UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                        --------------------------------
                                   FORM 10-QSB
                        --------------------------------

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

                  For The Quarterly Period Ended March 31, 2006

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

             For The Transition Period from __________ To _________

                         Commission file number 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)

              One NE First Avenue, Suite 205, Ocala, Florida 34470
        ----------------------------------------------------------------
                    (Address of principal executive offices)

                                 (352) 867-5183
        ----------------------------------------------------------------
                            Issuer's telephone number

                      National Residential Properties, Inc.
         ---------------------------------------------------------------
              (Former Name, former address and former fiscal year,
                          if changed since last report)

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














<PAGE>
    APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:

         As of May 10, 2006, there were 6,462,895 shares of the Registrant's
Common Stock, $0.0000001 par value per share, outstanding.

Transitional Small Business Disclosure Format Yes |_| No |X|










































                                        2
<PAGE>
                       National Realty and Mortgage, Inc.

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006

                                TABLE OF CONTENTS

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements. ..............................................  4

Item 2. Management's Discussion and Analysis or Plan of
        Operation........................................................... 20

Item 3. Controls and Procedures............................................. 28

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings................................................... 29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds......... 29

Item 3. Defaults upon Senior Securities..................................... 29

Item 4. Submission of Matters to a Vote of Securities Holders............... 29

Item 5. Other Information................................................... 29

Item 6. Exhibits and Reports on Form 8-K.................................... 29































                                        3
<PAGE>
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.


                                     PART I
                              FINANCIAL INFORMATION

Item 1.  Financial Statements












































                                        4
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)

                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2006 AND 2005






















































                                        5
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSDIARIES)



       INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)





Balance Sheet as of March 31, 2006 (Unaudited)                                7

Statements of Operations for the Six and Three Months
    Ended March 31, 2006 and 2005 (Unaudited)                                 8

Statements of Cash Flows for the Six Months Ended
   March 31, 2006 and 2005 (Unaudited)                                        9

Notes to Condensed Consolidated Financial Statements (Unaudited)             10







































                                        6
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
                CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
                                 MARCH 31, 2006


<TABLE>
<CAPTION>
                                     ASSETS
                                     ------

<S>                                                                 <C>
  Cash and cash equivalents                                          $         20,948
  Fixed assets, net of depreciation                                            11,242
  Loan receivable - related parties                                            61,820
  Mortgages receivable and other                                                5,435
                                                                    ------------------

TOTAL ASSETS                                                         $         99,445
                                                                    ==================

                       LIABILITIES AND STOCKHOLDERS' (DEFICIT)
                       ---------------------------------------

LIABILITIES
  Accounts payable and accrued expenses                              $         88,333
  Debentures payable                                                          199,202
  Notes and mortgages payable                                                  20,786
                                                                    ------------------

      TOTAL LIABILITIES                                                       308,321
                                                                    ------------------


STOCKHOLDERS' (DEFICIT)
Preferred Stock, $.0000001 Par Value; 1,000,000,000
shares authorized and 0 shares issued and outstanding                               -
  Common Stock, $.0000001 Par Value; 8,000,000,000 shares
    authorized and 6,472,766 shares issued and outstanding                          1
  Common Stock Class A Voting, $.0000001 Par Value; 1,000,000,000
      shares authorized and 666,667 shares issued and outstanding                  20
  Additional Paid-in Capital                                                8,045,517
  Accumulated Deficit                                                      (8,254,394)
                                                                    ------------------

      TOTAL STOCKHOLDERS' (DEFICIT)                                          (208,876)
                                                                    ------------------

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)                        $         99,445
                                                                    ==================
</TABLE>








                                        7
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
           FOR THE SIX AND THREE MONTHS ENDED MARCH 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED                        THREE MONTHS ENDED
                                                                    MARCH 31,                                 MARCH 31,
                                                           2006                 2005                 2006                2005
                                                    -------------------  --------------------  ------------------  -----------------
<S>                                                 <C>                  <C>                   <C>                 <C>
OPERATING REVENUES
  Revenue                                            $               -    $            2,800    $              -    $             -

COST OF SALES                                                        -                     -                   -                  -
                                                    -------------------  --------------------  ------------------  -----------------
GROSS PROFIT                                                         -                 2,800                   -                  -
                                                    -------------------  --------------------  ------------------  -----------------

OPERATING EXPENSES
   Professional fees and compensation expenses                  31,589               107,157               4,232             62,924
   Bad debt                                                          -                 2,524                   -                  -
   Travel and automobile expenses                                    -                15,368                   -                  -
   Telephone and utilities                                           -                   616                   -                  -
   Real estate taxes and property maintenance                    5,460                 2,198               4,750                  -
   Office expenses                                              41,176                 2,886              24,384              1,186
   Miscellaneous                                                 5,598                12,483                  27              3,952
   Depreciation and amortization                                12,562                12,156               3,669              6,078
                                                    -------------------  --------------------  ------------------  -----------------
       TOTAL OPERATING EXPENSES                                 96,385               155,388              37,062             74,140
                                                    -------------------  --------------------  ------------------  -----------------

(LOSS) BEFORE OTHER INCOME (EXPENSE)                           (96,385)             (152,588)            (37,062)           (74,140)
                                                    -------------------  --------------------  ------------------  -----------------

OTHER INCOME (EXPENSE)
   Other income-forgiveness of debt                            102,953                     -             102,953                  -
   Bad debt                                                   (114,600)                                 (114,600)
   Interest expense                                                  -               (25,735)                  -             (3,835)
   Interest income                                                   -                 4,135                   -              1,300
                                                    -------------------  --------------------  ------------------  -----------------
       TOTAL OTHER INCOME (EXPENSE)                            (11,647)              (21,600)            (11,647)            (2,535)
                                                    -------------------  --------------------  ------------------  -----------------

NET INCOME (LOSS) BEORE PROVISION FOR INCOME TAXES            (108,032)             (174,188)            (48,709)           (76,675)
  Provision for Income Taxes                                         -                     -                   -                  -
                                                    -------------------  --------------------  ------------------  -----------------

NET INCOME (LOSS) APPLICABLE TO COMMON SHARES        $        (108,032)   $         (174,188)   $        (48,709)   $       (76,675)
                                                    ===================  ====================  ==================  =================

NET (LOSS) PER BASIC AND DILUTED SHARES              $           (0.02)   $            (0.17)   $           0.02    $         (0.08)
                                                    ===================  ====================  ==================  =================

WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                                       6,472,766             6,472,766           6,472,766          6,472,766
                                                    ===================  ====================  ==================  =================
</TABLE>
                                        8
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                FOR THE SIX MONTHS ENDED MARCH 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                          2006                 2005
                                                                    ------------------  -------------------
<S>                                                                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net (Loss)                                                       $       (108,032)   $        (174,188)
                                                                    ------------------  -------------------
ADJUSTMENTS TO RECONCILE NET (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
     Depreciation and amortization                                             12,562               12,156
     Bad debt                                                                 114,600                    -
     Forgiveness of debt                                                     (102,953)                   -
     Common stock issued for compensation                                      20,000                    -

CHANGES IN ASSETS AND LIABILITIES:
     Decrease in loan receivable - others                                           -              116,600
     Increase (Decrease) in accounts payable and accrued expenses            (126,703)              47,482
     (Increase) Decrease in mortgage receivable and others                     32,047               (3,249)
     Decrease in investment securities                                              -                2,523
                                                                    ------------------  -------------------
     Total adjustments                                                        (50,447)             175,512
                                                                    ------------------  -------------------

     NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                     (158,479)               1,324
                                                                    ------------------  -------------------

CASH FLOWS FROM INVESTING ACTIVITIES
    (Increase) in mortgages, or advances                                      (61,821)              (8,260)
                                                                    ------------------  -------------------

     NET CASH  (USED IN) INVESTING ACTIVITIES                                 (61,821)              (8,260)
                                                                    ------------------  -------------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net change in notes and mortgages payable                                       -              (14,997)
                                                                    ------------------  -------------------
        NET CASH (USED IN) FINANCING ACTIVITIES                                     -              (14,997)
                                                                    ------------------  -------------------

NET (DECREASE) IN
    CASH AND CASH EQUIVALENTS                                                (220,300)             (21,933)

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

CASH AND CASH EQUIVALENTS - END OF PERIOD                            $         20,948    $           3,087
                                                                    ==================  ===================

SUPPLEMENTAL DISCLOSURE OF NON-CASH
   INFORMATION:
Compensation expense to officer                                      $         20,000    $               -
                                                                    ==================  ===================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

CASH PAID DURING THE PERIOD FOR:
    Interest expense                                                 $              -    $          25,735
                                                                    ==================  ===================
</TABLE>
                                        9
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2006 AND 2005
                                   (UNAUDITED)

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

         The condensed consolidated unaudited interim financial statements
         included herein have been prepared, without audit, pursuant to the
         rules and regulations of the Securities and Exchange Commission. The
         condensed consolidated unaudited financial statements and notes are
         presented as permitted on Form 10-QSB and do not contain information
         included in the Company's annual consolidated unaudited statements and
         notes. Certain information and footnote disclosures normally included
         in financial statements prepared in accordance with accounting
         principles generally accepted in the United States of America have been
         condensed or omitted pursuant to such rules and regulations, although
         the Company believes that the disclosures are adequate to make the
         information presented not misleading. It is suggested that these
         condensed consolidated unaudited financial statements be read in
         conjunction with the September 30, 2005 audited consolidated financial
         statements and the accompanying notes thereto. While management
         believes the procedures followed in preparing these condensed
         consolidated financial statements are reasonable, the accuracy of the
         amounts are in some respects dependent upon the facts that will exist,
         and procedures that will be accomplished by the Company later in the
         year.

         These condensed consolidated unaudited financial statements reflect all
         adjustments, including normal recurring adjustments which, in the
         opinion of management, are necessary to present fairly the condensed
         consolidated operations, changes in permanent stockholders equity
         (deficit), and cash flows for the periods presented.

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

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

                                       10
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2006 AND 2005
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
         --------------------------------------------------

         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 canceled, and new debentures, identical
         to the Connecticut Acquisition Debentures, together with accompanying
         conversion rights into authorized but unissued shares of the Company's
         common stock, par value $.001 per share ("NRMS Common Stock"), were
         issued by the Company to the holders of the Connecticut Acquisition
         Debentures.

                                       11
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2006 AND 2005
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
         --------------------------------------------------

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

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

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

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

         The Company with its name change in fiscal 2005 changed its trading
         symbol from NRES to NRMG.

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

         PRINCIPLES OF CONSOLIDATION
         ---------------------------

         The condensed 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.

                                       12
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2006 AND 2005
                                   (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         USE OF ESTIMATES
         ----------------

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

         REVENUE AND COST RECOGNITION
         ----------------------------

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

         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.

                                       13
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2006 AND 2005
                                   (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------


         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                                     5 to 7 Years
         Vehicles                                                  5 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.

         (LOSS) PER SHARE OF COMMON STOCK
         --------------------------------

         Historical net loss per common share is computed using the weighted
         average number of common shares outstanding. Diluted earnings per share
         (EPS) include 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 loss per share when the Company reported a loss because to
         do so would be antidilutive for periods presented.



















                                       14
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2006 AND 2005
                                   (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

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

<TABLE>
<CAPTION>
                                                                     MARCH 31,              MARCH 31,
                                                                        2006                  2005
                                                                 -------------------    ------------------

<S>                                                              <C>                    <C>
Net (Loss)                                                        $        (108,032)     $       (174,188)
                                                                 -------------------    ------------------

Weighted-average common shares outstanding (Basic)                        6,472,766             6,472,766

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

                                                                 -------------------    ------------------
Weighted-average common shares outstanding (Diluted)                      6,472,766             6,472,766
                                                                 ===================    ==================
</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
         March 31, 2006.

         FAIR VALUE OF FINANCIAL INSTRUMENTS
         -----------------------------------

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

         LOAN ORIGINATION FEES
         ---------------------

         Represent fees in connection with obtaining mortgages on the various
         properties. The loan origination fees are being amortized straight-line
         over a two-year period. Amortization expense for the six months ended
         March 31, 2006 and 2005 is $4,636 and $6,526, respectively.

                                       15
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2006 AND 2005
                                   (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         RECLASSIFICATIONS
         -----------------

         Certain amounts for the six months ended March 31, 2005 have been
         reclassified to conform to the presentation of the March 31, 2006
         amounts. The reclassifications have no effect on the net (loss) for the
         six months ended March 31, 2006.

NOTE 3 - MORTGAGES RECEIVABLE AND OTHER
         ------------------------------

         Represents amounts due from individuals who purchased property from the
         Company and other various amounts due the Company. Amounts due at March
         31, 2006 is $5,435.

NOTE 4 - FIXED ASSETS
         ------------

         Fixed assets consist of the following at March 31, 2006:

                                                                      2006
                                                                 ------------
         Office equipment and other                               $   30,968
         Vehicles                                                     31,508
                                                                 ------------
                                                                      62,476
         Less: Accumulated Depreciation                              (51,234)
                                                                 ------------

                                          Total                   $   11,242
                                                                 ============

         Depreciation expense was $7,926 and $5,630 for the six months ended
         March 31, 2006 and 2005, respectively.














                                       16
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2006 AND 2005
                                   (UNAUDITED)

NOTE 5 - NOTES AND MORTGAGES PAYABLE
         ---------------------------

         Notes and mortgages payable consist of the following at March 31, 2006:

                                                                     2006
                                                                --------------

         Open credit line with a bank with interest at
         8.50% unsecured.                                        $        786

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

                     Total                                       $     20,786
                                                                ==============


NOTE 6 - CONVERTIBLE DEBENTURES PAYABLE
         ------------------------------

         The Company has convertible debentures outstanding at March 31, 2006 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 March
         31, 2006 these debentures are in default. The investors have not
         contacted the Company about the new payment terms.

NOTE 7 - 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 shares of its common stock valued
         at $33,750. The Company restated its September 30, 2000 consolidated
         financial 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 purchase.

         On May 8, 2001, the Company merged with Connecticut Acquisition upon
         the acquisition of the Hebron Parcel. This Hebron parcel was
         subsequently conveyed on October 31, 2001 to Genesis Capital
         Corporation of Nevada, an entity related to the Company through common
         officers and directors. (Upon the acquisition of the Hebron parcel)

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

         The Company currently has no operations.


                                       17
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2006 AND 2005
                                   (UNAUDITED)


NOTE 8 - STOCKHOLDERS' EQUITY (DEFICIT)
         ------------------------------

         As of March 31, 2006, there were 8,000,000,000 shares authorized, and
         6,472,766 shares issued and outstanding of the Company's common stock
         with a par value of $.0000001.

         As of March 31, 2006, there were 1,000,000,000 shares authorized, and
         666,667 issued and outstanding of the Company's Class A Voting common
         stock with a par value of $.0000001.

         As of March 31, 2006, there were 1,000,000,000 shares authorized and 0
         shares issued and outstanding of the Company's preferred stock with a
         par value of $.0000001.

         On December 19, 2005, the Company effected a reverse stock split 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.

         On November 15th the company in conjunction with the issuance of
         666,667 Class A Voting common stock recognized an expense of $20,000
         which represented the fair market value of the stock.

NOTE 9 - INCOME TAXES
         ------------

         The net deferred tax assets in the accompanying condensed consolidated
         balance sheet include the following components at March 31, 2006:

                                                                2006
                                                          -----------------

         Deferred tax assets                               $     2,476,318
         Deferred tax valuation allowance                       (2,476,318)
                                                          -----------------

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



         Due to the uncertainty of utilizing approximately $8,254,394 in net
         operating losses, and recognizing the deferred tax assets, an
         offsetting valuation allowance has been established.







                                       18
<PAGE>
               NATIONAL REALTY AND MORTGAGE INC. AND SUBSIDIARIES
        (FORMERLY NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES)
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2006 AND 2005
                                   (UNAUDITED)


NOTE 10 - RELATED PARTY TRANSACTIONS
          --------------------------

The company wrote off $114,600 of receivables due to it from a related
corporation and conversely took into income $102,953 of debt forgiven by a
related entity. The net effect for the quarter was to increase expense by
$11,647.


NOTE 11 - PRIOR PERIOD ADJUSTMENT
          -----------------------

The company in the first quarter 2006 recorded the fair market of stock issued
as $200,000 instead of $20,000. The company has reduced compensation expense
accordingly for the six months ended March 31, 2006.





































                                       19
<PAGE>
Item 2.  Management's Discussion and Analysis or Plan of Operation.

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

                                   Background

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

         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.

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





                                       20
<PAGE>
         (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 and
that the validly issued shares were still held by Mr. and Mrs. Astrom.

         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.

         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:

         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.



                                       21
<PAGE>
         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 affect 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 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.

On December 19, 2005, the Company affected 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 record date for the 2005
Reverse Stock Split was December 6, 2005. 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.

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. 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. However, the Company has not been actively marketing or seeking out
opportunities in either business line.

In October 2003, the Company began lending money to individuals in the form of
mortgage notes. The Company acted as a broker on some of these transactions and
received loan origination fees for its services. The Company has not funded a
new loan for over one year and all but two of the previous funded loans have
been repaid.

The Company's common stock is quoted on the OTC Bulletin Board under the trading
symbol "NRMG".

The following presentation of management's discussion and analysis of the
Company's financial condition and results of operations should be read in
conjunction with the Company's consolidated financial statements, the
accompanying notes thereto and other financial information appearing elsewhere

                                       22
<PAGE>
in this report. This section and other parts of this report contain forward
looking statements that involve risks and uncertainties. The Company's actual
results may differ significantly from the results discussed in the forward
looking statements.

RESULTS OF OPERATIONS

                  THREE MONTHS ENDED MARCH 31, 2006 COMPARED TO
                        THREE MONTHS ENDED MARCH 31, 2005

Revenues

Revenues were $0.00 for the three months ended March 31, 2006, as compared to
$0.00 for the three months ended March 31, 2005.

Cost Of Revenues

Cost of revenues was $0.00 for the three months ended March 31, 2006, as
compared to $0.00 for the three months ended March 31, 2005.

Operating Expenses

Operating expenses for the three months ended December 31, 2006 were $37,062
compared to $74,140 for the three months ended December 31, 2005. The decrease
in operating expenses was due to a significant decrease in professional fees and
compensation expenses.

Loss From Operations

Loss from operations for the three months ended March 31, 2006 was $37,062
compared to $74,140 for the three months ended December 31, 2005.

Other Income and Expenses

The company wrote off $114,600 of receivables due to it from a related
corporation and conversely took into income $102,953 of debt forgiven by a
related entity. The net effect for the quarter was to increase expense by
$11,647.

Interest Expense

Interest expense was $0.00 compared to $3,835 for the three months ended
December 31, 2005 and 2004, respectively.

Net Loss Applicable To Common Stock

Net loss per share applicable to Common Stock was $0.02 for the three months
ended March 31, 2006, compared to $0.08 for the three months ended March 31,
2005.

LIQUIDITY AND CAPITAL RESOURCES

         To date, the Company has financed its operations primarily through
mortgage debt and the issuance of the NRMG Debentures. At March 31, 2006, the
Company had $20,948 in cash and cash equivalents.

         The Company believes that through its operations as a mortgage lender

                                       23
<PAGE>
it has sufficient cash resources to maintain operations for a period of at least
12 months. In the event that cash from its operations is insufficient, the
Company intends to satisfy its cash requirements for the next 12 months by
borrowing from affiliated company's with common ownership or control and
believes it can satisfy its cash requirements so long as it is able to obtain
financing from these affiliated companies. The Company expects, however, to
dramatically reduce operating expenses going forward. Further, there can be no
assurance that such funds will actually be liquid and available.

         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 to be
$7,500 per month.

         Currently, the Company is using its available cash on hand as the
primary resource to fund its daily operations. Much of these funds were derived
from the Company's recent sales of its real property holdings.


RECENT DEVELOPMENTS

         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 NRES Common Stock issued upon
conversion of the NRES Debentures were sold by holders of the NRES Debentures
following conversion. This occurred during the period beginning on May 16, 2001
and ending on July 13, 2001 for the NRES Connecticut Debentures and beginning on
November 5, 2001 and ending on August 2, 2002 for the NRES 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 NRES 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.

         The Company may also have violated the federal proxy rules by either
(i) not obtaining the requisite shareholder approval to effect the changes in
capital structure described above or (ii) not providing shareholders with an
Information Statement on Schedule 14C. As such, it appears the Company has only
1 million shares of NRES Common Stock authorized. Until the Company's board of
directors and shareholders cure and ratify the over issuances of stock, the 40
Million Share Increase, the 250 Million Share Increase, the 750 Million Share
Increase and the 1.5 Billion Share Increase and comply with the federal proxy
rules in doing so by properly obtaining shareholder approval, the Company may be
liable to the holders of the NRES Common Stock issued in excess of the
authorized amount. These holders can 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 Company still may be
subject to an enforcement action for possible violations of this and other
provisions of the federal securities laws.


OFF BALANCE SHEET TRANSACTIONS

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

                                       24
<PAGE>
                                  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
affected 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 December 31, 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 December 31, 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 over issuances 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.

         However, the Company believes that the Board of Directors and
Shareholders have the authority to amend the articles. Accordingly, 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 affect 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.

                                       25
<PAGE>
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 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.

On December 19, 2005, the Company affected 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 record date for the 2005
Reverse Stock Split was December 6, 2005. 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.

         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.

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
affected 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. However these changes in capital structure
had 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. 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. As of December 31, 2005 these
potential violations were cured. As of December 31, 2005 the Company has prison
proper shareholder approval, provided proper notice to the shareholders with an
Information Statements on Schedule 14C and the changes to the capital structure

                                       26
<PAGE>
have been filed with the Secretary of State of the State of Nevada.

THE COMPANY MAY NOT BE ABLE TO RAISE ADDITIONAL CAPITAL

Though the Company was able to increase its authorized capital to 10 billion
shares 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.

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
nonexistent and there can be no assurance of a change in the immediate future.

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

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

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

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

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

                                       27
<PAGE>
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 3. 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 10QSB,
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 13a15(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 only has
one asset. 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.


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<PAGE>
                                     PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         The Company is not a party to any pending legal proceedings nor is any
of the Company's property the subject of any pending legal proceedings.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On November 15, 2005, the Company reported: (i) that it 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 Mr. Astrom for the 1 million shares of Class A common stock
the Company intended to issue him when the Company's stock was more valuable and
to compensate Mr. Astrom for services rendered to the Company as chief financial
officer for the past three fiscal years. The Company relied on Section 4(2) of
the Securities Act of 1933, as amended as an exemption from the registration
requirements of Section 5 of the Securities Act, in that this issuance
constitutes a transaction by the Company not involving any public offering; (ii)
that it approved and adopted Amended and Restated Bylaws of the Company

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

See the discussion in "RISK FACTORS  RISKS RELATED TO LEGAL
UNCERTAINTIES"

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

             None

ITEM 5. OTHER INFORMATION

         None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8K

(a) Exhibits:

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

 31.1          Certification of Chief Executive Officer pursuant to Section 302
               of the Sarbanes Oxley Act of 2002.

 31.2          Certification of Chief Financial Officer pursuant to Sec tion 302
               of the Sarbanes Oxley Act of 2002.

 32.1          Certification of Chief Executive Officer pursuant to Sec tion 906
               of the SarbanesOxley Act of 2002.

 32.2          Certification of Chief Financial Officer pursuant to Sec tion 906
               of the SarbanesOxley Act of 2002.


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<PAGE>
(b) Reports on Form 8K:

         1. On December 19, 2005 the Company filed Form 8K reporting its reverse
stock split of its chares of common stock.

         2. On November 17, 2005, the Company reported the record date for a
reverse stock split of the shares of the Company's capital stock.

         3. On November 15, 2005, the Company reported: (i) that it 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 Mr. Astrom for the 1 million shares of Class A common
stock the Company intended to issue him when the Company's stock was more
valuable and to compensate Mr. Astrom for services rendered to the Company as
chief financial officer for the past three fiscal years. The Company relied on
Section 4(2) of the Securities Act of 1933, as amended as an exemption from the
registration requirements of Section 5 of the Securities Act, in that this
issuance constitutes a transaction by the Company not involving any public
offering; (ii) that it approved and adopted Amended and Restated Bylaws of the
Company.


SIGNATURES

In accordance with the requirements of the Exchange Act, the Company has caused
this report to be signed by the undersigned, thereunto duly authorized.


National Realty and Mortgage, Inc.

Date: May 11, 2006

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
























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