ANNUAL REPORT

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

                                   FORM 10-KSB

         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES

                              EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2005

                         Commission File Number 0-27159

                       NATIONAL REALTY AND MORTGAGE, INC.
             (Exact Name of Registrant as Specified in its Charter)

           Nevada                                               65-0439467
(State or Other Jurisdiction                                 (I.R.S. Employer
      of Incorporation)                                   Identification Number)

       6915 RED ROAD SUITE #222 CORAL GABLES, FLORIDA 33143 (305) 666-6565
               (Address, including zip code, and telephone number,
                  of registrant's principal executive offices)

       SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT: None

      SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:
                        Common Stock $.0000001 par value
                                (Title of class)

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

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

         Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is contained herein, and will not 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. [X]

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

         Issuer's revenues for its most recent fiscal year:  $1,407,800.

         The aggregate market value of voting stock held by non-affiliates of
the registrant as of January 6, 2006 was $64,002.51 (based on the last reported
sale price of $0.01 per share on January 6, 2006).

         The number of shares of the registrant's common stock outstanding as of
January 6, 2006 was 6,462,895 shares of common stock and 666,667 shares of Class
A common stock.

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                                TABLE OF CONTENTS

PART I....................................................................... 1

    ITEM 1.  BUSINESS........................................................ 2

    ITEM 2.  PROPERTIES...................................................... 9

    ITEM 3.  LEGAL PROCEEDINGS............................................... 10

    ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............. 10

PART II...................................................................... 11

    ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS............................................. 11

    ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION....... 12

    ITEM 7.  FINANCIAL STATEMENTS............................................ 15

    ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
             AND FINANCIAL DISCLOSURE........................................ 30

    ITEM 8A. CONTROLS AND PROCEDURES......................................... 30

    ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
             PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT...... 31

    ITEM 10. EXECUTIVE COMPENSATION.......................................... 32

    ITEM 11. SECURITY OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND
             MANAGEMENT AND RELATED STOCKHOLDER MATTERS...................... 33

    ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................. 34

    ITEM 13. EXHIBITS........................................................ 34

    ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.......................... 35

         THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. SUCH STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ASSUMPTIONS,
ESTIMATES AND PROJECTIONS ABOUT THE COMPANY AND ITS INDUSTRY. FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS THAT MAY CAUSE ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE,
ACHIEVEMENTS AND PROSPECTS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION
TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON EVEN IF NEW
INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE. BECAUSE THE
COMPANY IS CURRENTLY ISSUING "PENNY STOCK" AS DEFINED IN RULE 3A51-1 UNDER THE
EXCHANGE ACT, THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 DO NOT APPLY TO THE COMPANY.







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                                     PART I

BACKGROUND CAPITALIZATION INFORMATION

         The Company's original Articles of Incorporation (the "ARTICLES")
authorized the Company to issue 1 million shares of the Company's common stock
("NRMG COMMON STOCK"). After its incorporation, the following events occurred:
(i) in December 1994, the Company attempted to effect a 2 for 1 stock split (the
"1994 STOCK SPLIT"); (ii) in January 1999, the Company attempted to effect a 1
for 10 reverse stock split (the "1999 REVERSE STOCK SPLIT"); (iii) between the
date of its incorporation and January 2001, the Company believed it increased
the number of shares it was authorized to issue from 1 million to 40 million
shares of NRMG Common Stock (the "40 MILLION SHARE INCREASE"); (iv) in October
2000, the Company attempted to increase the number of shares the Company was
authorized to issue from 40 million to 250 million shares of NRMG Common Stock
(the "250 MILLION SHARE INCREASE"); (v) in January 2001, the Company attempted
to increase the number of shares it was authorized to issue from 250 million to
750 million shares of NRMG Common Stock and effected a 3 for 1 stock split (the
"750 MILLION SHARE INCREASE"); and (vi) in June 2001, the Company attempted to
increase the number of shares it was authorized to issue from 750 million to 1.5
billion shares of NRMG Common Stock (the "1.5 BILLION SHARE INCREASE", and
together with the 1994 Stock Split, the 1999 Reverse Stock Split, the 40 Million
Share Increase, the 250 Million Share Increase and the 750 Million Share
Increase, the "CAPITAL CHANGES"). The Company has since determined that some or
all of the Capital Changes were not validly adopted by the Company's board of
directors, approved by the Company's shareholders or filed with the Secretary of
State of the State of Nevada as required by the laws of the State of Nevada. As
a result, it appears the Company was never authorized to issue more than 1
million shares of NRMG Common Stock. Until November 17, 2005, (as described in
more detail below) all shares of NRMG Common Stock issued in excess of 1 million
shares appeared to have been issued in excess of the authorized amount.

         Given the foregoing, the Company attempted to determine the majority
owners of the validly issued shares of NRMG Common Stock. The Company discovered
that Richard Astrom and Pamela Gay Astrom, tenants by the entireties, were
issued a substantial block of shares shortly after the Company merged with
National Rehab Properties, Inc. in 1995. These shares consisted of the majority
of the Company's validly issued outstanding shares. After their initial
issuance, approximately 22% of these shares were transferred by Mr. and Mrs.
Astrom to their family members, and were then resold into the public market.
While Mr. and Mrs. Astrom did transfer these shares, the Company's assumption is
that, because the shares are largely fungible, the shares transferred by Mr. and
Mrs. Astrom were those issued in excess of the Company's authorized amount. If
the Company was incorrect in this assumption, Mr. and Mrs. Astrom would not have
been the owners of a majority of the Company's validly issued shares. The
Company's former transfer agent's records show that the remainder of these
shares (including those shares the Company assumes were validly issued) were
still held by Richard and Pamela Astrom, as tenants by the entireties, when the
Company's former transfer agent and the Company severed relations. The Company's
current transfer agent's records confirm that these shares can be traced from
that time to the present, as they are still held by Richard and Pamela Astrom,
as tenants by the entireties, and have not been sold or otherwise transferred.
As such, Richard Astrom and Pamela Gay Astrom, as tenants by the entireties,
appeared to hold a majority of the validly issued shares of NRMG Common Stock.

         After making the aforementioned factual findings, the Company proceeded
to retain local counsel in the State of Nevada to determine the effect of the
invalidity of some or all of the Capital Changes and to confirm the foregoing
analysis under Nevada law. Based on the Company's discussions with Nevada
counsel and the assumption that the shares transferred to Mr. and Mrs. Astrom's
family members described above included only those shares that were issued in
excess of the Company's authorized amount, the Company determined that Richard
and Pamela Astrom could amend the Company's articles of incorporation to
increase the Company's authorized shares of common stock. The Company also
believed that the issuance of NRMG Common Stock in excess of the authorized
amount could be cured by the Company's board of directors.

         On September 20, 2005, the Company filed a revised information
statement on Schedule 14C with the Securities and Exchange Commission (the
"SEC") relating to shareholder approval of the following proposals:
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              1.  To amend the Company's articles of incorporation to increase
                  the number of authorized shares of common stock to 9 billion
                  shares and accordingly increase the total number of authorized
                  shares of all classes of stock the Company is authorized to
                  issue.

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

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

              4.  To amend the Company's articles of incorporation to effect a 1
                  for 300 reverse split of the Company's capital stock.

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

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

         The shareholders owning a majority of the validly issued and then
outstanding NRMG Common Stock then adopted and approved these proposals. On
October 17, 2005, the Company filed Amended and Restated Articles of
Incorporation incorporating the changes discussed in (1), (2), (3), (5) and (6)
above with the Nevada Secretary of State. On November 19, 2005, the Company's
board of directors ratified the Capital Changes. On December 19, 2005, the
Company effected a reverse stock split of the shares of the Company's capital
stock, whereby every 300 shares of capital stock were combined and converted
into one share of capital stock and the Company's common stock began to trade on
a split-adjusted basis (the "2005 REVERSE STOCK SPLIT"). The record date for the
2005 Reverse Stock Split was December 6, 2005. As of December 6, 2005, there
were 1,938,566,046 shares of common stock issued and outstanding and 200 million
shares of Class A common stock issued and outstanding. The number of shares of
common stock and Class A common stock issued and outstanding, or held as
treasury shares was reduced to a number approximately equal to the number of
shares of common stock or Class A common stock, respectively, issued and
outstanding, or held as treasury shares, immediately prior to the effectiveness
of the reverse split, divided by 300 (except that the Company did not issue
fractional shares in connection with the 2005 Reverse Stock Split and instead,
any fractional share that resulted from the 2005 Reverse Stock Split was rounded
up to the next whole share). As of January 6, 2006, there were 6,462,895 shares
of common stock issued and outstanding and 666,667 shares of Class A common
stock issued and outstanding.

ITEM 1.  BUSINESS

OVERVIEW

     o   National Realty and Mortgage, Inc. was incorporated on October 18,
         1971, in the State of Nevada under the name of Mister Las Vegas, Inc.
         At the time of its incorporation, the Company was authorized to issue 1
         million shares of its common stock.

     o   Pursuant to a letter agreement executed on November 15, 1994, Richard
         Astrom, the then-president of National Rehab Properties, Inc., a
         Florida corporation formed on October 1, 1993, purchased 200,000 of the
         235,000 issued and outstanding shares of NRMG Common Stock from the
         Company's then controlling shareholders. At this time the Company was
         authorized to issue 1 million shares of NRMG Common Stock. On December
         15, 1994, the Company's board of directors approved the 1994 Stock
         Split, giving Richard Astrom 400,000 of the issued and outstanding
         shares of NRMG Common Stock.

     o   On December 15, 1994, the Company entered into an agreement of merger
         with National Rehab Properties, Inc. On May 15, 1995, the merger became
         effective and National Rehab Properties, Inc. merged with and

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<PAGE>
         into the Company, with National Rehab Properties, Inc. remaining as the
         surviving entity. The surviving entity subsequently changed its name to
         National Rehab Properties, Inc. and became authorized to conduct
         business in the State of Florida on August 17, 1995.

     o   In January 1999, the Company attempted to effect the 1999 Reverse Stock
         Split. Between the date of its incorporation and January 2001, the
         Company attempted to increase the number of shares the Company was
         authorized to issue from 1 million to 40 million shares of common stock
         pursuant to the 40 Million Share Increase.

     o   On June 17, 1999, pursuant to a joint action by written consent of the
         Company's shareholders and board of directors, the Company was given
         the authority to amend its articles of incorporation to authorize 2
         million shares of Class A common stock and to issue 1 million shares of
         its newly authorized Class A common stock to Christopher Astrom.

     o   In April 2000, the Company acquired 80% of Encore Services, Inc.
         ("ENCORE SERVICES"). Encore Services served as the Company's general
         construction contractor, but was subsequently replaced by Encore
         Builders, Inc. ("ENCORE BUILDERS`"), a former subsidiary (through March
         21, 2002) of Capital Solutions I, Inc., formerly Vacation Ownership
         Marketing, Inc. Capital Solutions I, Inc. ("CAPITAL SOLUTIONS I") is an
         affiliate of the Company. Encore Builders was the general construction
         contractor for the Company's Conquistador Plaza project in Miami,
         Florida. Since the time Encore Builders replaced Encore Services as the
         general construction contractor of the Company's Conquistador Plaza
         project, to the time the Company severed its relationship with Encore
         Services in March 2002, Encore Services has been inactive.

     o   In October 2000, the Company changed its name to National Residential
         Properties, Inc. (the "NATIONAL RESIDENTIAL NAME CHANGE").

     o   In October 2000, the Company attempted to effect the 250 Million Share
         Increase by filing a Certificate of Change in Number of Authorized
         Shares with the Nevada Secretary of State to increase its authorized
         number of shares from 40 million shares, to 250 million shares.

     o   In January 2001, the Company attempted to effect the 750 Million Share
         Increase.

     o   On April 12, 2001, the Company's wholly-owned subsidiary, Connecticut
         Acquisition Corp. No. 1 ("CONNECTICUT ACQUISITION") obtained a loan
         from accredited investors evidenced by its 8% Series A Senior
         Subordinated Convertible Redeemable Debentures due April 12, 2003 (the
         "CONNECTICUT ACQUISITION DEBENTURES"), which were convertible from time
         to time into shares of Connecticut Acquisition's Class A common stock.
         On May 8, 2001, Connecticut Acquisition merged with and into the
         Company, with the Company remaining as the surviving entity. As a
         result, all rights and obligations of Connecticut Acquisition inured to
         the benefit of and became binding upon the Company. Pursuant to the
         merger, the Connecticut Acquisition Debentures were surrendered and
         canceled, and new debentures, identical to the Connecticut Acquisition
         Debentures (the "NRMG CONNECTICUT DEBENTURES"), but convertible into
         authorized and unissued shares of NRMG Common Stock, were issued by the
         Company to the holders of the Connecticut Acquisition Debentures.

     o   In June 2001, the Company filed a Certificate of Amendment with the
         Secretary of State of the State of Nevada attempting to effect the 1.5
         Billion Share Increase.

     o   On October 17, 2001, the Company's wholly-owned subsidiary, DC Power
         Products Acquisition Corp. ("DC POWER"), a Florida corporation,
         obtained a loan from accredited investors evidenced by its 8% Series A
         Senior Subordinated Convertible Redeemable Debentures due October 17,
         2003 (the "DC POWER DEBENTURES"), which were convertible from time to
         time into shares of DC Power's common stock. On November 1, 2001, DC
         Power merged with and into the Company with the Company remaining as
         the surviving entity. As a result, all rights and obligations of DC
         Power inured to the benefit of and became binding upon the Company.
         Pursuant to the merger, the DC Power Debentures were surrendered

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<PAGE>
         and canceled, and new debentures, identical to the DC Power Debentures
         (the "NRMG DC POWER DEBENTURES" and together with the NRMG Connecticut
         Debentures, the "NRMG DEBENTURES"), but convertible into authorized and
         unissued shares of NRMG Common Stock, were issued by the Company to the
         holders of the DC Power Debentures. At this time, the Articles, as
         amended, provided that the Company was authorized to issue up to 1.5
         billion shares of NRMG Common Stock. However, the Company concluded
         that the 1994 Stock Split, the 1999 Reverse Stock Split, the 40 Million
         Share Increase, the 250 Million Share Increase, the 750 Million Share
         Increase and the 1.5 Billion Share Increase may not have been validly
         adopted by the Company's board of directors, approved by the Company's
         shareholders or filed with the Secretary of State of the State of
         Nevada, as required by the laws of the State of Nevada.

     o   The Company believed it had only 1 million shares of NRMG Common Stock
         authorized, a majority of which was owned by Richard and Pamela Gay
         Astrom, as tenants by the entireties. Additionally, as a result of the
         conversion of the NRMG Debentures into NRMG Common Stock and the
         decrease in the price of NRMG Common Stock, investors were entitled to
         more shares than authorized. As a result, the Company, had
         1,938,566,046 shares of NRMG Common Stock issued, which exceeded the
         number of authorized shares. Under the laws of the State of Nevada, it
         may be possible that the transactions for shares in excess of the
         number of authorized shares will not be viewed as valid and the Company
         may be responsible for taking corrective action or compensating the
         shareholders.

     o   On September 20, 2005, the Company filed a revised information
         statement on Schedule 14C with the SEC relating to shareholder approval
         of the following proposals: (i) to amend the Company's articles of
         incorporation to increase the number of authorized shares of common
         stock to 9 billion shares and accordingly increase the total number of
         authorized shares of all classes of stock the Company is authorized to
         issue; (ii) to amend the Company's articles of incorporation to create
         Class A common stock and to issue Class A common stock to Christopher
         Astrom; (iii) to amend the Company's articles of incorporation to
         change the par value of the Company's common stock to $.0000001 per
         share; (iv) to amend the Company's articles of incorporation to effect
         a 1 for 300 reverse split of the Company's capital stock; (v) to ratify
         past changes of the Company's name and approve an amendment to the
         Company's articles of incorporation to change the name of the Company
         to "National Realty and Mortgage, Inc." and (vi) to amend the Company's
         articles of incorporation to create a class of preferred stock, and to
         adopt and approve amended and restated articles of incorporation.
         Shareholders owning a majority of the Company's validly issued and then
         outstanding NRMG Common Stock then adopted and approved the proposals
         set forth in the revised information statement on Schedule 14C.

     o   On October 17, 2005, the Company filed Amended and Restated Articles of
         Incorporation which: (i) changed the name of the Company to National
         Realty and Mortgage, Inc. (the "NATIONAL REALTY NAME CHANGE"), (ii)
         created Class A common stock, (iii) created a class of preferred stock,
         (iv) increased the number of authorized shares of common stock to
         9,000,000,000 and accordingly increased the number of shares of all
         classes of stock that the Company is authorized to issue and (v)
         changed the par value of the Company's common stock to $.0000001 per
         share.

     o   On November 15, 2005, the Company issued 200 million shares of its
         newly authorized Class A common stock, par value $.0000001 per share,
         to Christopher Astrom.

     o   On November 17, 2005, the Company's board of directors ratified the
         Capital Changes.

     o   On December 19, 2005, the Company effected the 2005 Reverse Stock Split
         whereby every 300 shares of capital stock were combined and converted
         into one share of capital stock and the Company's common stock began to
         trade on a split-adjusted basis. The record date for the 2005 Reverse
         Stock Split was December 6, 2005. As of December 6, 2005, there were
         1,938,566,046 shares of common stock issued and outstanding and 200
         million shares of Class A common stock issued and outstanding. The
         number of shares of common stock and Class A common stock issued and
         outstanding, or held as treasury shares was reduced to a number
         approximately equal to the number of shares of common stock or Class A
         common stock, respectively, issued and outstanding, or held as treasury
         shares, immediately prior to the effectiveness of the reverse split,
         divided by 300 (except that the Company did not issue fractional shares
         in connection with the 2005

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         Reverse Stock Split and instead, any fractional share that resulted
         from the 2005 Reverse Stock Split was rounded up to the next whole
         share). As of January 6, 2006, there were 6,462,895 shares of common
         stock issued and outstanding and 666,667 shares of Class A common stock
         issued and outstanding.

OPERATING HISTORY

From 1993 until 1999, the Company's business concentrated on 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 single family homes on them, or bought abandoned homes which the Company
then renovated and sold. 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. In its 2004 fiscal year, the Company
commenced operations as a mortgage lender.

The Company has become licensed to extend credit as a mortgage lender,
implemented an online appraisal service and has begun active efforts to locate
potential borrowers, including increased advertising efforts and discussions
with mortgage brokers. Although the Company has determined to develop its
mortgage lending business, it has not discontinued its real estate development
business. The Company plans to continue its real estate development business in
tandem with its mortgage lending business to the extent appropriate development
opportunities present themselves and become available to the Company. The
Company has not hired additional personnel to engage in its mortgage lending
business. As of September 30, 2005, the Company has approximately $37,482
outstanding in credit extended to borrowers.

CONNECTICUT PROPERTIES

         On May 4, 2001, the Company's wholly-owned subsidiary, Connecticut
Acquisition, entered into a land development agreement with a Mr. Nathan Kahn
and various companies controlled by him (the "KAHN ENTITIES") to develop a
parcel of land located in Hebron, Connecticut (the "HEBRON PARCEL") as a senior
adult community. Thereafter, Connecticut Acquisition and the Kahn Entities hoped
to continue to develop the Hebron Parcel with a view toward either selling
developed lots to builders or erecting dwellings themselves. In addition, the
Kahn Entities had obtained options to purchase and develop other properties, and
the Kahn Entities advised they would need additional funding to pay their
expenses, such as engineering reports, zoning studies, and the like, in
connection with the obtaining and maintenance of these options. On April 12,
2001, in contemplation of the financing of this project, Connecticut Acquisition
obtained a loan from accredited investors evidenced by the Connecticut
Acquisition Debentures.

         From the proceeds of the sale of the Connecticut Acquisition Debentures
approximately (a) $160,000 was to be used by Connecticut Acquisition to acquire
the Hebron Parcel (together with a mortgage in the amount of $315,000 which
Connecticut Acquisition would assume) and (b) $680,000 was to be used by
Connecticut Acquisition to pay the expenses to be incurred with the development
of the other properties.

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

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

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CONQUISTADOR PLAZA

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

         Encore Builders, a subsidiary of Capital Solutions I whose president
was a director of the Company, was the primary construction company responsible
for construction projects at the Company's properties. However, the first of
these projects, the Conquistador Plaza project, was subject to substantial
delays due to the inability of Encore Builders to meet completion schedules. The
delays in construction caused the Company to commence financing construction
loan interest from its own resources, rather than from construction loan
proceeds, and to terminate Encore Builders as the project's contractor. In March
2002, the Company returned the shares of Encore Services.

         On April 18, 2002, the Company's subsidiary, Conquistador Plaza, Inc.
("CONQUISTADOR PLAZA") received a notice of default from its lender. The notice
cited violations of loan covenants by Conquistador Plaza, specifically relating
to the proceeds of the construction loan being insufficient to complete
construction of the Conquistador Plaza development. The notice of default also
cited the termination of work on the project for a period of more than 20 days.
As a consequence of the defaults, the lender accelerated and declared due and
payable Conquistador Plaza's entire indebtedness of $3,205,317.89, and advised
Conquistador Plaza that the lender would take action to protect its interest if
Conquistador Plaza did not return the entire balance by May 19, 2002. Although
the Company was not liable on the Conquistador Plaza loan, the Company invested
substantial funds in the Conquistador Plaza development and might have lost its
investment were the lender to foreclose on the lender's mortgage. In order to
repay the lender, Conquistador Plaza entered into a contract to sell the
Conquistador Plaza project. The Company entered into a contract dated June 24,
2002, to sell this property to Shamrock at the Gables LLC for $3.5 million. This
transaction was completed on October 8, 2002.

         On August 2, 2002, Encore Builders filed suit against Conquistador
Plaza in the Circuit Court of the Eleventh Judicial Circuit in Miami-Dade
County, Florida seeking foreclosure of a mechanic's lien with respect to the
Conquistador Plaza development. Encore Builders asserted Conquistador Plaza
breached the January 30, 2001 construction contract between Encore Builders and
Conquistador Plaza. Encore Builders asserted that $504,076.03 was due from
Conquistador Plaza and sought damages with interest, costs and attorneys fees.
Encore Builders was bonded by Mountbatten Surety Company, Inc. On August 26,
2003, the parties stipulated for a full settlement of all claims that existed
amongst them. As part of the settlement, $55,000 was paid for the benefit of
Encore Builders and $50,000 was paid to Mountbatten Surety Company, Inc.

BARCELONA APARTMENTS

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

RESIDENCES AT BAY HARBOR

         The Bay Harbor property, located on Bay Harbor Island, Florida, was
purchased by the Company in 2000, for $850,000. The Company intended to
construct a 15-story, 60 unit apartment building on the Bay Harbor property and
intended for Encore Builders to handle the construction. Immediately after
closing the acquisition of the land, the Company applied for a building permit,
but did not obtain the permit due to various neighborhood objections to
construction. The initial business plan called for the building to be sold as a
condominium project for $18 million, with construction costs at approximately
$12 million. Due to the Company's relations with Encore Builders and the
difficulties with the building permit, the Company chose not to construct the
building and instead, on December 17, 2001, chose to resell the land for $2.2
million to Dennis Almandares, an independent third party.

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The transaction contemplated by this agreement did not close, and the Company
subsequently entered into a purchase and sale agreement dated as of May 20, 2002
to sell this property to Gateway Mortgage Bankers, Inc. for $2.3 million. The
Company expected to close this transaction in September of 2002 or upon the
issuance of a building permit by the city building department for a 15-story
building but was unable to obtain the required building permit. Subsequently,
the Company filed a complaint against the Town of Bay Harbor. On June 30, 2004,
the Circuit Court granted the Town of Bay Harbor Island's summary judgment
motion. The Company has no plans to appeal the ruling.

         On April 7, 2005, the Company entered into an Agreement for Purchase
and Sale (the "BAY HARBOR AGREEMENT") with Bay Harbor Island Associates, L.P. to
sell the Bay Harbor property. The Bay Harbor Agreement provided that the Company
would transfer fee simple title and all related interests in the property in
exchange for $1.4 million. The transaction was subject to a 30 day inspection
period and was scheduled to close on August 5, 2005 (subject to the right of Bay
Harbor Island Associates, L.P. to advance the closing date upon notice to the
Company). On August 3, 2005, the Company completed the sale of the Bay Harbor
Property and transferred title to Bay Harbor Island Associates, L.P. in exchange
for $1,297,183.38 in cash and the release of an aggregate of $140,000 which had
been previously placed in escrow. Net proceeds totaled $696,820.33 and the
satisfaction of outstanding mortgages and other expenses totaled $734,489.67.
The Company was also reimbursed $31,310 pursuant to the Bay Harbor Agreement.

CURRENT OPERATIONS

         From 1999 until 2002, the Company's business focused on residential
real estate development and building construction services, and in particular on
acquiring properties suitable for development as multifamily housing or multiple
unit single family development tracts. In its 2004 fiscal year, the Company
commenced operations as a mortgage lender. Although the Company has determined
to develop its mortgage lending business, it has not discontinued its real
estate development business. The Company plans to continue its real estate
development business in tandem with its mortgage lending business to the extent
appropriate development opportunities present themselves and become available to
the Company. The Company has not hired additional personnel to engage in its
mortgage lending business. As of September 30, 2005, the Company has
approximately $37,482 outstanding in credit extended to borrowers.

RISK FACTORS

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

RISKS RELATED TO LEGAL UNCERTAINTIES

         THE COMPANY BELIEVES IT HAS VIOLATED NEVADA CORPORATE LAW

         At the time of its incorporation, the Company had 1 million shares of
its common stock authorized. Since that time, the Company believed it had
effected the 1994 Stock Split, the 1999 Reverse Stock Split, the 40 Million
Share Increase, the 250 Million Share Increase, the 750 Million Share Increase
and the 1.5 Billion Share Increase. These changes in capital structure appear to
have not been validly adopted by the Company's board of directors, approved by
the Company's shareholders or filed with the Secretary of State of the State of
Nevada, as required by the laws of the State of Nevada. As such, as of September
30, 2005, it appeared that the Company had only 1 million shares of NRMG Common
Stock authorized, and the majority of the validly issued shares were held by
Richard and Pamela Astrom as tenants by the entireties. As of September 30,
2005, the Company believed a majority of the Company's validly issued and then
outstanding shares and the board of directors could cure and ratify the
overissuances of stock and the aforementioned changes in capital structure.
Until that time, the Company believed it could be liable to the holders of the
NRMG Common Stock issued in excess of the authorized amount. As of September 30,
2005, the Company also believed the issuance of Class A common stock to
Christopher Astrom in 1999 was not authorized as an amendment to the Company's
articles of incorporation was never filed with the

                                        7
<PAGE>
Secretary of State of the State of Nevada. As of September 30, 2005, the Company
believed the recipient of the unauthorized shares, Christopher Astrom, could
have a claim against the Company for damages, but thought it was unlikely that
Christopher Astrom would file a claim against the Company as he is an officer,
director and principal shareholder of the Company. Also, as discussed below, as
of September 30, 2005, the Company's board of directors and the holders of a
majority of its validly issued and then outstanding shares intended to authorize
the creation of Class A common stock and issue shares to Christopher Astrom.

         It came to the Company's attention that, as a result of the conversion
of the debentures issued by the Company into NRMG Common Stock, coupled with the
decrease in the trading price of NRMG Common Stock, investors were entitled to
more shares of NRMG Common Stock than were authorized under the Articles. As a
result, as of September 30, 2005, the Company had 1,938,566,046 shares of NRMG
Common Stock issued, which exceeded the number of shares authorized. As stated
above, the Company believed the holders of a majority of the Company's validly
issued and then outstanding shares (Richard and Pamela Astrom) and the board of
directors could cure and ratify the overissuances of stock. If this could not be
accomplished, the Company could have been liable to the holders of the NRMG
Common Stock issued in excess of the authorized amount in an amount equal to
1,937,566,046 shares (the number of shares issued in excess of the amount
authorized) multiplied by the price each such share was issued for (which ranged
from approximately $.0001 to $5.4 per share). These holders could demand the
issuance of the shares in excess of the Company's authorized amount be
rescinded, causing the Company to purchase the shares at the price at which they
were sold. The overissuance, together with the Company's inability to increase
its authorized number of shares, eliminated the Company's ability to raise
capital through issuances of publicly registered securities. As of September 30,
2005, the Company believed it would be unable to continue trading NRMG Common
Stock or increase its capital resources through selling publicly registered
securities until the overissuance is cured and the Company increases the
authorized number of shares of NRMG Common Stock. The Company's officers and
directors may have also violated their fiduciary duties to the Company by
permitting the Company to issue shares in excess of its authorized amount and by
not having sufficient shares available upon the conversion of the debentures
issued by the Company.

         As of November 17, 2005, the Company's board of directors had cured and
ratified the overissuances of stock. While it is unlikely that a shareholder
would bring an action against the Company now that, as of November 17, 2005, the
Company has ratified the overissuances of NRMG Common Stock, any such action
maintained against the Company could have a substantial impact on the Company's
liquidity and capital resources.

         THE COMPANY HAS VIOLATED SECTION 5 OF THE SECURITIES ACT.

         Section 5 of the Securities Act prohibits the public sale of securities
absent an effective registration statement being filed with the SEC, unless an
exemption from registration applies. All shares of NRMG Common Stock issued upon
conversion of the NRMG Debentures were sold by holders of the NRMG Debentures
following conversion. This occurred during the period beginning on May 16, 2001
and ending on July 13, 2001 for the NRMG Connecticut Debentures and beginning on
November 5, 2001 and ending on August 2, 2002 for the NRMG DC Power Debentures.
In October 2000, the Company issued debentures pursuant to a merger with 2217
Acquisition Inc., a Nevada corporation. These debentures were also converted
into NRMG Common Stock. These transactions were performed in a manner thought to
be exempt from the registration requirements of Section 5 of the Securities Act.
However, the requirements of the exemptions relied on do not appear to have been
satisfied.

         As of the date of this report, the Company has not received $540,000 in
additional proceeds from the sale of the NRMG DC Power Debentures and has
$199,202 in NRMG DC Power Debentures outstanding. The Company has no plans to
issue additional NRMG Debentures for any amounts not yet received and has no
plans to permit outstanding NRMG Debentures to be converted.

         THE COMPANY MAY HAVE VIOLATED THE FEDERAL PROXY RULES

         At the time of its incorporation, the Company had 1 million shares of
its common stock authorized. Since that time, the Company believed it had
effected the 1994 Stock Split, the 1999 Reverse Stock Split, the 40 Million
Share Increase, the 250 Million Share Increase, the 750 Million Share Increase
and the 1.5 Billion Share Increase.

                                        8
<PAGE>
As of September 30, 2005, these changes in capital structure do not appear to
have been validly adopted by the Company's board of directors, approved by the
Company's shareholders or filed with the Secretary of State of the State of
Nevada, as required by the laws of the State of Nevada. The Company may have
violated the federal proxy rules by either (i) not obtaining the requisite
shareholder approval to effect these changes or (ii) not providing shareholders
with an Information Statement on Schedule 14C.

         THE COMPANY MAY NOT BE ABLE TO RAISE ADDITIONAL CAPITAL

         Though the Company was able to increase its authorized capital to 10
billion shares on October 17, 2005, there can be no assurance that the Company
will be able to raise additional capital on a debt or equity basis.

         THE COMPANY IS IN DEFAULT OF THE NRMG DEBENTURES

         The Company is in default under the terms of the NRMG Debentures
because, among other things, the Company has no plans to register additional
NRMG Common Stock to be issued upon conversion of the NRMG Debentures that are
currently outstanding and has no plans to complete the issuance of the NRMG
Debentures. Given the foregoing, the Company could face litigation by the
holders of the NRMG Debentures seeking to enforce the Company's obligations
thereunder. This would likely have a substantial negative effect on the
Company's capital resources and would also negatively affect the Company's
liquidity. The Company is currently working with the holders to reach a mutually
satisfactory resolution.

OTHER RISKS

         THE COMPANY'S STOCK PRICE HAS DECLINED SIGNIFICANTLY AND MAY NOT
RECOVER

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

         RISKS RELATED TO 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 construction and
permanent mortgage financing which may render the acquisition, sale or
refinancing of a property difficult or unattractive and which may make debt
service burdensome, changes in real estate and zoning laws, bonding
requirements, permitting requirements, changes in income taxes, real estate
taxes or federal or local economic or rent controls, floods, earthquakes and
other acts of nature and other factors beyond the Company's control. The
illiquidity of real estate investments generally may impair the Company's
ability to respond promptly to changing circumstances.

         Under federal, state and local environmental laws, ordinances and
regulations, 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 its
employees may have arranged for removal, disposal or treatment of hazardous or
toxic substances. In addition, environmental laws impose liability for release
of asbestos-containing materials into the air, and third parties can seek
recovery from the Company for personal injury associated with those materials.

ITEM 2.  PROPERTIES

         As of September 30, 2005, the Company did not own any real property.
The Company plans to continue to develop its real estate business in tandem with
its mortgage lending business to the extent appropriate development
opportunities present themselves. The Company currently does not expect to
generate additional revenues other than from its lending business unless and
until it acquires additional property. The Company's investment policy with
respect to real estate investments is to invest primarily in apartment complexes
and to operate and finance these properties with proceeds from previous

                                        9
<PAGE>
sales of property. The Company's policy with respect to real estate mortgages is
to originate and service primarily first mortgages on single family dwellings in
Florida. These policies are established by the Company's board of directors and
may be changed from time to time with or without the approval of the
shareholders. There are no limitations on the percentage of the Company's assets
which may be invested in any one investment, or type of investment, and it is
the Company's policy to acquire such assets primarily for income.

         For additional discussion of the Company's business operations, see
"Item 1 - Business" under the subheading "Current Operations".

         OUTSTANDING MORTGAGES

         As of September 30, 2005, the Company had one unsecured line of credit
and one note outstanding and no mortgages outstanding on its properties. The
balance due at maturity as of September 30, 2005 and 2004 and interest rate
provisions of the Company's notes and mortgages is set forth below:

         Notes and mortgages payable consist of the following at September 30,
2005 and 2004, respectively:

<TABLE>
<CAPTION>
                                                                                     2005                2004
                                                                                ---------------     ---------------
<S>                                                                             <C>                 <C>
Open credit line with a bank with interest at 8.50% unsecured.                    $         786       $      23,907

Note payable with a bank, bearing interest at 7.00%, secured by real estate                   -             461,493
and due December 26, 2004.

Second mortgage with a bank, with interest at 9.50%, secured by real estate                   -             275,000
and due in 2004.

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

Total                                                                             $      20,786       $     760,400
                                                                                ===============     ===============
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS

         In the ordinary course of business, the Company and its subsidiaries
are involved in legal proceedings incidental to their operations. The Company
and its subsidiaries are not currently involved in any legal proceedings that
management believes would have a material adverse effect on the operations or
financial condition of the Company and its subsidiaries taken as a whole.

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

         On September 20, 2005 the Company filed a revised information statement
on Schedule 14C with the SEC relating to shareholder approval of the following
items:

                                       10
<PAGE>
         1. To amend the Company's articles of incorporation to increase the
         number of authorized shares of common stock to 9 billion shares and
         accordingly increase the total number of authorized shares of all
         classes of stock the Company is authorized to issue.

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

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

         4. To amend the Company's articles of incorporation to effect a 1 for
         300 reverse split of the Company's capital stock.

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

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

         Shareholders owning a majority of the validly issued and then
outstanding NRMG Common Stock then adopted and approved these proposals. As a
result, these proposals were approved and adopted by the majority required by
law and no further votes were needed.

         The Company filed Amended and Restated Articles of Incorporation
incorporating the changes discussed in (1)-(3), (5) and (6) above with the
Nevada Secretary of State on October 17, 2005. The Company filed a Certificate
of Amendment to the Company's articles of incorporation incorporating the
changes discussed in (4) above with the Nevada Secretary of State on December
14, 2005, with an effective date of December 19, 2005. No other shareholders
voted for or against these actions.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS.

MARKET PRICE OF NRMG COMMON STOCK

         NRMG Common Stock is quoted on The Over the Counter Bulletin Board
under the symbol NRMG.OB. While it appears there was no market for NRMG Common
Stock, the Company has set forth in the table below the high and low closing bid
prices per share of NRMG Common Stock as reported on The Over the Counter
Bulletin Board during the fiscal years ended September 30, 2004 and 2005.
Following the ratification of the Capital Changes and the 2005 Reverse Stock
Split, NRMG Common Stock recently began trading again. The last reported sale
price on The Over the Counter Bulletin Board for NRMG Common Stock was $.01 on
January 6, 2006. The prices below are being reported on a post 2005 Reverse
Stock Split basis.

                                       11
<PAGE>
<TABLE>
<CAPTION>
                                                                         HISTORIC PRICES
  FISCAL YEAR ENDED                                                  ------------------------
    SEPTEMBER 30,                PERIOD                                 HIGH          LOW
---------------------   ----------------------------------------     ----------    ----------
<S>                     <C>                                          <C>           <C>
        2004            First Quarter...........................        $0.06         $0.03
                        Second Quarter..........................        $3.00         $0.03
                        Third Quarter...........................        $0.18         $0.03
                        Fourth Quarter..........................        $0.06         $0.03
        2005            First Quarter...........................        $0.06         $0.03
                        Second Quarter..........................        $0.06         $0.03
                        Third Quarter...........................        $0.06         $0.03
                        Fourth Quarter..........................        $0.06         $0.03
</TABLE>

         HOLDERS

         As of January 6, 2005, there were approximately 630 holders of record
of NRMG Common Stock.

         DIVIDEND POLICY

         The Company has never declared or paid any cash dividends on its
capital stock. The Company currently intends to retain future earnings, if any,
in the foreseeable future.

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

         THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE
COMPANY'S FINANCIAL STATEMENTS AND NOTES TO THOSE STATEMENTS AND OTHER FINANCIAL
INFORMATION APPEARING ELSEWHERE IN THIS REPORT.

INTRODUCTION

         As of September 30, 2005, the Company does not hold any real estate
properties. Revenues for the Company's fiscal year ended September 30, 2005 were
almost solely generated from the sale of property held in the Company's
portfolio. The Company currently does not expect to generate additional revenues
other than from its lending business unless and until it acquires additional
property.

RESULTS OF OPERATIONS

         The following is a discussion of the consolidated financial condition
and results of operations of the Company for the fiscal years ended September
30, 2005 and 2004, 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.

         For the year ended September 30, 2005, the Company incurred net loss of
$686,659, compared to net loss of $1,126,721 for the comparable 2004 period. The
decrease in net loss in 2004 is primarily attributable to a slowdown in the
Company's operations, and the fact that the Company wrote down a property in
2004 but did not write down any property in 2005.

RESULTS OF OPERATIONS FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND SEPTEMBER 30,
2004

REVENUES

         Total revenues for the year ended September 30, 2005 decreased
approximately 12% to $1,407,800, as compared to $1,600,120 for the year ended
September 30, 2004. The primary source of revenues for the year ended September
30, 2005 was the sale of the Bay Harbor property, whereas the Company sold a
larger property in the year ended September 30, 2004.

                                       12
<PAGE>
COST OF SALES

         Cost of sales for the year ended September 30, 2004 were $1,476,459 as
compared to $1,294,286 for the year ended September 30, 2005. This 12% decrease
in cost of sales was largely attributable to the fact that the carrying value of
property sold in the year ended September 30, 2005 was less than the carrying
value of property sold in the year ended September 30, 2004.

OPERATING EXPENSES

         PROFESSIONAL FEES AND COMPENSATION EXPENSES

         Professional fees and compensation expenses for the year ended
September 30, 2005 totaled $491,426 compared to $555,420 for the year ended
September 30, 2004. This $63,994 decrease is primarily related to a reduction in
the number of properties owned and the reduced expenses associated with a
mortgage business as opposed to a real estate business.

         TRAVEL AND AUTOMOBILE EXPENSES

         Travel and automobile expenses for the year ended September 30, 2005
totaled $ 122,155 compared to $80,334 for the year ended September 30, 2004.
This 52% increase is primarily due to the Company's management commuting for
purposes of reviewing new opportunities to expand the Company's business.

         DEPRECIATION AND AMORTIZATION

         Depreciation and amortization for the year ended September 30, 2005
totaled $21,497 as compared to $39,410 for the year ended September 30, 2004.
The reason for this 45% decrease is that the Company did not purchase any new
equipment in 2005 and sold off a portion of its assets.

OTHER INCOME (EXPENSE)

         Other income (expense) for the year ended September 30, 2004, was
income of $3,403, which decreased to an expense of $36,929 for the year ended
September 30, 2005. The reason for this decrease was a significant increase in
interest expense due to higher interest rates and the Company's extension of
outstanding mortgages pending the sale of the Bay Harbor property.

LIQUIDITY AND CAPITAL RESOURCES

         To date, the Company has financed its operations primarily through
mortgage debt and the issuance of the NRMG Debentures. At September 30, 2005,
the Company had $241,248 in cash and cash equivalents, an increase of $216,228
from September 30, 2004. This increase in cash and cash equivalents is
attributable to the sale of the Company's remaining real estate asset in 2005.
The Company made no acquisitions of real estate either in the year ended
September 30, 2004 or 2005. The Company has no plans to issue additional NRMG
Debentures for any amounts not yet received and has no plans to permit
outstanding NRMG Debentures to be converted.

         The Company used $160,224 in investing activities for the year ended
September 30, 2004, as compared to $35,647 earned in the year ended September
30, 2005. This increase in cash provided by investing activities is primarily
due the sale of properties which produced more cash in the fiscal year ended
September 30, 2005 than in the fiscal year ended September 30, 2004. Net cash
used in financing activities was $739,614 for the year ended September 30, 2005,
as compared to $1,143,513 used in the year ended September 30, 2004. This
decrease in net cash used in financing activities is attributable to the Company
paying off less debt in its 2005 fiscal year than in 2004.

         The Company had $920,195 in cash flow from operating activities for the
year ended September 30, 2005 as compared to $534,042 for the year ended
September 30, 2004. This increase in cash flow from operating

                                       13
<PAGE>
activities is primarily due to the sale of the Bay Harbor property. The Company
had stockholders' deficit of $4,538,782 at September 30, 2005. The Company's
determination that it had issued shares in excess of its authorized amount
resulted in the Company's determination to continue to classify all shares
issued in excess of 1 million as temporary equity.

         The Company believes that through its operations as a mortgage lender
it has sufficient cash resources to maintain operations for a period of at least
12 months. The Company expects, however, to dramatically reduce operating
expenses going forward. Further, because the Company recently began its lending
operations there can be no assurance that such funds will actually be liquid and
available. See "Outlook", below for a discussion on possible limits on the
Company's ability to raise capital. Cash requirements will largely depend upon
the availability of real estate acquisition opportunities and costs related to
its lending operations.

         The Company's ability to rely on exemptions from the registration
requirements of Section 5 of the Securities Act relating to the issuance,
exchange and conversion of its debentures has been called into question. It
appears the Company may have violated Section 5. The ramifications of this may
entail a possible rescission offer to the shareholders affected within the past
year. Section 13 of the Securities Act provides that no action shall be
maintained for offering or selling securities in violation of Section 5 unless
that action is brought within one year of the date of the violation. One year
has passed from the initial placement of the NRMG Debentures and from the
conversion of the NRMG Debentures issued. As of the date of this report, there
have been no actions filed against the Company based upon a violation of Section
5. Because the statute of limitations has run, it is unlikely that these holders
of NRMG Common Stock will file an action against the Company. However, any such
action maintained against the Company could have a substantial impact on the
Company's liquidity. As such, the Company could not afford to offer rescission.
If a court were to determine that rescission rights existed, the Company might
be compelled to seek bankruptcy protection.

OUTLOOK

         The Company invested substantial funds in its previous projects, but
only realized material profits from these projects upon the sale of the real
estate. With the completion of the sale of the Bay Harbor Property on August 3,
2005, the Company has disposed of its last remaining property. The Company
estimates the general overhead costs necessary to sustain its existence
(excluding expenses related to its newly commenced mortgage business) to be
$10,000 per month.

         Currently, the Company is using its available cash on hand as the
primary resource to continue its mortgage business. Much of these funds were
derived from the Company's recent sales of its real property holdings. Now that
shareholder approval has been obtained and the changes to the Company's capital
structure have been effected, the Company intends to enter into a financing
agreement with an as of yet unidentified third party to generate cash to broaden
its mortgage lending business. The Company currently has no third party funding
source for loans it originates. The Company intends both to originate and
service loans.

         The Company's ability to meet its continuing operating expenses largely
depends on its ability to continue to raise capital (i) through the sale of debt
or equity, (ii) through construction and permanent mortgage financing, (iii)
through the sale of land purchased, but not developed, by the Company and (iv)
through operations as a mortgage lender. There can be no assurance the Company
will be able to raise additional capital on a debt or equity basis, or obtain
mortgage financing, complete any of its projects under development, or sell any
completed development projects (should they be completed) or land purchased for
resale or development at a profit.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

         The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reported period. The Company made no allowances, valuations
or assumptions that if resolved differently would be material to the financial
statements.

OFF-BALANCE SHEET ARRANGEMENTS

         The Company has no off-balance sheet arrangements and has not entered
into any transactions involving unconsolidated, limited purpose entities or
commodities contracts.

                                       14
<PAGE>
ITEM 7.  FINANCIAL STATEMENTS


                        BAGELL, JOSEPHS & COMPANY, L.L.C.
                          Certified Public Accountants

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

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders of
National Realty and Mortgage, Inc. and Subsidiaries
Coral Gables,  Florida

We have audited the accompanying consolidated balance sheets of National Realty
and Mortgage, Inc. and Subsidiaries (the "Company") as of September 30, 2005 and
2004 and the related consolidated statements of operations, changes in
stockholders' (deficit), changes in temporary equity, and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
National Realty and Mortgage, Inc. and Subsidiaries as of September 30, 2005 and
2004, and the consolidated results of its operations, changes in stockholders'
equity (deficit), changes in temporary equity, and cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.


/s/ BAGELL, JOSEPHS & COMPANY, L.L.C.
BAGELL, JOSEPHS & COMPANY, L.L.C.
Gibbsboro, New Jersey
December 22, 2005



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


                                       15
<PAGE>
               NATIONAL REALTY AND MORTGAGE, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           SEPTEMBER 30, 2005 AND 2004


                                     ASSETS
                                     ------

<TABLE>
<CAPTION>
                                                                                2005                  2004
                                                                         --------------------  --------------------
<S>                                                                       <C>                   <C>
  Cash and cash equivalents                                               $          241,248    $           25,020
  Inventory - real estate holdings                                                        -              1,300,000
  Fixed assets, net of depreciation                                                   19,168                27,612
  Loan origination fees, net                                                           4,635                17,688
  Loans receivable - others                                                          114,600               116,600
  Mortgages receivable and other                                                      37,482                68,606
  Investment securities                                                                   -                  2,523
                                                                         --------------------  --------------------

TOTAL ASSETS                                                              $          417,133    $        1,558,049
                                                                         ====================  ====================

            LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' (DEFICIT)
            ---------------------------------------------------------

LIABILITIES
  Accounts payable and accrued expenses                                   $          317,989    $           32,632
  Debentures payable                                                                 199,202               199,202
  Notes and mortgages payable                                                         20,786               760,400
                                                                         --------------------  --------------------

      TOTAL LIABILITIES                                                              537,977               992,234
                                                                         --------------------  --------------------

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

STOCKHOLDERS' (DEFICIT)
  Common stock, $.001 par value; 1,000,000 shares
    authorized and 1,000,000 shares issued and outstanding,
    respectively                                                                       1,000                 1,000
  Common stock class A voting, $.001 par value; 0
      shares authorized, issued and outstanding                                           -                     -
  Additional paid- in capital                                                      3,606,580             3,606,580
  Accumulated deficit                                                             (8,146,362)           (7,459,703)
                                                                         --------------------  --------------------

      TOTAL STOCKHOLDERS' (DEFICIT)                                               (4,538,782)           (3,852,123)
                                                                         --------------------  --------------------

TOTAL LIABILITIES, TEMPORARY EQUITY AND
   STOCKHOLDERS' (DEFICIT)                                                $          417,133    $        1,558,049
                                                                         ====================  ====================
</TABLE>

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

                                       16
<PAGE>
               NATIONAL REALTY AND MORTGAGE, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004


<TABLE>
<CAPTION>
                                                                                    2005                   2004
                                                                             --------------------   --------------------
<S>                                                                           <C>                    <C>
OPERATING REVENUES
  Revenue                                                                     $        1,407,800     $        1,600,120

COST OF SALES                                                                          1,294,286              1,476,459
                                                                             --------------------   --------------------

GROSS PROFIT (LOSS)                                                                      113,514                123,661
                                                                             --------------------   --------------------

OPERATING EXPENSES
   Professional fees and compensation expenses                                           491,426                555,420
   Impairment expense                                                                         -                 472,175
   Bad debt                                                                                2,548                  8,067
   Advertising                                                                                -                   4,310
   Travel and automobile expenses                                                        122,155                 80,334
   Telephone and utilities                                                                   616                 12,537
   Real estate taxes and property maintenance                                             38,515                 20,600
   Office expenses                                                                        44,873                 22,665
   Miscellaneous                                                                          41,614                 38,267
   Depreciation and amortization                                                          21,497                 39,410
                                                                             --------------------   --------------------
       TOTAL OPERATING EXPENSES                                                          763,244              1,253,785
                                                                             --------------------   --------------------

(LOSS) BEFORE OTHER INCOME (EXPENSE)                                                    (649,730)            (1,130,124)
                                                                             --------------------   --------------------

OTHER INCOME (EXPENSE)
   Interest expense                                                                      (41,064)               (14,982)
   Interest income                                                                         4,135                 18,385
                                                                             --------------------   --------------------

       TOTAL OTHER INCOME (EXPENSE)                                                      (36,929)                 3,403
                                                                             --------------------   --------------------

NET LOSS BEFORE PROVISION FOR INCOME TAXES                                              (686,659)            (1,126,721)
Provision for Income Taxes                                                                    -                      -
                                                                             --------------------   --------------------

NET LOSS APPLICABLE TO COMMON SHARES                                          $         (686,659)    $       (1,126,721)
                                                                             ====================   ====================

NET LOSS PER BASIC AND DILUTED SHARES                                         $            (0.56)    $            (1.13)
                                                                             ====================   ====================
WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                                                                 1,000,000              1,000,000
                                                                             ====================   ====================
</TABLE>

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

                                       17
<PAGE>
               NATIONAL REALTY AND MORTGAGE, INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                 FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004


<TABLE>
<CAPTION>
                                   COMMON STOCK         CLASS A COMMON STOCK     ADDITIONAL
                             ------------------------  -----------------------    PAID-IN      ACCUMULATED
                               SHARES       AMOUNT       SHARES      AMOUNT       CAPITAL        DEFICIT         TOTALS
                             -----------  -----------  ----------  -----------  ------------  -------------  --------------
<S>                          <C>          <C>          <C>         <C>          <C>           <C>            <C>
Balance, September 30, 2003   1,000,000    $   1,000           -            -    $3,606,580    $(6,323,932)   $(2,716,352)
Adjustment for amortization                                                                    $    (9,050)   $    (9,050)
Net loss                              -            -           -            -             -    $(1,126,721)   $(1,126,721)
                             -----------  -----------  ----------  -----------  ------------  -------------  --------------
Balance, September 30, 2004   1,000,000    $   1,000           -            -    $3,606,580    $(7,459,703)   $(3,852,123)
Net loss                              -            -           -            -             -    $  (686,659)   $  (686,659)
                             -----------  -----------  ----------  -----------  ------------  -------------  --------------
Balance, September 30, 2005   1,000,000    $   1,000           -            -    $3,606,580    $(8,146,362)   $(4,538,782)
                             ===========  ===========  ==========  ===========  ============  =============  ==============
</TABLE>




































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

                                       18
<PAGE>
               NATIONAL REALTY AND MORTGAGE, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY EQUITY
                 FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004




<TABLE>
<CAPTION>
                                    COMMON STOCK             CLASS A COMMON STOCK                   ADDITIONAL
                            -----------------------------  ------------------------                  PAID-IN
                                SHARES          AMOUNT       SHARES        AMOUNT      DISCOUNT      CAPITAL        TOTALS
                            ---------------  ------------  -----------  -----------  ------------  ------------  ------------
<S>                         <C>              <C>           <C>          <C>          <C>           <C>           <C>
Balance, September 30, 2003  1,937,566,046    $1,937,566    1,000,000    $   1,000    $(687,311)    $3,166,683    $4,417,938
No activity                            -             -            -            -            -              -             -
                            ---------------  ------------  -----------  -----------  ------------  ------------  ------------
Balance, September 30, 2004  1,937,566,046    $1,937,566    1,000,000    $   1,000    $(687,311)    $3,166,683    $4,417,938
No activity                            -             -            -            -            -              -             -
                            ---------------  ------------  -----------  -----------  ------------  ------------  ------------
Balance, September 30, 2005  1,937,566,046    $1,937,566    1,000,000    $   1,000    $(687,311)    $3,166,683    $4,417,938
                            ===============  ============  ===========  ===========  ============  ============  ============
</TABLE>

































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

                                       19
<PAGE>
               NATIONAL REALTY AND MORTGAGE, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                2005                   2004
                                                         -------------------    -------------------
<S>                                                      <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                               $        (686,659)     $      (1,126,721)
                                                         -------------------    -------------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:


     Depreciation and amortization                                   21,497                 39,410
     Impairment Expense                                                  -                 472,175

  CHANGES IN ASSETS AND LIABILITIES
     Decrease in inventory - real estate holdings                 1,300,000              1,200,245
     Decrease in deposits                                                -                   8,725
     Increase (decrease) in accounts payable and
       and accrued expenses                                         285,357                (59,792)
                                                         -------------------    -------------------
     Total adjustments                                            1,606,854              1,660,763
                                                         -------------------    -------------------

     NET CASH PROVIDED BY OPERATING ACTIVITIES                      920,195                534,042
                                                         -------------------    -------------------

CASH FLOWS FROM INVESTING ACTIVITIES

    Acquisition of assets                                                -                  (8,654)
    Decrease loans to/from others                                     2,000                     -
    Decrease in mortgage and notes receivable                        31,124               (151,570)
    Decrease in investment securities                                 2,523                     -
                                                         -------------------    -------------------


     NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES             35,647               (160,224)
                                                         -------------------    -------------------
</TABLE>








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

                                       20
<PAGE>
               NATIONAL REALTY AND MORTGAGE, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                 FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004



<TABLE>
<CAPTION>
                                                                2005                   2004
                                                         -------------------    -------------------
<S>                                                      <C>                    <C>
CASH FLOWS FROM FINANCING ACTIVITIES

    Payment of loan origination costs                                    -                  26,108
    Net change in notes and mortgages payable                      (739,614)            (1,169,621)
                                                         -------------------    -------------------
    NET CASH (USED IN) FINANCING ACTIVITIES                        (739,614)            (1,143,513)
                                                         -------------------    -------------------

NET INCREASE (DECREASE) IN
    CASH AND CASH EQUIVALENTS                                       216,228               (769,695)

CASH AND CASH EQUIVALENTS -
    BEGINNING OF YEAR                                                25,020                794,715
                                                         -------------------    -------------------

CASH AND CASH EQUIVALENTS - END OF YEAR                   $         241,248      $          25,020
                                                         ===================    ===================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

CASH PAID DURING THE YEAR FOR:
    Interest expense                                      $          41,064      $          14,982
                                                         ===================    ===================
</TABLE>

















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

                                       21
<PAGE>
               NATIONAL REALTY AND MORTGAGE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2005 AND 2004


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

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

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

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

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

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

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

         In contemplation  of the financing of this project,  on April 12, 2001,
         Connecticut  Acquisition  obtained  a loan  from  accredited  investors
         evidenced by its 8% Series A Senior Subordinated Convertible Redeemable
         Debentures   due  April  13,   2003   (the   "CONNECTICUT   ACQUISITION
         DEBENTURES"),  which were  convertible from time to time into shares of
         Connecticut  Acquisition's  Class  A  Common  Stock.  On May  8,  2001,
         following the acquisition of the Hebron Parcel, Connecticut Acquisition
         was merged into the Company. As a result, all rights and obligations of
         Connecticut  Acquisition  inured to the  benefit of and became  binding
         upon the Company.  Pursuant to the merger, the Connecticut  Acquisition
         Debentures were surrendered and

                                       22
<PAGE>
         canceled, and new debentures,  identical to the Connecticut Acquisition
         Debentures,   together  with   accompanying   conversion   rights  into
         authorized  but unissued  shares of the  Company's  common stock ("NRMG
         COMMON  STOCK"),  were  issued by the  Company  to the  holders  of the
         Connecticut Acquisition Debentures.

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

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

         Pursuant to the merger,  the DC Power  Debentures were  surrendered and
         canceled,  and new  debentures,  identical to the DC Power  Debentures,
         together  with  accompanying  conversion  rights  into  authorized  but
         unissued shares of NRMG Common Stock, were issued by the Company to the
         holders of the DC Power Debentures.

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

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

     PRINCIPLES OF CONSOLIDATION

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

     USE OF ESTIMATES

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


                                       23
<PAGE>
     REVENUE AND COST RECOGNITION

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

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

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

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

     CASH AND CASH EQUIVALENTS

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

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

     FIXED ASSETS

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

         Equipment and other                             3 to 5 Years
         Vehicle                                           3    Years

     INCOME TAXES

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

     ADVERTISING

         Costs of advertising are expensed as incurred.  Advertising  costs were
         $0 and  $4,310  for the  years  ended  September  30,  2005  and  2004,
         respectively.


     EARNINGS (LOSS) PER SHARE OF COMMON STOCK

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

                                       24
<PAGE>
         The  following is a  reconciliation  of the  computation  for basic and
diluted EPS:

<TABLE>
<CAPTION>
                                                                                       Restated
                                                                   2005                  2004
                                                                   ----                  ----

<S>                                                            <C>                    <C>
         Net Loss                                              ($ 686,659)            ($1,126,721)
                                                               -----------            ------------
         Weighted-average common shares
           outstanding (Basic)                                  1,000,000               1,000,000

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

         Weighted-average common shares
             outstanding (Diluted)                              1,000,000               1,000,000
</TABLE>

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

         There are no options and  warrants  outstanding  to  purchase  stock at
         September 30, 2005 and 2004.

     INVESTMENT SECURITIES

         Management  determines  the  appropriate  classification  of investment
         securities   at  the  time  they  are   acquired  and   evaluates   the
         appropriateness of such classifications at each balance sheet date. The
         classification of those securities and the related accounting  policies
         are as follows:

         Trading   securities:   Trading  securities  are  held  for  resale  in
         anticipation  of  short-term  fluctuations  in market  prices.  Trading
         securities,  consisting primarily of actively traded equity securities,
         are stated at fair value.  Realized and unrealized gains and losses are
         included in income.

         Available-for-sale securities: Available-for-sale securities consist of
         marketable  equity  securities  not  classified as trading  securities.
         Available-for-sale  securities are stated at fair value, and unrealized
         holding gains and losses,  net of the related deferred tax effect,  are
         reported as a separate component of stockholders' equity (deficit).

         Dividends on marketable equity securities are recognized in income when
         declared.  Realized  gains and losses are included in income.  Realized
         gains and losses are  determined on the basis of the actual cost of the
         securities sold.

         There were no investments held at September 30, 2005.

     FAIR VALUE OF FINANCIAL INSTRUMENTS

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

                                       25
<PAGE>
     LOAN ORIGINATION FEES

         Represent fees in connection  with  obtaining  mortgages on the various
         properties. The loan origination fees are being amortized straight-line
         over a  two-year  period.  Amortization  expense  for the  years  ended
         September 30, 2005 and 2004 is $13,052 and $26,838, respectively.

     RECENT ACCOUNTING PRONOUNCEMENT

         In August  2001,  the FASB issued  Statement  of  Financial  Accounting
         Standards  No.  144,  "Accounting  for the  Impairment  or  Disposal of
         Long-Lived  Assets"  ("SFAS 144"),  that is applicable to the financial
         statements  issued for fiscal years  beginning after December 15, 2001.
         The  FASB's  new  rules  on  asset  impairment   supersedes  SFAS  121,
         "Accounting for the Impairment of Long-Lived  Assets and for Long-Lived
         Assets to Be Disposed Of," and portions of Accounting  Principles Board
         Opinion 30, "Reporting the Results of Operations."

         This standard  provides a single accounting model for long-lived assets
         to be disposed of and  significantly  changes the  criteria  that would
         have to be met to classify an asset as held-for-sale. Classification as
         held-for-sale  is an  important  distinction  since such assets are not
         depreciated  and are  stated  at the lower of fair  value and  carrying
         amount.  This standard also requires  expected future  operating losses
         from discontinued  operations to be displayed in the period(s) in which
         the losses are  incurred,  rather  than as of the  measurement  date as
         presently  required.  As a  result  of  FASB No 144,  the  Company  has
         recorded an  impairment  loss at September  30, 2004 of $472,175 on its
         inventory.   The   Company   tests  its  real  estate   inventory   for
         recoverability at each balance sheet date.

     RECLASSIFICATIONS

         Certain  amounts  for the year  ended  September  30,  2004  have  been
         reclassified to conform with the presentation of the September 30, 2005
         amounts. The  reclassifications  have no effect on the net loss for the
         year ended September 30, 2004.

NOTE 3 - INVENTORY - REAL ESTATE HOLDINGS
         --------------------------------

         Inventory  consists of 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. The Company
         follows  SFAS  144   accounting  for  the  impairment  or  disposal  of
         long-lived  assets.  An impairment loss shall be recognized only if the
         carrying value of a long  lived-asset  (asset group) is not recoverable
         and  exceeds  its fair  value.  Since  the  Company's  assets  were not
         generating  income,  the fair value of those assets was  determined and
         estimated by  management  based on current  market  conditions  and the
         amount  at  which  the  asset  could  be  bought  or sold in a  current
         transaction  between  willing  parties,  that is other than a forced or
         liquidation sale. There were no holdings at September 30, 2005.

NOTE 4 - MORTGAGES RECEIVABLE AND OTHER
         ------------------------------

         Amount represent due from  individuals who purchased  property from the
         Company  and other  various  amounts  due the  Company.  Amounts due at
         September 30, 2005 and 2004 were $37,482 and $68,606, respectively.

                                       26
<PAGE>
NOTE 5 - FIXED ASSETS
         ------------

         Fixed assets consist of the following at September 30, 2005
         and 2004:

                                                         2005           2004
                                                     -----------    -----------

         Office Equipment and other                   $  30,969      $  30,969
         Vehicles                                        31,509         31,509
                                                     -----------    -----------
                                                         62,478         62,478
         Less: accumulated depreciation                 (43,310)       (34,866)
                                                     -----------    -----------

         Total                                        $  19,168      $  27,612
                                                     ===========    ===========

         Depreciation expense was $8,445 and $12,572 for the years ended
         September 30, 2005 and 2004, respectively.

NOTE 6 - NOTES AND MORTGAGES PAYABLE
         ---------------------------

         Notes and mortgages payable consist of the following
         at September 30, 2005 and 2004, respectively:

<TABLE>
<CAPTION>
                                                                   2005           2004
                                                                -----------    -----------
<S>                                                             <C>            <C>
         Open credit line with a bank with interest at 8.50%
         unsecured.                                              $     786      $  23,907

         Note payable with a bank, bearing interest at 7.00%,
         secured by real estate and due December 26, 2004.              -         461,493

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

         Second mortgage with a bank, with interest at 9.50%,
         secured by real estate and due in 2004.                        -         275,000
                                                                -----------    -----------

                Total                                            $  20,786      $ 760,400
</TABLE>

NOTE 7 - CONVERTIBLE DEBENTURES PAYABLE
         ------------------------------

         The Company has  convertible  debentures  outstanding  at September 30,
         2005  and 2004 in the  amount  of  $199,202.  These  debentures  accrue
         interest  at 8% per  annum.  These  debentures  mature  along  with the
         related  interest at November 2003.  The debentures are  convertible at
         the  investors'   discretion  pursuant  to  the  convertible  debenture
         agreement.  As of September 30, 2005 these  debentures  are in default.
         The investors  have not contacted the Company about new payment  terms.
         The Company  purports  that the  investors  will wait until the Company
         clears its contingency problems (see Note 9).

NOTE 8 - ACQUISITIONS
         ------------

         On February 10, 2000, the Company  acquired MAS XV  Acquisitions  Corp.
         for  1,500,000  shares of its common  stock valued at $.19 per share or
         $285,000.  Additionally,  on April 1, 2000, the Company acquired 80% of
         the Encore Services, Inc. for 250,000 common shares of its stock valued
         at $33,750.  The Company  restated its September 30, 2000  consolidated
         financial

                                       27
<PAGE>
         statements  and  expensed  the  entire  amounts  of these  acquisitions
         because they were  determined to have no value.  Both  companies had no
         assets or liabilities upon the purchase.

         On May 8, 2001, the Company merged with  Connecticut  Acquisition  upon
         the   acquisition  of  the  Hebron   Parcel.   The  Hebron  Parcel  was
         subsequently conveyed on October 31, 2001 to Genesis, an entity related
         to the Company through common officers and directors.

         DC Power merged into the Company on November 1, 2001.

NOTE 9 - CONTINGENCY/UNCERTAINTY
         -----------------------

         The Company,  during the year ended  September  30, 2001,  became aware
         that some or all of certain changes made to its capital  structure were
         not validly  adopted by the Company's  board of directors,  approved by
         the Company's shareholders, or filed with the Secretary of State of the
         State of Nevada as  required  by the laws of the State of Nevada.  As a
         result,  it appears that the Company never has been authorized to issue
         more than  1,000,000  shares of its  common  stock.  All  shares of the
         Company's  common stock issued in excess of 1,000,000  shares appear to
         have  been  issued  in  excess  of  the  Company's  authorized  amount,
         therefore, these shares have been reclassified to temporary equity (See
         Notes 10 and 11).

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

         The Company expects to reclassify certain amounts from temporary equity
         to permanent  stockholders'  equity after curing any over  issuances of
         its common stock pursuant to Section 13 of the Securities Act.

NOTE 10 - TEMPORARY EQUITY
          ----------------

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

         Temporary  equity at September 30, 2005 and 2004,  was  $4,417,938  and
         $4,418,938,  respectively.  Substantially  all  the  shares  issued  in
         connection with the conversion of debentures have been  reclassified as
         temporary equity.

NOTE 11 - STOCKHOLDERS' EQUITY (DEFICIT)
          ------------------------------

         As of  September  30,  2005  and  2004,  there  were  1,000,000  shares
         authorized,   and  1,000,000  shares  issued  and  outstanding  of  the
         Company's common stock with a par value of $.001.

         The  Company  issued  843,265,695  shares of common  stock for the year
         ended  September  30,  2002.  These  shares were  recorded in temporary
         equity  along with  1,094,300,351  shares of common  stock from  fiscal
         2001,  which have been  reclassified to temporary equity (see Note 10).
         All of the  843,265,695  shares of common stock issued,  were issued in
         excess of authorized limits.

                                       28
<PAGE>
         As of  September  30,  2005 and 2004,  there  were 0 shares  authorized
         issued and  outstanding  of the  Company's  Class A Voting common stock
         with a par value of $.001.

         The shares of common  stock  issued for the years ended  September  30,
         2002 relate to the debenture conversions.

NOTE 12 - INCOME TAXES
          ------------

         The net deferred tax assets in the  accompanying  consolidated  balance
         sheets include the following components at September 30, 2005 and 2004.

                                                        2005           2004
                                                  --------------  --------------

         Deferred tax assets                       $  2,851,227    $  2,831,248
         Deferred tax valuation allowance            (2,851,227)     (2,831,248)
                                                  --------------  --------------

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

         Due to the  uncertainty  of utilizing the  approximate  $8,146,362  and
         $7,459,703  in net  operating  losses at  September  30, 2005 and 2004,
         respectively,  and recognizing  the deferred tax assets,  an offsetting
         valuation allowance has been established.

NOTE 13 - LITIGATION
          ----------

         On  August  2,  2002,   Encore   Builders,   Inc.  filed  suit  against
         Conquistador  Plaza, Inc., a wholly owned subsidiary of the Company, in
         the  Circuit  Court of the  Eleventh  Judicial  Circuit  in  Miami-Dade
         County,  Florida  seeking the  foreclosure  of a  mechanic's  lien with
         respect to the Conquistador  Plaza development.  Encore Builders,  Inc.
         asserted  that  $504,076  was due from  Conquistador  Plaza,  Inc.  The
         Company paid $342,858 in 2003,  and the  remaining  balance of $161,218
         was written off at September 30, 2003 as the case has been settled.

NOTE 14 - SUBSEQUENT EVENTS
          -----------------

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

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

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

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

              4. To amend the Company's  articles of incorporation to effect a 1
              for 300 reverse split of the Company's capital stock.

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

                                       29
<PAGE>
              6. To amend the Company's  articles of  incorporation  to create a
              class of  preferred  stock,  and to adopt and approve  amended and
              restated articles of incorporation.

         Shareholders  owning a majority of the then issued and outstanding NRMG
         Common Stock then adopted and approved these proposals.  On October 17,
         2005, the Company filed Amended and Restated  Articles of Incorporation
         incorporating the changes discussed in (1), (2), (3), (5) and (6) above
         with the Nevada Secretary of State. On November 19, 2005, the Company's
         board of directors ratified the Capital Changes.  On December 19, 2005,
         the Company  effected a reverse stock split whereby every 300 shares of
         capital  stock were  combined and  converted  into one share of capital
         stock and the Company's common stock began to trade on a split-adjusted
         basis (the "2005  REVERSE STOCK  SPLIT").  The record date for the 2005
         Reverse Stock Split was December 6, 2005. As of December 6, 2005, there
         were  1,938,566,046  shares of common stock issued and  outstanding and
         200 million shares of Class A common stock issued and outstanding.  The
         number of shares of common  stock and Class A common  stock  issued and
         outstanding,  or  held as  treasury  shares  was  reduced  to a  number
         approximately  equal to the number of shares of common stock or Class A
         common stock, respectively, issued and outstanding, or held as treasury
         shares,  immediately  prior to the  effectiveness of the reverse split,
         divided by 300 (except that the Company did not issue fractional shares
         in  connection  with the 2005  Reverse  Stock  Split and  instead,  any
         fractional  share that  resulted  from the 2005 Reverse Stock Split was
         rounded up to the next whole share).  As of January 6, 2006, there were
         6,462,895  shares of common  stock issued and  outstanding  and 666,667
         shares of Class A common stock issued and outstanding.

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

         Not applicable.

ITEM 8A. CONTROLS AND PROCEDURES

         EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

         Based on their evaluation of the Company's disclosure controls and
procedures conducted as of the end of the period covered by this report on Form
10-KSB, Richard Astrom, the Company's Chief Executive Officer, and Christopher
Astrom, the Company's Chief Financial Officer, have concluded that they are the
only individuals involved in the Company's disclosure process. The Company has
no formal procedures in place for processing and assembling information to be
disclosed in the Company's periodic reports. The Company's system is designed so
that information is retained by the Company and relayed to counsel and the
Company's accountants as it becomes available. Though the Company has had
difficulty implementing its disclosure controls and procedures in the past, the
Company's principal executive officer and principal financial officer believe
that as of the end of the period being reported, the Company's disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act)
are effective in ensuring that (i) information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms and (ii) information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company's management, including its
principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure. The Company also notes that while its disclosure controls and
procedures might not have been effective for a larger entity, the Company's
principal executive officer and principal financial officer came to the
aforementioned determination in part based on the fact that the Company has
limited assets. Further, the Company believes that, given its size, an extensive
disclosure controls and procedures system is not necessary.

         CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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

                                       30
<PAGE>
ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         The Company's board of directors currently consists of two people. The
following information with respect to the principal occupation or employment,
other affiliations and business experience during the last five years of the
directors has been furnished to the Company by such directors. Except as
indicated, the directors have had the same principal occupation for the last
five years. The Company has no standing audit committee. Because the Company has
no standing audit committee it does not have an audit committee financial expert
serving on the audit committee.

         There have been no material changes to the procedures by which security
holders may recommend nominees to the Company's board of directors.

NAME                    AGE       PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
--------------------  -------     ----------------------------------------------
Richard Astrom          58        Richard Astrom has been a director of the
                                  Company since 1994. Richard Astrom Secretary
                                  of Capital Solutions I and has served as one
                                  of its directors since September of 2001. Mr.
                                  Astrom has served as President and a director
                                  of Genesis Capital Corporation of Nevada since
                                  September of 2001.

Christopher Astrom      34        Christopher Astrom has been a director of the
                                  Company since June of 1995. Christopher Astrom
                                  is currently President, Chief Executive
                                  Officer and Chief Financial Officer of Capital
                                  Solutions I, and has served as one of its
                                  directors since August of 2001. Mr. Astrom has
                                  served as Secretary and Treasurer of Genesis
                                  Capital Corporation of Nevada since September
                                  of 2001.

EXECUTIVE OFFICERS

         The following individuals were serving as executive officers of the
Company on January 6, 2006:

NAME                    AGE       POSITION WITH THE COMPANY
--------------------  -------     ----------------------------------------------
Richard Astrom          58        President and Chief Executive Officer
Christopher Astrom      34        Vice President, Secretary and Chief Financial
                                  Officer

         Richard Astrom is Christopher Astrom's father. The Company does not
have any employees besides Christopher Astrom and Richard Astrom.

         The Company's two current directors and officers, Richard Astrom and
Christopher Astrom, are each directors and officers of another public company,
Capital Solutions I and another entity, each which may be deemed an affiliate of
the Company. Richard Astrom and Christopher Astrom divide their time between the
Company, Capital Solutions I and this other entity, and devote time to each
company as they determine to be necessary and appropriate. As such, the amount
of time Richard Astrom and Christopher Astrom devote to the Company varies
widely, depending upon the needs of the Company. There are times when they put
in up to 10 hours per day, and other times where they do not dedicate any time
at all, as the Company does not require it.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of the outstanding
NRMG Common Stock to file with the SEC and the Company reports on Form 4 and
Form 5 reflecting transactions affecting beneficial ownership. Based solely upon
its review of the

                                       31
<PAGE>
copies of such forms received by it, the Company believes that, during the
Company's 2005 fiscal year, all persons complied with such filing requirements.

CODE OF ETHICS

         The Company has not yet adopted a code of ethics that applies to its
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions. The Company's
two directors, Richard and Christopher Astrom, have chosen not to adopt such a
code of ethics because they are also the Company's principal executive officer
and principal financial officer, and also the Company's only two employees.

ITEM 10. EXECUTIVE COMPENSATION

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

 NAME AND PRINCIPAL POSITION         YEAR          SALARY           BONUS       LONG-TERM ALL OTHER
                                                                                COMPENSATION AWARDS:
                                                                                SECURITIES UNDERLYING
                                                                                OPTIONS
---------------------------------   ------   -----------------   -----------   -----------------------
                                           ANNUAL COMPENSATION(1)
------------------------------------------------------------------------------------------------------
<S>                                 <C>      <C>                 <C>           <C>
Richard Astrom (2)                   2005     $    56,430                -                         -
  President and                      2004     $   418,888 (4)            -                         -
  Chief Executive Officer            2003     $   200,000 (4)            -                         -

Christopher Astrom (3)               2005     $   115,000                -                         -
  Vice President, Secretary          2004     $    75,000                -                         -
  and Chief Financial Officer        2003     $    62,578                -                         -
</TABLE>

         (1) In accordance with the rules of the Securities and Exchange
Commission, compensation in the form of perquisites and other personal benefits
has been omitted for the Company's named executive officers because the
aggregate amount of such perquisites and other personal benefits constituted
less than the lesser of $50,000 or 10% of the total of annual salary and bonuses
for each named executive officer in the Company's prior fiscal year.

         (2) Richard Astrom joined the Company in 1994.

         (3) Christopher Astrom joined the Company in 1994.

         (4) The amount reflected above includes amounts paid to Richard Astrom
to reimburse him for legal fees paid by him to Richard and Christopher Astrom's
counsel who assisted Richard and Christopher Astrom with securities matters
which also benefited the Company.

         Richard Astrom and Christopher Astrom are directors of the Company.
Directors currently do not receive a stated salary from the Company for their
service as members of the board of directors.

EMPLOYMENT AND SEPARATION AGREEMENTS

         The Company does not have any employment or separation agreements with
either Christopher Astrom or Richard Astrom, the Company's only employees as of
January 6, 2006.

                                       32
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

         To the Company's knowledge, the following table sets forth information
with respect to beneficial ownership of outstanding NRMG Common Stock as of
January 6, 2006 by:

         o    each person known by the Company to beneficially own more than 5%
              of the outstanding NRMG Common Stock;

         o    each of the Company's named executive officers;

         o    each of the Company's directors; and

         o    all of the Company's executive officers and directors as a group.

         Beneficial ownership is determined in accordance with the rules of the
SEC and includes voting or investment power with respect to the securities as
well as securities which the individual or group has the right to acquire within
sixty days of the original filing of this Form 10-KSB. Unless otherwise
indicated, the address for those listed below is c/o National Realty and
Mortgage, Inc., 6915 Red Road, Suite 222, Coral Gables, Florida 33143. Except as
indicated by footnote, and subject to applicable community property laws, the
persons named in the table have sole voting and investment power with respect to
all shares of NRMG Common Stock shown as beneficially owned by them. The number
of shares of NRMG Common Stock outstanding used in calculating the percentage
for each listed person includes the shares of NRMG Common Stock underlying
options held by such persons that are exercisable within 60 days of January 6,
2006, but excludes shares of NRMG Common Stock underlying options held by any
other person. The number of shares of NRMG Common Stock outstanding as of
January 6, 2006 was 6,462,895 shares of common stock and 666,667 shares of Class
A common stock. Except as noted otherwise, the amounts reflected below are based
upon information provided to the Company and filings with the SEC.

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

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

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

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

                                       33
<PAGE>
         (4) Each share of Class A common stock held by Christopher Astrom is
convertible, at his option, into 20 shares of common stock. If Christopher
Astrom were to convert his 666,667 shares of Class A common stock, he would hold
approximately 67.66% of the common stock of Company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Nearly all of the amount paid to Richard Astrom as compensation was
paid to reimburse him for legal fees paid by him to Richard and Christopher
Astrom's counsel who assisted them with securities matters which also benefited
the Company.

         On November 15, 2005, the Company issued 200 million shares of the
Company's Class A common stock, $0.0000001 par value per share, to Christopher
Astrom. Each share of Class A common stock is convertible at the option of the
holder into 20 shares of common stock. The purpose of the issuance was to
remunerate Christopher Astrom for the 1 million shares of Class A common stock
the Company intended to issue him in 1999 when the Company's stock was more
valuable and to compensate him for services rendered to the Company as chief
financial officer for the past three fiscal years.

ITEM 13. EXHIBITS

EXHIBIT NO.        DESCRIPTION

3.1*          Amended and Restated Articles of Incorporation of the Company

3.2           Certificate of Amendment to Articles of Incorporation of the
              Company

3.3**         Amended and Restated Bylaws of the Company

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

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

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

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

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

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

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

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

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

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

                                       34
<PAGE>
31.1          Certification of the Principal Executive Officer pursuant to Rule
              13a-14(a)

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

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

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

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

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

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

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT AND NON-AUDIT FEES

         Aggregate fees for professional services rendered for the Company by
Bagell, Josephs & Company, L.L.C. for the fiscal years ended September 30, 2005
and 2004 are set forth below. The aggregate fees included in the Audit category
are fees billed for the fiscal years for the audit of the Company's annual
financial statements and review of financial statements and statutory and
regulatory filings or engagements. The aggregate fees included in each of the
other categories are fees billed in the fiscal years.
(All references to "$" in this report are to United States dollars.)

                                               FISCAL YEAR          FISCAL YEAR
               AUDIT FEES                         2005                 2004
-----------------------------------------     -------------        -------------

AUDIT FEES                                     $    15,000          $    35,000
AUDIT-RELATED FEES                                       -                    -
TAX FEES                                       $     7,500          $     2,609
ALL OTHER FEES                                           -                    -
TOTAL                                          $    22,500          $    37,609

         Audit Fees for the fiscal years ended September 30, 2005 and 2004 were
for professional services rendered for the audits of the consolidated financial
statements of the Company, quarterly review of the financial statements included
in Quarterly Reports on Form 10-Q, consents, and other assistance required to
complete the year end audit of the consolidated financial statements.

         There were no fees that were classified as Audit-Related Fees as of the
fiscal years ended September 30, 2005 and 2004.

         Tax Fees as of the fiscal years ended September 30, 2005 and 2004 were
for professional services related to tax compliance, tax authority audit support
and tax planning.

         There were no fees that were classified as All Other Fees as of the
fiscal years ended September 30, 2005 and 2004.

                                       35
<PAGE>
         As the Company does not have a formal audit committee, the services
described above were neither approved by the audit committee under the de
minimus exception provided by Rule 2-01(c)(7)(i)(C) under Regulation S-X nor
pursuant to audit committee pre-approval policies and procedures.

                                   SIGNATURES

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

                                        NATIONAL REALTY AND MORTGAGE, INC.

                                        By: /s/ RICHARD ASTROM
                                           ---------------------------------
                                           Richard Astrom
                                           President and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on January 12, 2006.

SIGNATURE                                         TITLE(S)

/s/ RICHARD ASTROM               President, Chief Executive Officer and Director
----------------------------
Richard Astrom

/s/ CHRISTOPHER ASTROM           Vice President, Chief Financial Officer,
----------------------------     Secretary and Director
Christopher Astrom




























                                       36