
there are no proceedings pending or threatened before either regulatory body.

     (h)  There are no other  material  outstanding  debt or  equity  securities
presently convertible into Common Stock.

     (i) The Seller has not sold any securities within the 12 month period prior
to the date the Common  Stock was first  offered in  reliance  on any  exemption
under Section 3(b) of the 1933 Act, Regulation D or its rules or in violation of
Section 5(a) of the 1933 Act.

     (j) The  issuance,  sale and  delivery  of the  Debentures  have  been duly
authorized by all required  corporate action on the part of the Seller, and when
issued,  sold and delivered in accordance  with the terms hereof and thereof for
the consideration expressed herein and therein, will be duly and validly issued,
fully paid and non-assessable.  The Common Stock issuable upon conversion of the
Debenture  has been duly and validly  reserved for issuance and upon issuance in
accordance with the terms of the

                                       41
<PAGE>


Debentures,  shall be duly and validly  issued,  fully paid, and  non-assessable
There are no pre-emptive rights of any shareholder of Seller.

     (k) This Agreement has been duly authorized, validly executed and delivered
on behalf of Seller and is a valid and binding  agreement in accordance with its
terms,  subject to general  principles of equity and to bankruptcy or other laws
affecting the  enforcement of creditors'  rights  generally.  The Seller has all
requisite  right,  power and authority to execute and deliver this Agreement and
to consummate the transactions  contemplated hereby. All corporate action on the
part  of  the  Seller,   its  Directors  and  shareholders   necessary  for  the
authorization,  execution,  delivery and  performance  of this Agreement and the
Debentures has been taken.  Upon their issuance to the Buyer and delivery to the
Escrow Agent, as defined in and pursuant to the Escrow Agreement, the Debentures
will be  validly  issued  and  nonassessable,  and will be free of any  liens or
encumbrances.

     (1) Seller  acknowledges and agrees that the  transactions  contemplated by
this the Agreement have taken place solely and  exclusively  within the State of
Colorado.

     4. Exemption Reliance on Representations

     Buyer  understands  that the offer and sale of the Securities are not being
registered  under  the 1933 Act.  Seller  and  Buyer  are  relying  on the rules
governing  offers  and  sales  made  pursuant  to  Rule  504  promulgated  under
Regulation  D. The offer and sale of the Shares are made solely within the State
and jurisdiction of Colorado.

     5. Transfer Agent Instructions

     (a) Debentures.  Upon the conversion of the Debentures, the Buyer or holder
shall give a notice of  conversion  to the Seller and the Seller shall  instruct
its transfer agent to issue one or more Certificates representing that number of
shares of Common Stock into which the Debenture or Debentures are convertible in
accordance with the provisions  regarding conversion set forth in Exhibit A. The
Seller shall act as Debenture Registrar and shall maintain an appropriate ledger
containing the necessary information with respect to each Debenture.

     (b)  Common  Stock  to be  Issued  Without  Restrictive  Legend.  Upon  the
conversion of any Debenture,  Seller shall instruct  Seller's  transfer agent to
issue Stock Certificates up to the total of the "Conversion  Amount" (as defined
in the  Debenture)  and any  "Interest  Shares"  (as  defined in the  Debenture)
without restrictive legend in the name of the Buyer (or its nominee) and in such
denominations to be specified at conversion representing the number of shares of
Common Stock  issuable upon such  conversion,  as  applicable.  The Common Stock
shall be  immediately  freely  transferable  on the books and records of Seller.
Seller shall also  instruct  its attorney to issue and render any legal  Opinion
which is  required  at any time by Seller's  transfer  agent to permit  Seller's
transfer  agent to issue any and all Stock  Certificates  without a  restrictive
legend as required by this Agreement.

     6. Registration If upon conversion of the Debentures  effected by the Buyer
pursuant to the terms of this  Agreement or payment of interest  pursuant to the
Debenture  the Seller  fails to issue  certificates  for shares of Common  Stock
issuable upon such conversion  (Underlying  Shares) or the Interest  Shares,  as
defined in Section 4(b) of the  Debenture,  to the Buyer bearing no  restrictive
legend for any reason, then the Seller shall be required,  at the request of the
Buyer and at the Seller's expense.  to effect the registration of the Underlying
Shares and/or Interest Shares issuable upon

                                       42
<PAGE>


conversion of the  Debentures and payment of interest under the Act and relevant
Blue Sky laws as  promptly  as is  practicable.  The Seller and the Buyer  shall
cooperate  in good  faith in  connection  with the  furnishings  of  information
required for such  registration  and the taking of such other  actions as may be
legally or  commercially  necessary  in order to effect such  registration.  The
Seller shall file such a registration statement within 30 days of Buyer's demand
and  shall  use its good  faith  diligent  efforts  to cause  such  registration
statement to become effective as soon as practicable thereafter. Such good faith
diligent  efforts shall include,  but not be limited to, promptly  responding to
all comments received from the staff of the SEC,  providing Buyer's counsel with
a contemporaneous  copy of all written  communications  from and to the staff of
the SEC with respect to such registration  statement and promptly  preparing and
filing  amendments to such  registration  statement  which are responsive to the
comments received from the staff of the SEC. Once declared effective by the SEC,
the Seller shall cause such registration statement to remain effective until the
earlier of (i) the sale by the Buyer of all Underlying Shares registered or (ii)
120 days after the effective date of such registration  statement.  In the event
the Seller undertakes to file a Registration Statement on in connection with the
Common Stock. upon the effectiveness of such Registration,  Buyer shall have the
option to sell the Common Stock pursuant thereto.

     7. Delivery Instructions. The Debentures being purchased hereunder, and the
Purchase  Price,  shall be delivered to the Escrow Agent  pursuant to the Escrow
Agreement.

     8. Conditions To Seller's  Obligation To Sell.  Seller's obligation to sell
the Debentures is conditioned upon:

     (a) The receipt and  acceptance by Seller of this  Agreement as executed by
Buyer.

     (b) All of the  representations  and  warranties of the Buyer  contained in
this Agreement shall be true and correct on the Closing Date with the same force
and  effect  as if made on and as of the  Closing  Date.  The Buyer  shall  have
performed or complied with all  agreements  and satisfied all  conditions on its
part to be  performed,  complied  with or  satisfied  at or prior to the Closing
Date.

     (c) No order asserting that the transactions contemplated by this Agreement
are subject to the registration  requirements of the Act shall have been issued,
and no  proceedings  for that  purpose  shall  have been  commenced  or shall be
pending or, to the  knowledge  of the  Seller,  be  contemplated.  No stop order
suspending  the sale of the  Debentures  or Common Stock shall have been issued,
and no  proceedings  for that  purpose  shall  have been  commenced  or shall be
pending or, to the knowledge of the Seller, be contemplated.

     9.  Conditions  To Buyer's  Obligation To Purchase.  Buyer's  obligation to
purchase the Debentures is conditioned upon:

     (a) The  confirmation of receipt and acceptance by Seller of this Agreement
as evidenced by execution of this  Agreement of the duly  authorized  officer of
Seller.

     (b)  Delivery  of the  Debentures  and the Escrow  Agreement  to the Escrow
Agent.

     10. No Shareholder Approval and No Dilution

     (a) Seller  hereby  agrees that from the Closing Date until the issuance of
Common Stock upon the  conversion  of the  Debentures,  Seller will not take any
action which would require Seller to seek

                                       43
<PAGE>


shareholder  approval  of such  issuance  unless  such  shareholder  approval is
required  by law or  regulatory  body  (including  but not limited to the NASDAQ
Stock  Market,  Inc.) as a result of the  issuance of the  Debentures  or Common
Stock hereunder.

     (b) Provided the Debentures,  or any Seller  Debentures from a series which
predate the Debentures remain outstanding and unpaid, or if there is any portion
of any such  Debentures  which have not been converted into the Seller's  Common
Stock,  then the Seller shall not split nor reverse split the Common Stock,  nor
consolidate the outstanding number of shares of Common Stock into a small number
of shares,  nor otherwise take any action,  directly or indirectly,  which would
have a material  adverse  effect on the value of the  Debentures  or the trading
price of the Common Stock.

     (c) Upon (i) a transfer  of all or  substantially  all of the assets of the
Seller to any person in a single transaction or series of related  transactions,
or (ii) a  consolidation,  merger or  amalgamation  of the  Seller  with or into
another person or entity in which the Seller is not the surviving  entity (other
than  a  merger  which  is  effected  solely  to  change  the   jurisdiction  of
incorporation  of the Company and results in a  reclassification,  conversion or
exchange  of  outstanding  shares of Common  Stock  solely into shares of Common
Stock) (each of items (i) and (ii) being referred to as a "Sale  Event"),  then,
in each  case,  the  Seller  shall,  upon  request  of any  Holder,  redeem  the
Debentures  registered  in the  name of such  Holder  in  cash  for  130% of the
principal  amount,  plus  accrued  but  unpaid  interest  through  the  date  of
redemption, or at the election of the Holder, such Holder may convert the unpaid
principal amount of such Convertible  Notes (together with the amount of accrued
but unpaid  interest) into shares of Common Stock of the surviving entity at the
Conversion Price as set forth in the Debenture

In case of any  reclassification,  capital  reorganization  or other  change  or
exchange  of  outstanding  shares  of  the  Common  Stock,  or in  case  of  any
consolidation  or merger of the Seller with or into another  corporation  (other
than a consolidation or merger in which the Seller is the continuing corporation
and which does not result in any  reclassification,  capital  reorganization  or
other  change of  outstanding  shares of Common  Stock),  the Seller shall cause
effective provision to be made so that the Purchaser or Holder of the Debenture,
as the  case  may be,  shall  have  the  right  thereafter,  by  exercising  the
Debenture,  to  purchase  the  kind  and  number  of  shares  of  stock or other
securities or property  (including cash) receivable upon such  reclassification,
capital  reorganization or other change,  consolidation or merger by a holder of
the  number of shares  of Common  Stock  that  could  have been  purchased  upon
exercise of the Debentures and at the same  Conversion  Price, as defined in the
Debenture, immediately prior to such reclassification, capital reorganization or
other change,  consolidation or merger. The foregoing provisions shall similarly
apply to successive reclassifications, capital reorganizations and other changes
of  outstanding  shares of  Common  Stock and to  successive  consolidations  or
mergers.  If the consideration  received by the holders of Common Stock is other
than cash,  the value shall be as  determined  by the Board of  Directors of the
Seller or successor person or entity acting in good faith.

     11. Miscellaneous

     (a) This  Agreement  together  with the  Debentures  and Escrow  Agreement,
constitutes the entire agreement between the parties, and neither party shall be
liable or bound to the other in any manner by any warranties, representations or
covenants except as specifically set forth herein.  Any previous agreement among
the parties related to the transactions  described herein is superseded  hereby.
The terms and  conditions  of this  Agreement  shall inure to the benefit of and
shall be binding  upon the  restrictive  successors  and  assigns of the parties
hereto.  Nothing in this  Agreement,  express or implied,  is intended to confer
upon any party, other than the parties hereto,  and their respective  successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.

     (b) Buyer is an  independent  contractor  and is not the  agent of  Seller.
Buyer  is not  authorized  to bind  Seller  or to  make  any  representation  or
warranties on behalf of Seller.

                                       44
<PAGE>


     (c) All  representations  and  warranties  contained  in this  Agreement by
Seller and Buyer shall survive the closing of the  transactions  contemplated by
this Agreement.

     (d)  This  Agreement  shall be  construed  in  accordance  with the laws of
Colorado  applicable  to contracts  made and wholly to be  performed  within the
State of Washington and shall be binding upon the successors and assigns of each
party hereto.  Buyer and Seller hereby  mutually waive trial by jury and consent
to exclusive  jurisdiction and venue in the courts of the State of Colorado.  At
Buyer's election,  any dispute between the parties may be arbitrated rather than
litigated in the courts before the arbitration board of the American Arbitration
Association  in Denver and pursuant to its rules.  Upon demand made by the Buyer
to the Seller,  Seller agrees to submit to and participate in such  arbitration.
This Agreement may be executed in counterparts,  and the facsimile  transmission
of an executed counterpart to this Agreement shall be effective as an original.

     (e) Seller  agrees to indemnify  and hold Buyer  harmless  from any and all
claims,   damages  and   liabilities   arising  from  Seller's   breach  of  its
representations and/or covenants set forth herein.

     (f) Buyer agrees to  indemnify  and hold Seller  harmless  from any and all
claims,   damages  and   liabilities   arising  from   Buyer's   breach  of  its
representations and warranties set forth in this Agreement.

     IN WITNESS  WHEREOF,  the undersigned has executed this Agreement as of the
date first set forth above.

                                 Official Signatory of Seller:
                                 -----------------------------

                                 ENCORE SERVICES, INC.



                                 s/s: Braulio Gutierrez

Accepted this 15th day of March, 2000     Title: President


                                 Official Signatory of Buyer:
                                 ----------------------------


                                 HLKT HOLDINGS L.L.C.

                                 s/s:___________________













                                       45
<PAGE>


                                    DEBENTURE


          THE  SECURITIES  REPRESENTED  HEREBY  HAVE  NOT  BEEN  AND WILL NOT BE
     REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE
     SECURITIES   COMMISSION  OF  ANY  STATE   PURSUANT  TO  AN  EXEMPTION  FROM
     REGISTRATION  PROVIDED BY SECTION 3(b) OF THE  SECURITIES  ACT OF 1933,  AS
     AMENDED,  AND THE RULES AND REGULATIONS  PROMULGATED  THEREUNDER (THE "1933
     ACT"), AND RULE 504 OF REGULATION D PROMULGATED THEREUNDER

A-001                                                              US $1,000,000


                              ENCORE SERVICES, INC.
                              ---------------------


        8% SERIES A SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE DEBENTURE
                               DUE MARCH 15, 2002


     THIS DEBENTURE of Encore  Services,  Inc., a corporation duly organized and
existing  under the laws of Florida  ("Company"),  designated as its 8% Series A
Senior Subordinated  Convertible  Debentures Due March 15, 2002, in an aggregate
principal face amount not exceeding One Million Dollars (U.S. $1,000,000), which
Debentures are being purchased at 90% of the face amount of such Debentures.

     FOR VALUE RECEIVED,  the Company  promises to pay to HLKT Holdings LLC, the
registered  holder hereof and its authorized  successors  and permitted  assigns
(Holder), the aggregate principal face of One Million Dollars (U.S. $ 1,000.000)
on March 15, 2002  (Maturity  Date),  and to pay interest on the  principal  sum
outstanding,  at the rate of 9% per annum  commencing  April 15, 2000 and due in
full at the  Maturity  Date  pursuant  to  paragraph  4(b)  herein.  Accrual  of
outstanding  principal  sum has been made or duly  provided for. The interest so
payable will be paid to the person in whose name this Debenture is registered on
the  records  of  the  Company  regarding  registration  and  transfers  of  the
Debentures   (Debenture  Register);   provided,   however,  that  the  Company's
obligation to a transferee of this Debenture arises only if such transfer,  sale
or other  disposition is made in accordance with the terms and conditions of the
Securities Subscription Agreement dated as of March 15, 2000 between the Company
and HLKT Holdings, LLC (Subscription Agreement).  The principal of, and interest
on, this  Debenture  are payable at the address last  appearing on the Debenture
Register of the Company as  designated in writing by the Holder hereof from time
to time. The Company will pay the outstanding  principal due upon this Debenture
before or on the Maturity Date, less any amounts  required by law to be deducted
or withheld,  to the Holder of this Debenture by check if paid more than 10 days
prior to the Maturity  Date or by wire  transfer and addressed to such Holder at
the last address  appearing on the Debenture  Register.  The  forwarding of such
check or wire  transfer  shall  constitute  a payment of  outstanding  principal
hereunder  and shall  satisfy and  discharge the liability for principal on this
Debenture to the extent of the sum  represented  by such check or wire transfer.
Interest  shall be  payable  in Common  Stock (as  defined  below)  pursuant  to
paragraph 4(b) herein.

                                       46
<PAGE>


     This Debenture is subject to the following additional provisions:

     1. The Debentures are issuable in denominations of Ten Thousand Dollars (US
$10,000) and integral multiples thereof.  The Debentures are exchangeable for an
equal  aggregate   principal  amount  of  Debentures  of  different   authorized
denominations,  as requested by the Holders  surrendering the same, but not less
than U.S.  $10,000.  No service  charge  will be made for such  registration  or
transfer or exchange, except that Holder shall pay any tax or other governmental
charges payable in connection therewith.

     2. The Company  shall be entitled to withhold from all payments any amounts
required to be withheld under the applicable laws.

     3. This Debenture may be  transferred or exchanged only in compliance  with
the  Securities Act of 1933, as amended (Act) and  applicable  state  securities
laws.  Prior to due presentment for transfer of this Debenture,  the Company and
any agent of the  Company may treat the person in whose name this  Debenture  is
duly registered on the Company's  Debenture Register as the owner hereof for all
other  purposes,  whether or not this  Debenture  be  overdue,  and  neither the
Company nor any such agent shall be affected or bound by notice to the contrary.
Any Holder of this  Debenture,  electing to exercise the right of conversion set
forth in Section  4(a)  hereof,  in  addition to the  requirements  set forth in
Section  4(a),  and any  prospective  transferee  of this  Debenture,  are  also
required to give the Company  written  confirmation  that the Debenture is being
converted (Notice of Conversion) in the form annexed hereto as Exhibit I.

     4. (a) The Holder of this Debenture is entitled, at its option, at any time
immediately  following execution of this Agreement and delivery of the Debenture
hereof,  to convert all or any amount over $10,000 of the principal  face amount
of this Debenture then  outstanding into freely tradable shares of common stock,
$0.001 par value per share,  of the Company  without  restrictive  legend of any
nature (Common Stock), at a conversion price  (Conversion  Price) for each share
of Common  Stock  equal to (i) 70% of the per share price  valued in  accordance
with the book value of the  Company's  shares  which  shall  include  but not be
limited to all  assets and good will of the  Company  and the  proceeds  of this
Debenture and any other Debenture issued  simultaneously  with this Debenture or
within 30 days of the  issuance  of this  Debenture,  but shall not  include any
liabilities  of the  Company  (Asset  Book  Value),  or, if the  Company  or its
successor or the assignee of this  Debenture is traded on an exchange,  (ii) 70%
of the closing bid price of the Common  Stock as reported on such  exchange  for
the trading day immediately preceding the date of receipt by the Company of each
Notice of Conversion  (Conversion Shares). If the number of resultant Conversion
Shares would as a matter of law or pursuant to regulatory  authority require the
Company to seek  shareholder  approval of such issuance,  the Company shall,  as
soon as  practicable,  take the  necessary  steps to seek  such  approval.  Such
conversion  shall be  effectuated,  as  provided in a certain  Escrow  Agreement
executed  simultaneously  with this  Debenture,  by the Company  delivering  the
Conversion Shares to the Holder within 7 business days of receipt by the Company
of the  Notice of  Conversion.  Once the  Holder has  received  such  Conversion
Shares,  the Escrow Agent shall  surrender the Debentures to be converted to the
Company,  executed  by the Holder of this  Debenture  evidencing  such  Holder's
intention  to  convert  this  Debenture  or  a  specified  portion  hereof,  and
accompanied by proper  assignment  hereof in blank.  Accrued but unpaid interest
shall be subject  to  conversion.  No  fractional  shares or scrip  representing
fractions  of  shares  will be issued on  conversion,  but the  number of shares
issuable shall be rounded to the nearest whole share.

     (b)  Interest at the rate of 8% per annum  shall be paid by issuing  Common
Stock of the Company as follows: Based on the Asset Book Value, or if the shares
of Common Stock of the Company are traded on an exchange,  the closing bid price
of the Common Stock as reported on such exchange for the

                                       47
<PAGE>


trading day immediately  preceding the date of the monthly  interest payment due
(Market Price),  the Company shall issue to the Holder shares of Common Stock in
an amount equal to the total monthly  interest accrued and due divided by 70% of
the Market  Price  (Interest  Shares).  The dollar  amount of  interest  payable
pursuant to this paragraph 4(b) shall be calculated  based upon the total amount
of payments  actually made by the Holder in connection  with the purchase of the
Debentures  at the time any interest  payment is due. If such payment is made by
check,  interest  shall  accrue  beginning  10 days  from the date the  check is
received by the Company.  If such payment is made by wire transfer directly into
the  Company's  account,  interest  shall accrue  beginning on the date the wire
transfer is received by the Company.  Common Stock issued  pursuant hereto shall
be issued  pursuant to Rule 504 of Regulation D in accordance  with the terms of
the Subscription Agreement.

     (c) At any time after 90 days the  Company  shall have the option to pay to
the Holder 130% of the principal amount of the Debenture, in full, to the extent
conversion  has not  occurred  pursuant to paragraph  4(a)  herein,  or pay upon
maturity if the Debenture is not converted.  The Company shall give the Holder 5
days written  notice and the Holder  during such 5 days shall have the option to
convert the  Debenture  or any part  thereof  into shares of Common Stock at the
Conversion Price set forth in paragraph 4(a) of this Debenture.

     (d) Upon (i) a transfer  of all or  substantially  all of the assets of the
Company to any person in a single transaction or series of related transactions,
or (ii) a  consolidation,  merger or  amalgamation  of the Company  with or into
another person or entity in which the Company is not the surviving entity (other
than  a  merger  which  is  effected  solely  to  change  the   jurisdiction  of
incorporation  of the Company and results in a  reclassification,  conversion or
exchange  of  outstanding  shares of Common  Stock  solely into shares of Common
Stock) (each of items (i) and (ii) being referred to as a "Sale Event", then, in
each case, the Company shall, upon request of any Holder,  redeem the Debentures
registered in the name of such Holder in cash for 130% of the principal  amount,
plus  accrued  but unpaid  interest  through the date of  redemption,  or at the
election of the Holder,  such Holder may convert the unpaid  principal amount of
this Debenture (together with ____________

Then, or at any time thereafter,  unless cured, and in each and every such case,
unless  such  Event of Default  shall have been  waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any  subsequent  default) at
the option of the Holder and in the  Holder's  sole  discretion,  the Holder may
consider  this  Debenture  immediately  due and  payable,  without  presentment,
demand,  protest  or  (further)  notice  of  any  kind  (other  than  notice  of
acceleration),  all of which are hereby expressly waived,  anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately,  and without expiration of any period of grace,  enforce
any and all of the  Holder's  rights and remedies  provided  herein or any other
rights or remedies afforded by law.

     9. This  Debenture  represents  a  prioritized  obligation  of the Company.
However,  no recourse  shall be had for the payment of the  principal of, or the
interest  on, this  Debenture,  or for any claim based  hereon,  or otherwise in
respect hereof, against any incorporator,  shareholder,  officer or Director, as
such,  past,  present or future,  of the Company or any  successor  corporation,
whether  by  virtue  of any  constitution,  statute  or rule  of law,  or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance  hereof and as part of the consideration for the issue hereof,
expressly waived and released.

                                       48
<PAGE>


     10. In case any provision of this Debenture is held by a court of competent
jurisdiction  to be excessive in scope or  otherwise  invalid or  unenforceable,
such provision shall be adjusted rather than voided, if possible,  so that it is
enforceable to the maximum extent possible,  and the validity and enforceability
of the remaining provisions of this Debenture will not in any way be affected or
impaired thereby.

     11.  This  Debenture  and the  agreements  referred  to in  this  Debenture
constitute the full and entire  understanding  and agreement between the Company
and the Holder with respect to the subject  hereof.  Neither this  Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.

     12. This  Debenture  shall be governed by and construed in accordance  with
the laws of Colorado  applicable  to  contracts  made and wholly to be performed
within  the State of  Colorado  and shall be  binding  upon the  successors  and
assigns of each party hereto.  The Holder and the Company hereby  mutually waive
trial by jury and consent to exclusive  jurisdiction  and venue in the courts of
the State of Colorado. At Holder's election, any dispute between the parties may
be  arbitrated  rather  than  litigated  in  the  courts,  before  the  American
Arbitration Association in Denver and pursuant to its rules. Upon demand made by
the Holder to the Company,  the Company  agrees to submit to and  participate in
such  arbitration.  This  Agreement  may be  executed in  counterparts,  and the
facsimile  transmission  of an executed  counterpart to this Agreement  shall be
effective as an original.


     IN WITNESS  WHEREOF,  the  Company has caused  this  instrument  to be duly
executed by an officer thereunto duly authorized.


Dated:    March 15, 2000


                                    ENCORE SERVICES, INC.



                                    By:______________________________________


                                         Title: President



                                       49
<PAGE>


Exhibit 3.2

                                                                           FILED
                                                            IN THE OFFICE OF THE
                                                       SECRETARY OF STATE OF THE
                                                                 STATE OF NEVADA

                                                                    OCT 10, 2000
DEAN HELLER                                   No. C 2817-71
Secretary of State                 Dean Heller, Secretary of State
101 North Carson Street, Suite 3
Carson City, Nevada 89701
--------------------------------------------------------------------------
Important:  Read attached instructions before completing form
--------------------------------------------------------------------------

              Certificate of Amendment to Articles of Incorporation
              -----------------------------------------------------
                          For Nevada Profit Corporation
                          -----------------------------
          (Pursuant to NRS 78.386 and 78.390 - After Issuance of Stock)
                              -Remit in Duplicate-

1.   Name of Corporation:    National Rehab Properties, Inc.
                          ------------------------------------------

2.   The articles have been amended as follows (provide article numbers, if
     available):
     "The name of the corporation is:

     NATIONAL RESIDENTIAL PROPERTIES, INC."
     -----------------------------------------------------------

3.  The vote by which the stockholders holding shares in the corporation
    entitling them to exercise at least a majority of the voting power or such
    greater proportion of the voting power as may be required in the case of a
    vote by classes or series,  or as may be required  by the provi-  sions of
    the  articles  of  incorporation  have  voted in  favor  of the  amendment
    is:       51%
       --------------------------------------------------------------------
4.  Signature required:

s/s:   Richard Astrom                         s/s:  Christoper Astrom
    -----------------------------------           ----------------------------
    President or Vice President                   Secretary or Asst. Secretary

       *If any proposed  amendment  would alter or change any  preference or any
         relative  or other  right  given to any class or series of  outstanding
         shares, then the amendment must be approved by the vote, in addition to
         the  affirmative  vote  otherwise  required,  of the  holders of shares
         representing  a majority  of the  voting  power of each class or series
         affected by the amendment  regardless of limitations or restrictions on
         the voting power thereof.

         IMPORTANT: Failure to include any of the above information and remit
         the proper fees may cause this filing to be rejected.



                                       50
<PAGE>


Exhibit 3.3

FILED
In the office of the
Secretary of State of the
State of Nevada

Oct 10, 2000
No.  C 2817-71
     ---------

Dean Heller, Secretary of State

              CERTIFICATE OF CHANGE IN NUMBER OF AUTHORIZED SHARES
                                       OF
                      NATIONAL RESIDENTIAL PROPERTIES, INC.

                           Pursuant to Section 78.209

     We,  the  undersigned,  being  the  president  and  secretary  of  NATIONAL
RESIDENTIAL  PROPERTIES,  INC., do hereby execute and  acknowledge the following
instrument:

A) The current number of authorized shares is:

               Forty million (40,000,000) without par value

B) The number of authorized shares after the change is:

               Two hundred and fifty million (250,000,000) shares
                         Par value $ .001 per share

C) The  number of shares  to  be issued  after the change in  exchange  for each
   issued share of the same class is none.

D) The  provisions,  if  any, for the issuance of fractional  shares, or for the
   payment  of  money  or  the  issuance  of  scrip  to  stockholders  otherwise
   entitled to  a  fraction of a share and the percentage of outstanding  shares
   affected thereby is none.

E) No stockholder approval is required to effect the change.

F) The effective date of the change shall be the date of filing in the office of
   the Nevada Secretary of State.

IN WITNESS WHEREOF. We the undersigned, being the president and the secretary of
NATIONAL  RESIDENTIAL  PROPERTIES,  INC. , do hereby execute and acknowledge the
above instrument.


s/s: Richard Astrom                s/s:     Christoper Astrom
     -----------------------------------------------------------
     President                         Secretary



STATE OF
COUNTY OF

                                       51
<PAGE>


On October 10, 2000,  personally  appeared  before me, a notary public,  Richard
Astrom  and  Christopher   Astrom,  the  President  and  Secretary  of  NATIONAL
RESIDENTIAL PROPERTIES, INC., A Nevada corporation and personally known to me to
be  the  persons  whose  names  are  subscribed  to  the  above  instrument  who
acknowledged that they executed said instrument.

                 s/s:      Patricia Gutierrez
                     ------------------------------------
                                  Notary Public
                                                              PATRICIA GUTIERREZ
                                                 Notary Public, State of Florida
                                                     My comm. exp. Dec. 19, 2003
                                                              Comm. No. CC896915





                                       52
<PAGE>


Exhibit 10.04


                           PREPAID MANAGEMENT AGREEMENT

Agreement made this 20th day of September,  2000 by and between  Richard Astrom,
an individual and National Residential Properties, Inc., a Nevada Corporation.

Whereas there exists a $302,000 debt by Richard  Astrom to National  Residential
Properties,  Inc. ("the Company") as listed on the Company's Balance Sheet which
debt matures September 20, 2000.

And Whereas Richard Astrom proposes a means of facilitating the repayment of the
debt wherein the $302,000 note  receivable  item on the Company's  balance sheet
would be converted to a five year prepaid management contract.

And Whereas  there are  existing  arrangements  between  Richard  Astrom and the
Company  for paying  compensation  to Richard  Astrom  for his  services  to the
Company.

Therefore, the following agreement is entered into the date first written above:

The $302,000  debt by Richard  Astrom to the Company as listed on the  Company's
Balance Sheet which debt matures September 20, 2000 is hereby cancelled.

The Company and Richard Astrom agree that the $302,000 debt by Richard Astrom to
the  Company  as  currently  listed on the  Company's  Balance  Sheet is by this
Prepaid  Management  Agreement  converted  to a  five  year  prepaid  management
contract.  Beginning  January 1, 2001,  the first  $60,400  (plus an  additional
amount  equal to the  accrued  interest on the  unearned  balance of the prepaid
management contract, calculated at the rate of 8% per annum) of Richard Astrom's
annual  compensation  from the  Company  will be applied  against  the  $302,000
prepaid management contract each year.

Richard Astrom  pledges and agrees that beginning  January 1, 2001, for the next
five years the first  $60,400  (plus an  additional  amount equal to the accrued
interest on the  unearned  portion of the prepaid  management  contract  balance
calculated  at the rate of 8% per  annum) of his  annual  compensation  from the
Company will be withheld by the Company and be applied against the $302,000 item
each year.

This  agreement  is  made a part of any  existing  agreements,  whether  oral or
written,  for compensation between the Company and Richard Astrom as well as any
future compensation agreements between the Company and Richard Astrom.

Witness the signatures of the parties hereto:

s/s  Richard Astrom
   --------------------------
Richard Astrom, an individual

National Residential Properties, Inc., a Nevada Corporation.
By: s/s  Richard Astrom                  Its: President
   --------------------------------

                                       53
<PAGE>
















                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIARIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)
                        CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2000 AND 1999




























                                       F-1


<PAGE>


                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIARIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)





                                Table of Contents


                                                                            Page


Independent Auditor's Report                                                   1

Financial Statements
    Consolidated Balance Sheet                                                 2
    Consolidated Statements of Income                                          3
    Consolidated Statements of Changes in Stockholders' Equity                 4
    Consolidated Statements of Cash Flows                                      5

Notes to Financial Statements                                             6 - 10























                                       F-2

<PAGE>





                              BAUM & COMPANY, P.A.
                          Certified Public Accountants
                        1515 University Drive - Suite 209
                          Coral Springs, Florida 33071
                                 (954) 752-1712



                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
National Residential Properties, Inc.
Miami, Florida

We  have  audited  the  accompanying  consolidated  balance  sheet  of  National
Residential  Properties,  Inc. and its  subsidiaries  (formerly  National  Rehab
Properties,  Inc.) of September 30, 2000 and the related consolidated statements
of  income,  consolidated  statement  of changes in  stockholders'  equity,  and
consolidated cash flows for the years ended September 30, 2000 and September 30,
1999.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  financial   position  of  National   Residential
Properties, Inc. and its subsidiaries (formerly National Rehab Properties, Inc.)
of  September  30,  2000,  and  the  results  of  its  operations,   changes  in
stockholders'  equity and its cash flows for the years ended  September 30, 2000
and  September  30,  1999  in  conformity  with  generally  accepted  accounting
principles.


December 20, 2000
Coral Springs, Florida

                                       F-3







<PAGE>

<TABLE>

                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIARIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2000

<CAPTION>
                                     ASSETS
                                                                       2000
                                                                  -------------
<S>                                                               <C>
Current Assets
    Cash in bank                                                  $     137,990
    Inventory - real estate holdings                                  3,321,090
    Other current assets                                                 25,287
                                                                  -------------

       Total Current Assets                                           3,484,367
                                                                  --------------

Property, Plant & Equipment
    (Net of accumulated depreciation of $29,948 )                        45,395

Other Assets
    Notes Receivable (Net of allowance for bad debts of $12,000)         55,344
    Organizational costs (net of $55 accumulated amortization)              495
    Prepaid management fee                                              302,000
    Goodwill                                                              1,219
                                                                  -------------

       Total Other Assets                                               359,058
                                                                  -------------

           Total Assets                                           $   3,888,820
                                                                  =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
    Accounts payable and accrued expenses                         $      72,004
    Mortgages and notes payable                                       1,600,233
                                                                  -------------

       Total Current Liabilities                                      1,672,237
                                                                  -------------

Shareholders' Equity
    Common stock, $.001 par value; authorized 100,000,000
        Shares; issued and outstanding 51,061,866                        51,062
    Common stock class A voting, $.001; authorized 2,000,000
       shares; issued and outstanding 1,000,000                           1,000
    Additional paid in capital                                        3,123,733
    Accumulated deficit                                                (959,212)
                                                                  -------------

       Total Shareholders'  Equity                                    2,216,583
                                                                  -------------

       Total Liabilities and Shareholders' Equity                 $   3,888,820
                                                                  =============

                 See accompanying notes to financial statements
</TABLE>


                                       F-4

<PAGE>
<TABLE>


                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIAIRIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)
                        CONSOLIDATED STATEMENTS OF INCOME
                     YEARS ENDED SEPTEMBER 30, 2000 AND 1999

<CAPTION>
                                                      2000            1999
                                                --------------   --------------
<S>                                             <C>              <C>
Gross sales                                     $       62,500   $      374,038

Cost of sales                                           60,146          118,368
                                                --------------   --------------

Gross profit                                             2,354          255,670

Operating Expenses:

    General & administration expenses                  591,066          509,543
                                                --------------   --------------

Net income (loss) before other income (expense)       (588,712)        (253,873)

Other Income (expense)

    Interest income                                     45,121            8,488
    Interest expense                                   (19,927)         (14,124)
    Miscellaneous                                       (7,244)         - - - -
                                                --------------   --------------

       Total income (expense)                           17,950           (5,636)
                                                --------------   --------------

Net income (loss) before provisions for income
taxes                                                 (570,762)        (259,509)

Provision for income taxes

    Tax benefit                                         29,005         - - - -
                                                --------------   --------------

Net loss                                        $    ( 541,757)  $    ( 259,509)
                                                ==============   ==============

Weighted average common shares outstanding          28,951,990        3,390,338
                                                --------------   --------------

Weighted average common share diluted               28,951,990        7 715,338
                                                --------------   -------------

Loss per share                                          (.0187)          (.0765)
                                                ==============   ==============

Loss per share full diluted                             (.0265)          (.0336)
                                                ==============   ==============

                 See accompanying notes to financial statements
</TABLE>

                                       F-5


<PAGE>

<TABLE>

                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIARIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                           SEPTEMBER 30, 2000 AND 1999

<CAPTION>
                                                       Class A  Additional  Retained Earnings/
                                    Common Stock        Common    Paid-in      Accumulated
                               #Shares      Amount      Voting    Capital        Deficit
                             ----------   ----------   -------  ----------   -------------
<S>                          <C>          <C>          <C>      <C>          <C>
September 30, 1998            9,054,773   $    9,055   $ 1,000  $1,324,190   $    (157,946)

Net (Loss)                         ----         ----      ----        ----        (259,509)
                             ----------   ----------   -------  ----------   -------------

September 30, 1999            9,054,773   $    9,055     1,000   1,324,190        (417,455)

Shares issued for
 services rendered            1,463,765        1,464      ----      81,060            ----

Shares for options
 exercised                    6,000,000        6,000      ----        ----            ----

Shares issued for
 acquisition of companies     1,750,000        1,750      ----        ----            ----

Additional shares issued
 from debenture conversion   34,193,328       34,193      ----   1,718,483            ----

Canceled shares              (1,400,000)      (1,400)     ----        ----            ----

Net (Loss)                         ----         ----      ----        ----        (541,757)
                             ----------   ----------   -------  ----------   -------------

September 30, 2000           51,061,866   $   51,062   $ 1,000  $3,123,733   $    (959,212)
                             ==========   ==========   =======  ==========   =============
</TABLE>

                 See accompanying notes to financial statements
                                       F-6

<PAGE>

<TABLE>

                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIAIRIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                           SEPTEMBER 30, 2000 AND 1999

<CAPTION>
                                                          2000         1999
                                                      -----------   -----------
<S>                                                   <C>           <C>
Cash Flows From Operating Activities:

    Net income (loss)                                 $  (541,757)  $    (9,509)

    Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
    Depreciation and amortization                          20,171        10,507
    Common stock issued for services                       81,060           -0-
    Changes in assets and liabilities
    (Increase) in accrued interest                        (24,160)          -0-
    (Increase) in inventory of real estate holdings    (1,599,176)     (545,153)
    Decrease in prepaid expenses                           55,873        15,645
    Decrease in security deposits                             -0-           700
    (Increase) decrease in deposits                      (52,000)       (25,000)
    Increase in customer deposits                             -0-        (1,350)
    Increase (decrease) accounts payable                  (10,199)      (82,203)
    (Decrease) in income tax payable                          -0-       (37,228)
    (Increase) decrease in mortgage receivable            (42,986)      (41,018)
                                                      -----------   -----------
                                                       (2,113,174)     (759,185)
                                                      -----------   -----------
Cash Flows From Investing Activities:

    Acquisition of fixed assets                           (15,847)      (51,060)
    Goodwill generated from acquisition                    (1,219)          -0-
    Reduction in note to related party                       ----        18,091
                                                      -----------   -----------

                                                          (17,066)        8,049
                                                      -----------   -----------
Cash Flows From Financing Activities:

    Proceeds from mortgages payable                     1,060,118       605,900
    Repayment of mortgages payable                       (516,135)     (970,641)
    Proceeds from debentures                             (947,500)      947,500
    Proceeds from note payable - related party               ----        20,000
    Proceeds from issuance of common stock              1,760,490     1,045,880
    Increase in subscription receivable                   500,000      (500,000)
                                                      -----------    ----------
                                                        1,856,973     1,148,639
Net (decrease) increase in cash                          (273,267)      397,503

Cash at beginning of year                                 411,257        13,754
                                                      -----------    ----------
Cash at end of year                                       137,990       411,257
                                                      ===========    ==========

                 See accompanying notes to financial statements
</TABLE>


                                       F-7

<PAGE>


                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIAIRIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Background

     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  September  12,  2000,  the  corporation  changed  its name to  National
     Residential Properties, Inc.

     The company's  business is residential real estate development and building
     construction  services.   From  1993  until  1999  the  Company's  business
     concentrated  in  investing  in and  revitalizing  single  family  homes in
     established  older  residential  neighborhoods  in urban areas. The Company
     either buys single unit vacant properties and builds single family homes or
     it buys abandoned  homes and completes 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 its business,  the
     Company entered a second phase of business,  the development,  construction
     and ownership of multifamily housing projects. Beginning in the fiscal year
     ended  September  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., a
     bonded general construction contractor.

     Real Estate Holdings

     Real  estate  investments  are  stated  at the  lower  of cost  or  market.
     Acquisition   costs  are  allocated  to  respective   properties  based  on
     appraisals of the various properties acquired in the acquisition.

     Income Taxes

     In February 1992, the Financial Accounting Standards Board issued Statement
     on Financial  Accounting  standards 109 of  "Accounting  for Income Taxes."
     Under the Statement 109, deferred tax assets and liabilities are recognized
     for the  estimated  future tax  consequences  attributable  to  differences
     between the financial  statement  carrying  amounts of existing  assets and
     liabilities and their  respective tax bases.  The Company has net operating
     losses (NOL's) of approximately $1,000,000.

         Deferred tax benefit (34% statutory rate)              $ 340,000
         Valuation allowance                                      340,000
                                                                ---------
           Net Benefit                                          $   - 0 -
                                                                =========



                                       F-8

<PAGE>


                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIARIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Due to the  uncertainty of utilizing the NOL and  recognizing  the deferred
     tax benefit, an offsetting valuation allowance has been provided.

     Revenue Recognition

     Revenue is recognized  under the full accrual method of accounting upon the
     completed  sale of real property held for  development  and sale. All costs
     incurred  directly or  indirectly  in  acquiring  and  developing  the real
     property are capitalized.

     Use of Estimates

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

     Cash and Cash Equivalents

     Cash and cash  equivalents  include  cash on hand,  cash in banks,  and any
     highly  liquid  investments  with a maturity of three months or less at the
     time of purchase.  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.

     Earnings/Loss Per Share

     Primary  earnings  per common share are computed by dividing the net income
     (loss) by the weighted  average number of shares of common stock and common
     stock  equivalents  outstanding  during the year. The number of shares used
     for the fiscal years ended  September 30, 2000 and 1999 were 28,951,990 and
     3,390,338  respectively.  Fully  diluted  shares for the fiscal  year ended
     September 30, 2000 and 1999 were 28,951,990 and 7,715,338 respectively.

     Principles of Consolidation

     The consolidated financial statements include accounts of its subsidiaries.
     All material intercompany transactions have been eliminated.

NOTE 2 - INVENTORY

     Inventory  consists of residential  single family homes held for resale and
     land  held for  development  and is  valued  at the lower of cost or market
     value.   Cost  includes   acquisition,   renovation   and  carrying   costs
     specifically identified with each unit.

                                       F-9

<PAGE>


                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIARIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)
                          NOTES TO FINANCIAL STATEMENTS

NOTE 3 - LONG-TERM RECEIVABLES

     Mortgages Receivable

     Due to the  irregular  payment  history of these  types of  mortgages,  the
     balance of $55,344 (net of an  allowance of $12,000) has been  reclassified
     as long  term  receivables.  These  are due  from  persons  that  purchased
     properties from the company.

NOTE 4 - PROPERTY & EQUIPMENT

     Property and  equipment are stated at cost.  Depreciation  is provided over
     the estimated  useful lives of the respective  assets,  generally  three to
     five years, on a straight-line basis.

             Automobiles                                     $  54,680
             Office Equipment                                   20,663
                                                             ---------
                                                                75,343
             Less: Accumulated Depreciation                     29,948
                                                             ---------
                  Net Fixed Assets                           $  45,395
                                                             =========

NOTE 5 - RELATED PARTY TRANSACTION

     Prepaid Expenses

     The President of the Company owed the Company  $302,000  pursuant to a note
     which  matured on  September  20,  2000.  Pursuant  to an  agreement  dated
     September 29, 2000 entitled  "Prepaid  Management  Agreement," the previous
     $302,000 note was canceled and a new  arrangement  for the repayment of the
     $302,000 note was created. The parties agreed that the $302,000 debt by the
     president  to the  Company  will  be  repaid  under  the  following  terms:
     beginning January 1, 2001, for the next five years, the first $60,400 (plus
     an additional  amount equal to the accrued interest on the unearned portion
     of the  contract  balance,  calculated  at the rate of 8% per annum) of his
     annual compensation from the Company will be withheld by the Company and be
     applied  against the $302,000 item each year. This agreement is made a part
     of any  existing  agreements,  whether  oral or  written  for  compensation
     between  the  Company  and  the  officer  well as any  future  compensation
     agreements between the Company and officers.

     The  Company has  entered  into  construction  contracts  of  approximately
     14,000,000 with Encore Builders, Inc., a company wholly owned by a Director
     of the Company and a minority shareholder of Encore Services, Inc.

     Officers of the Company were paid an aggregate of $ 131,515.

                                      F-10

<PAGE>


                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIARIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)
                          NOTES TO FINANCIAL STATEMENTS

NOTE 5 - RELATED PARTY TRANSACTION (Continued)

     Leases

     Office  space is being  provided  by a  company  which is  wholly  owned by
     Bravlio  Gutierrez a minority  shareholder of Encore  Services,  Inc. and a
     director of the company.

NOTE 6 - ACQUISITIONS

     A. On February 10, 2000, the company acquired MAS XV Acquisition  Corp. for
     1,000,000 shares of its common stock and an additional  500,000 for fees. T
     he  acquisition  has been handled as a purchase  method of  accounting  for
     business combinations.

     B. On April 3, 2000 the Company acquired 80% of Encore  Services,  Inc. for
     250,000 common shares of its stock.

NOTE 7 - MORTGAGES AND NOTES PAYABLE

     Mortgage Payable

     Collateralized constructions loans, bearing interest at the
     greater of 8.25% or 1.5% over prime lending rate. The monthly
     interest is added to the  principal  balance of the loan.
     The loans are paid off upon sale of the underlying real estate
     or October 1, 2001.  Notes are guaranteed by an officer of the
     Company.                                                       $    325,233

     Mortgage Payable

     Collateralized note bearing interest at 12% and payable
     in full plus accrued interest on June 29, 2000.  The Company
     negotiated an extension of the due date to March 1, 2001,
     at which time the entire principle and interest will be due.        500,000

     Mortgage  Payable

     Collateralized note, secured by real estate, due upon sale of
     underlying real estate or December 9, 2002. Interest is payable
     monthly at 12%. Note is guaranteed by an officer of the Company     100,000

     Note Payable

     Collateralized note bearing interest at 9-1/2% secured by
     real estate, due August 2, 2001.                               $    675,000
                                                                    ------------
           Subtotal                                                    1,600,233
     Less: Non-Current Maturities                                          - 0 -
                                                                    ------------
     Total Current Maturities                                       $  1,600,233
                                                                    ============
                                      F-11

<PAGE>


                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                              AND ITS SUBSIDIAIRIES
                   (FORMERLY NATIONAL REHAB PROPERTIES, INC.)
                          NOTES TO FINANCIAL STATEMENTS

NOTE 8- CAPITAL TRANSACTIONS

     During the fiscal  year ended  September  30,  2000 the  following  capital
     transactions occurred.

     A.   On various  dates from  October  1, 1999 to June 28,  2000  34,193,328
          common shares valued at $1,735,447 were issued to debenture holders as
          part of debenture conversion provision.

     B.   On February 10, 2000, the Company issued  1,000,000  common shares for
          the  purchase of MAX XV  Acquisition,  Inc.  In  addition  the company
          issued 500,000 shares and $100,000 for consulting  services  regarding
          the acquisition.

     C.   On April 1, 2000,  the company  issued  250,000  shares for 80% of the
          common stock of Encore Services, Inc.

     D.   On April 3, 2000,  an officer of the company stock  exercised  options
          for 6,000,000 shares at their exercise price of $ 6,000.

     E.   On October 13, 1999 227,272 shares of common stock,  valued at $22,727
          were issued for consulting fees.

     F.   In November  1999,  308,333  shares of common  stock valued at $30,833
          were issued for consulting fees.

     G.   On December  7, 1999  250,000  common  shares  valued at $25,000  were
          issued for consulting services.

     F.   On May 2, 2000,  the Company  donated  250,000 common shares valued at
          $2,500 to the Yeshiva Gedoluh of Midwood.

NOTE 9- SUBSEQUENT EVENTS

     A.   On October 10, 2000 the Company amended its Articles of  Incorporation
          to  increase  its  authorized   common  shares  from   100,000,000  to
          250,000,000.

     B.   The Company acquired the Company,  2217 Acquisition Inc.on October 10,
          2000 for the purpose of  purchasing  a parcel of land for  development
          and related convertible financing .

NOTE 10  - SUPPLEMENTAL CASH FLOW STATEMENT  DISCLOSURES

     Interest expense for year 2000                    $ 104,135




                                      F-12