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

                                   FORM 10-QSB

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

                                     0-27159

                            (COMMISSION FILE NUMBER)

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002

                                       OR

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

                      NATIONAL RESIDENTIAL PROPERTIES, 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)
                                  ------------

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

         As of January 8, 2004, there were 1,938,566,046 shares of the
Registrant's Common Stock, $.001 par value per share, outstanding.

         Transitional Small Business Disclosure Format (Check one): Yes |_| No X

--------------------------------------------------------------------------------
<PAGE>
                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002

                                TABLE OF CONTENTS


PART I  FINANCIAL INFORMATION................................................  5
         ITEM 1.  Financial Statements.......................................  5
         ITEM 2.  Management's Discussion and Analysis or Plan of Operation.. 25
         RISK FACTORS........................................................ 37
         ITEM 3.  Controls and Procedures.................................... 39
PART II OTHER INFORMATION.................................................... 40
         ITEM 1.  Legal Proceedings.......................................... 40
         ITEM 2.  Changes In Securities...................................... 40
         ITEM 3.  Defaults Upon Senior Securities............................ 42
         ITEM 4.  Submission of Matters to a Vote of Security Holders........ 43
         ITEM 5.  Other Information.......................................... 43
         ITEM 6.  Exhibits and Reports on Form 8-K........................... 43
         SIGNATURES.......................................................... 44


         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. THESE
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. 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.





























                                        2
<PAGE>
RESTATEMENT INFORMATION

         National Residential Properties, Inc., a Nevada corporation (the
"COMPANY"), in consultation with its independent accountants, is presenting its
consolidated financial statements for its fiscal year ended September 30, 2002
in an annual report on Form 10-KSB being filed concurrently with this quarterly
report. The effect of the presentation included in this annual report is to
restate financial information presented for the periods ended September 30,
2001, December 31, 2001 and March 31, 2002 and the effect of the presentation
included in this quarterly report on Form 10-QSB is to restate financial
information presented for the period ended June 30, 2001. As the effects of this
restatement are being reflected in the annual report, the Company does not plan
to file an amended annual report for the fiscal year ended September 30, 2001 or
amended quarterly reports for the periods ended June 30, 2001, December 31, 2001
and March 31, 2002. The following is a summary of the cumulative effect of the
restatement of the Company's net loss for the periods ended December 31, 2001
and March 31, 2002 as well as for the year ended September 30, 2001:

NET LOSS FOR THE YEAR ENDED SEPTEMBER 30, 2001

     NET LOSS, AS PREVIOUSLY STATED                              $(583,644)

          Amortization of discount on debenture conversions     (1,129,866)
          Legal fees - debentures                                  (60,000)
          Fees - investors                                        (640,865)
                                                               ------------

     NET LOSS, AS RESTATED                                     $(2,414,375)
                                                               ============

NET LOSS FOR THE PERIOD ENDED DECEMBER 31, 2001

     NET LOSS, AS PREVIOUSLY STATED                               $(47,655)

          Amortization of discount on debenture conversions (100,480) Interest
          expense - debentures (4,922) Fees - investors (68,735) Revenue - sales
          of property 90,762 Cost of sales - sales of property (40,963) Reversal
          of gain on sale of property (15,741)
                                                               ------------

     NET LOSS, AS RESTATED                                       $(187,734)
                                                               ============
















                                        3
<PAGE>
<TABLE>
<CAPTION>
NET LOSS FOR THE PERIOD ENDED MARCH 31, 2002
<S>                                                                          <C>
     THREE MONTHS ENDED MARCH 31, 2002
        NET LOSS, AS PREVIOUSLY STATED                                       $(1,106,453)

          Amortization of discount on debenture conversions
          Interest expense - debentures                                           (5,887)
          Additional management compensation                                    (372,851)
          Reclassification of unrealized losses on investment securities         804,952
                                                                             ------------

        NET LOSS, AS RESTATED                                                  $(680,239)
                                                                             ============

     SIX MONTHS ENDED MARCH 31, 2002
        NET LOSS, AS PREVIOUSLY STATED                                       $(1,154,108)

          Amortization of discount on debenture conversions                     (100,480)
          Interest expense - debentures                                          (10,809)
          Fees - investors                                                       (68,735)
          Revenue - sales of property                                             90,762
          Cost of sales - sales of property                                      (40,963)
          Reversal of gain on sale of property                                   (15,741)
          Additional management compensation                                    (372,851)
          Reclassification of unrealized losses on investment securities         804,952
                                                                             ------------

        NET LOSS, AS RESTATED                                                  $(867,973)
                                                                             ============
</TABLE>



























                                        4
<PAGE>
                                     PART I
                                     ------
                              FINANCIAL INFORMATION
                              ---------------------

ITEM 1.   FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2002
                                   (UNAUDITED)

                                     ASSETS
                                     ------
<S>                                                                         <C>
               Cash and cash equivalents                                     $   39,254
               Inventory - real estate holdings                               9,824,008
               Land sale receivable                                           1,505,000
               Fixed assets, net of depreciation                                 10,207
               Prepaid management fee and other                                 222,987
               Mortgage receivable and other                                    104,933
               Investment securities                                              2,523
               Deposits                                                           6,725
                                                                           ------------

                    TOTAL ASSETS                                            $11,715,637
                                                                           ============

</TABLE>




















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







                                        5
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
                                  JUNE 30, 2002
                                   (UNAUDITED)


         LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)
         ----------------------------------------------------------------
<S>                                                                         <C>
           LIABILITIES
               Deferred revenue on sale of land                              $1,460,978
               Accounts payable and accrued expenses                             71,657
               Loan payable - other                                             434,945
               Debentures payable                                               299,202
               Notes and mortgages payable                                    6,304,441
                                                                           ------------
                    TOTAL LIABILITIES                                         8,571,223
                                                                           ------------
           TEMPORARY EQUITY                                                   4,417,938
                                                                           ------------
           STOCKHOLDERS' EQUITY (DEFICIT)


           Common Stock, $.001 Par Value; 1,000,000 shares authorized and
               1,000,000 shares issued and outstanding                            1,000

           Common  Stock  Class  A  Voting,   $.001  Par  Value;  0  shares
               authorized and 0 shares issued and outstanding                         -

           Additional Paid-in Capital                                         3,606,580
           Deficit                                                           (4,881,104)
                                                                           ------------
                    TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                     (1,273,524)
                                                                           ------------
           TOTAL LIABILITIES, TEMPORARY EQUITY AND
           STOCKHOLDERS' EQUITY (DEFICIT)                                   $11,715,637
                                                                           ============
</TABLE>
















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


                                        6
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                            FOR THE NINE AND THREE MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (UNAUDITED)
<S>                                                            <C>               <C>               <C>              <C>
                                                                     NINE MONTHS ENDED                 THREE MONTHS ENDED
                                                               JUNE 30, 2002     JUNE 30, 2001     JUNE 30, 2002    JUNE 30, 2001
                                                               -------------     -------------     -------------    -------------
OPERATING REVENUES
   Revenue                                                      $    155,116       $    48,559       $    21,452      $    21,972

COST OF SALES                                                         40,963                 -                 -                -
                                                               -------------     -------------     -------------    -------------
GROSS PROFIT                                                         114,153            48,559            21,452           21,972
                                                               -------------     -------------     -------------    -------------
OPERATING EXPENSES
   Management fees                                                    39,271           133,849            13,090           18,249
   Professional fees and compensation expenses                       697,808           207,720           145,720           49,008
   Advertising                                                         3,258            25,541               140           11,889
   Travel and automobile expenses                                     18,650            23,572             7,241            1,442
   Telephone and utilities                                             7,679            10,675             1,744            5,385
   Real estate taxes and property maintenance                          9,327            30,842             3,928           12,844
   Office expenses                                                    18,788            15,112             6,207           10,815
   Miscellaneous                                                       9,810            11,342             1,747            3,362
   Depreciation and amortization                                       1,596             3,123               532              532
                                                               -------------     -------------     -------------    -------------
       TOTAL OPERATING EXPENSES                                      806,187           461,776           180,349          113,526
                                                               -------------     -------------     -------------    -------------
 LOSS BEFORE OTHER INCOME (EXPENSE)                                 (692,034)         (413,217)         (158,897)         (91,554)
                                                               -------------     -------------     -------------    -------------
OTHER INCOME (EXPENSE)
   Amortization of discount on debenture conversions               (100,480)                                   -
   Unrealized loss on investment securities                        (224,547)                 -                 -                -
   Interest expense                                                 (16,760)          (24,633)           (5,951)                -
   Interest income                                                     2,250            12,229             1,250            5,670
                                                               -------------     -------------     -------------    -------------
       TOTAL OTHER INCOME (EXPENSE)                                (339,537)          (12,404)           (4,701)            5,670
                                                               -------------     -------------     -------------    -------------
NET LOSS BEFORE PROVISION FOR INCOME TAXES                    $  (1,031,571)     $   (425,621)     $   (163,598)     $   (85,884)
PROVISION FOR INCOME TAXES                                                 -                 -                 -                -
                                                               -------------     -------------     -------------    -------------
NET LOSS APPLICABLE TO COMMON SHARES                          $  (1,031,571)     $   (425,621)     $   (163,598)     $   (85,884)
                                                               =============     =============     =============    =============
NET LOSS PER BASIC AND DILUTED SHARES                          $   (1.03157)     $   (0.00160)     $   (0.16360)    $   (0.00012)
                                                               =============     =============     =============    =============
WEIGHTED AVERAGE NUMBER OF COMMON
     SHARES OUTSTANDING                                            1,000,000       265,669,490         1,000,000      720,643,338
                                                               =============     =============     =============    =============
</TABLE>





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


                                        7
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                              (DEFICIT) (UNAUDITED)
                     FOR THE NINE MONTHS ENDED JUNE 30, 2002


                                                                       CLASS A         ADDITIONAL
                                           COMMON STOCK             COMMON STOCK         PAID-IN     ACCUMULATED
                                        SHARES        AMOUNT      SHARES     AMOUNT      CAPITAL       DEFICIT       TOTALS
                                     -------------  ----------   ---------   --------  -----------  ------------    ----------
<S>                                  <C>            <C>          <C>         <C>       <C>          <C>             <C>
September 30, 2001, as previously
reported                             1,095,300,351  $1,095,299   1,000,000   $  1,000  $ 4,607,597  $ (2,018,802)   $3,685,094

Reclassification of shares to
temporary equity - See Note 11      (1,094,300,351) (1,094,299) (1,000,000)   (1,000)  (1,001,017)              -  (2,096,316)

Prior period adjustment, Note 17                 -           -           -          -            -    (1,830,731)  (1,830,731)
                                     -------------  ----------   ---------   --------  -----------  ------------    ----------
September 30, 2001, as restated          1,000,000       1,000           -          -    3,606,580    (3,849,533)    (241,953)

Net loss, as previously reported                 -           -           -          -            -       (47,655)     (47,655)

Prior period adjustment, Note 17                 -           -           -          -            -      (140,079)    (140,079)
                                     -------------  ----------   ---------   --------  -----------  ------------    ----------
December 31, 2001, as restated           1,000,000       1,000           -          -    3,606,580    (4,037,267)    (429,687)

Net loss, as previously reported                 -           -           -          -            -    (1,106,453)  (1,106,453)

Prior period adjustment, Note 17                 -           -           -          -            -        426,214      426,214
                                     -------------  ----------   ---------   --------  -----------  ------------    ----------
March 31, 2002, as restated              1,000,000       1,000           -          -    3,606,580    (4,717,506)  (1,109,926)

Net loss                                         -           -           -          -            -      (163,598)    (163,598)

June 30, 2002                            1,000,000   $   1,000           -     $    -  $ 3,606,580  $ (4,881,104)  $(1,273,524)
                                     =============  ==========   =========   ========  ===========  ============    ==========

</TABLE>
















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

                                        8
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              STATEMENT OF CHANGES IN TEMPORARY EQUITY (UNAUDITED)
                     FOR THE NINE MONTHS ENDED JUNE 30, 2002

                                                                       CLASS A                        ADDITIONAL
                                            COMMON STOCK             COMMON STOCK                      PAID-IN
                                        SHARES        AMOUNT      SHARES     CAPITAL    DISCOUNT       CAPITAL        TOTALS
                                     -------------  ----------   ---------   --------  -----------  ------------    ----------
<S>                                  <C>            <C>          <C>         <C>       <C>          <C>             <C>
Balance, September 30, 2001, as
previously reported                              -     $      -          -     $    -     $      -       $       -     $      -

Reclassification of shares to        1,094,300,351    1,094,299  1,000,000      1,000            -       1,001,017    2,096,316
temporary equity - See Note 11

Prior period adjustment, Note 17                 -            -          -          -            -       1,830,731    1,830,731
                                     -------------  ----------   ---------   --------  -----------  ------------    ----------
Balance, September 30, 2001, as
restated                             1,094,300,351    1,094,299  1,000,000      1,000            -       2,831,748    3,927,047

Common stock issued for debt
conversion, interest expense and
discount on convertible debentures
for quarter ended December 31, 2001    843,265,695      843,267          -          -    (687,311)         334,935      490,891
                                     -------------  ----------   ---------   --------  -----------  ------------    ----------

Balance, June 30, 2002               1,937,566,046  $ 1,934,566  1,000,000   $  1,000  $ (687,311)    $  3,166,683  $ 4,417,938
                                     =============  ==========   =========   ========  ===========  ===========     ==========
</TABLE>
























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



                                        9
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (UNAUDITED)

                                                                        2002              2001
                                                                        ----              ----
<S>                                                               <C>               <C>
CASH FLOW FROM OPERATING ACTIVITIES
    Net loss                                                      $ (1,031,571)     $   (425,621)
                                                                  -------------     -------------
    Adjustments to reconcile net loss to net cash
      used in operating activities

      Amortization of discount on convertible debentures                100,480                 -
      Depreciation and amortization                                       1,596             3,123
      Management compensation                                           359,760                 -
      Unrealized loss on investment securities                          224,547                 -
      Distribution of property and equipment                                  -            31,147

CHANGES IN ASSETS AND LIABILITIES
    (Increase) in inventory - real estate holdings                  (2,024,516)       (3,459,780)
    (Increase) in deposits                                              (1,350)                 -
    Decrease in prepaid expenses and other assets                        70,115            12,472
    Increase in accounts payable and accrued expenses                    52,605            36,444
                                                                  -------------     -------------
    Total adjustments                                               (1,216,763)       (3,376,594)
                                                                  -------------     -------------
    NET CASH (USED IN) OPERATING ACTIVITIES                         (2,248,334)       (3,802,215)

CASH FLOWS FROM INVESTING ACTIVITIES
    Loans to officers, net                                            (145,663)                 -
    (Increase) in mortgage and notes receivable                        (46,108)         (216,925)
                                                                  -------------     -------------
    NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES               (191,771)         (216,925)
                                                                  =============     =============
</TABLE>

















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


                                       10
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (UNAUDITED)

                                                                       2002          2001
                                                                       ----          ----
<S>                                                                 <C>               <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from debentures and common stock issuances, net          $ 460,000    $1,101,960
  Loans to others                                                     434,945             -
  Net change in temporary equity                                      155,956             -
  Net change in notes and mortgages payable                         1,347,694     3,055,782
                                                                    ---------     ---------
    NET CASH PROVIDED BY FINANCING ACTIVITIES                       2,398,595     4,157,742
                                                                    ---------     ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                 (41,510)       138,602

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                        80,764       137,990
                                                                    ---------     ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD                             $39,254      $276,592
                                                                    =========     =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

CASH PAID DURING THE YEAR FOR:
  Interest expense                                                    $     -      $ 24,633
                                                                    =========     =========
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
  Issuance of common stock for:

   Services                                                           $     -     $ 134,170
                                                                    =========     =========
   Debt conversions                                                 $ 160,798     $ 825,000
                                                                    =========     =========
   Accounts payable and accrued expenses associated with debentures  $ 73,657        $    -
                                                                    =========     =========
   Amortization of discount on convertible debentures               $ 100,480        $    -
                                                                    =========     =========
  Other:

   Mortgage assumed                                                 $ 315,000        $    -
                                                                    =========     =========
   Investments received                                             $ 227,070        $    -
                                                                    =========     =========
   Distribution of automobile                                         $     -      $ 31,147
                                                                    =========     =========
</TABLE>







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


                                       11
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (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 ("SEC"). The condensed consolidated
                  financial statements and notes are presented as permitted on
                  Form 10-QSB and do not contain information included in the
                  Company's annual consolidated 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
                  financial statements be read in conjunction with the restated
                  September 30, 2001 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 consolidated operations and cash flows
                  for the periods presented.

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

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

                                       12
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (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 80% of 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 ("NRES
                  Common Stock"), were issued by the Company to the holders of
                  the Connecticut Acquisition Debentures.

                                       13
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (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") an entity which may
                  be deemed an affiliate of the Company, 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 Lifestyle.
                  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 was 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 the Company's
                  common stock ("NRES Common Stock"), were issued by the Company
                  to the holders of DC Power's debentures.

                  The Company has restated its audited consolidated financial
                  statements for September 30, 2001, and their unaudited
                  condensed consolidated financial statements for December 31,
                  2001 and March 31, 2002. These financial statements include
                  the adjustments for certain expenses not previously
                  recognized. The Company recognized $372,851 of management
                  compensation in the March 31, 2002 quarter, income of $804,952
                  from the reclassification of unrealized losses on investment
                  securities, and an additional $5,887 in interest expense
                  attributable to the debentures. Additionally, there were
                  certain reclassifications of balance sheet items that did not
                  effect stockholders' equity (deficit) at March 31, 2003.

                                       14
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (UNAUDITED)



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

                  For the quarter ended December 31, 2001, the Company is also
                  reporting $100,480 of amortization of discount on debenture
                  conversions and $73,657 of professional fees and interest
                  associated with the debentures. The Company recognized $34,058
                  of income from the sale of inventory in the quarter ended
                  December 31, 2001.

                  The Company, in accordance with SFAS 115, reflected the
                  permanent decline in its marketable equity securities.

                  The net effect was to decrease the loss for the six months
                  ended March 31, 2002 by $286,135, from $1,154,108 to $867,973.

                  Moreover, the Company has reclassified its balance sheet to
                  reflect the temporary equity account from permanent
                  stockholders' equity (deficit) (See Note 11).


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.

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

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

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

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

                                       15
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (UNAUDITED)


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

                  REVENUE AND COST RECOGNITION (CONTINUED)
                  ----------------------------------------

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

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

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

                  Equipment and other 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

                  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 $3,258 and $25,541 for the nine months ended June
                  30, 2002 and 2001, respectively.

                                       16
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (UNAUDITED)

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

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

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

                  The following is a reconciliation of the computation for basic
                  and diluted EPS:
<TABLE>
<CAPTION>
                                                                June 30,          June 30,
                                                                  2002              2001
                                                                  ----              ----
<S>                                                          <C>                <C>
                  Net Loss                                   ($1,031,571)       ($ 425,621)
                                                              -----------        ----------

                  Weighted-average common shares
                    outstanding (Basic)                        1,000,000         265,669,490

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

                  Weighted-average common shares
                      outstanding (Diluted)                    1,000,000        265,669,490
</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 June 30, 2002 and 2001.

                  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:



                                       17
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (UNAUDITED)

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

                  INVESTMENT SECURITIES (CONTINUED)
                  ---------------------------------

                  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 unless the change in value
                  is deemed permanent.

                  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.

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

                  The carrying amount reported in the condensed 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.

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

                  Certain amounts for the nine months ended June 30, 2001 have
                  been reclassified to conform with the presentation of the June
                  30, 2002 amounts. The reclassifications have no effect on net
                  income for the nine months ended June 30, 2001.

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

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

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

                  Represents amounts due from individuals who purchased property
                  from the Company. Amounts due at June 30, 2002 were $104,933.

                                       18
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (UNAUDITED)

NOTE 5 -          LOANS RECEIVABLE - OFFICERS
                  ---------------------------

                  Amounts represent advances to and from the officers of the
                  Company. The balance at June 30, 2002 is $-0-. Approximately
                  $47,070 of the loans receivable were satisfied through an
                  investment of common stock in an affiliated publicly trading
                  company paid to the Company in February 2002. The Company has
                  charged off the balance of the loans receivable as management
                  compensation during the quarter ended March 31, 2002.

NOTE 6 -          FIXED ASSETS
                  ------------

                  Fixed assets consist of the following at June 30, 2002:


                       Office Equipment and other                $    20,663
                       Accumulated Depreciation                      (10,456)
                                                                 ------------

                                      Total                      $    10,207
                                                                 ===========


                  Depreciation expense was $1,596 and $3,123 for the nine months
                  ended June 30, 2002 and 2001, respectively.

NOTE 7 -          MORTGAGES AND NOTES PAYABLE
                  ---------------------------

                  Mortgages and notes payable consist of the following at June
                  30, 2002:

                  The Company has various mortgages and construction loans
                  payable aggregating $6,304,441 at June 30, 2002. The mortgages
                  and notes payables are due at various times ranging through
                  2002 and 2003, bearing interest at various rates ranging from
                  7% through 14% per year. The mortgages and construction notes
                  are secured by the land and buildings held for development by
                  the Company.

NOTE 8 -          CONVERTIBLE DEBENTURES PAYABLE
                  ------------------------------

                  The Company has convertible debentures outstanding at June 30,
                  2002 in the amount of $299,202. 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.

                  Additionally, the Company recognized $100,480 of amortization
                  of the discount on the debenture conversions for the nine
                  months ended June 30, 2002.

                                       19
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (UNAUDITED)

NOTE 9 -          RELATED PARTY TRANSACTIONS
                  --------------------------

                  Prepaid Management Fees and Compensation

                  Pursuant to a "Prepaid Management Agreement" between the
                  Company and its President, dated September 29, 2000, the
                  Company prepaid management fees to the President in the amount
                  of $302,000. This fee was to be amortized by the Company
                  commencing January 1, 2001 and for the next five years.
                  Management fee expense was $39,271 and $133,849 for the nine
                  months ended June 30, 2002 and 2001 respectively.

                  Leases

                  A company wholly owned by a minority shareholder of Encore
                  Builders, Inc. provided office space to the Company through
                  March 15, 2002.

                  The Company's officers periodically received interest-free
                  advances form the Company. These advances have been satisfied
                  as of June 30, 2002 (See Note 5).

NOTE 10 -         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
                  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. The
                  Company currently has no operations.











                                       20
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (UNAUDITED)


NOTE 11 -         CONTINGENCY/UNCERTAINTY
                  -----------------------

                  The Company has become aware that some or all of the changes
                  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 Note
                  12).

                  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 were 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 nine months
                  and three months ended June 30, 2002. This account acts as a
                  reserve for capital that the Company may be required to repay.

                  As per Note 17, the Company expects to reclassify certain
                  amounts from temporary equity to permanent stockholders'
                  equity after curing any overissuances of its common stock.

NOTE 12 -         TEMPORARY EQUITY
                  ----------------

                  The Company has recorded on its balance sheet 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 June 30, 2002 and
                  2001, were $4,417,938 and $0, respectively. Substantially all
                  the shares issued in connection with the conversion of
                  debentures have been reclassified as temporary equity.


NOTE 13 -         STOCKHOLDERS' EQUITY (DEFICIT)
                  ------------------------------

                  As of June 30, 2002, there were 1,000,000 authorized shares,
                  and 1,000,000 issued and outstanding shares of the Company's
                  common stock with a par value of $.001.

                  The Company issued 843,265,695 shares of common stock for the
                  nine months ended June 30, 2002. These shares are recorded in
                  temporary equity (see Note 12). All of these shares were
                  issued in excess of authorized limits.

                  As of June 30, 2002, there were 0 authorized shares and 0
                  issued and outstanding shares of the Company's Class A Voting
                  common stock with a par value of $.001. (See Note 11).

                  The shares of common stock issued for the nine months ended
                  June 30, 2002 relate to the debenture conversions.

                                       21
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (UNAUDITED)

NOTE 14 -         INCOME TAXES
                  ------------

                  There was no income tax benefit recognized at June 30, 2002
                  and 2001.

                  The net deferred tax assets in the accompanying condensed
                  consolidated balance sheet include benefit of utilizing net
                  operating losses of approximately $1,952,442, however due to
                  the uncertainty of utilizing the net operating losses, an
                  offsetting valuation allowance has been established.

NOTE 15 -         GOING CONCERN
                  -------------

                  As shown in the accompanying condensed consolidated financial
                  statements, the Company incurred substantial net losses for
                  the nine and three months ended June 30, 2002, and 2001, as
                  well as for the years ended September 30, 2001 and 2000. There
                  is no guarantee whether the Company will be able to generate
                  enough revenue and/or raise capital to support those
                  operations. This raises substantial doubt about the Company's
                  ability to continue as a going concern.

                  Management also states that they are confident that they can
                  improve operations and raise the appropriate funds to continue
                  developing the properties being acquired.

                  The condensed consolidated financial statements do not include
                  any adjustments that might result from the outcome of these
                  uncertainties.

NOTE 16 -         SUBSEQUENT EVENTS
                  -----------------

                  On August 2, 2002, Encore Builders filed suit against
                  Conquistador Plaza, a subsidiary of the Company, 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. Conquistador
                  Plaza retained Encore Builders to construct 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 is due from Conquistador Plaza, Inc.
                  and is seeking 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 to be paid for the benefit
                  of Encore Builders and $50,000 was to be paid to Mountbatten
                  Surety Company, Inc.

                  On July 24, 2002, the Company sold the property 5271 SW 8th
                  Street, Miami, Florida known as Grenada Grand. The sales price
                  was $1,805,500. The Company netted cash of $1,003,630 after
                  the mortgages were satisfied and closing costs.

                  On August 1, 2002, the Company sold a property located at 1521
                  NW 84th Street, Miami, Florida for the contract price of
                  $95,000. The Company netted cash of approximately $5,500 after
                  mortgages and expenses were paid.

                  On August 2, 2002, Encore Builders, Inc., the plaintiff, filed
                  suit against Conquistador Plaza, Inc., a 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. The plaintiff asserts that $504,076.03 is due
                  from Conquistador Plaza, Inc. and is seeking damages with
                  interest, costs and attorneys fees. The plaintiff was bonded
                  by Mountbatten Surety Company, Inc., and the Company intends
                  to vigorously defend this claim.

                                       22
<PAGE>
                  In October 2002, the Company sold its "Conquistador Plaza"
                  property. The sales price for that property was $3,500,000. A
                  majority of the proceeds went to pay off an existing mortgage
                  on that property of approximately $3,164,433.

                  The Company has entered into agreements to sell its other
                  properties. Management of the Company believes all deals will
                  be closed before the end of its fiscal year ending September
                  30, 2003.



















































                                       23
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                   (UNAUDITED)

NOTE 17 -         PRIOR PERIOD ADJUSTMENT
                  -----------------------

                  The Company has recognized $372,851 of management
                  compensation, income of $804,952 from the reclassification of
                  unrealized losses on investment securities, and an additional
                  $5,887 in interest expense attributable to the debentures for
                  the quarter ended March 31, 2002.

                  Additionally, the Company has recognized $100,480 of
                  amortization of discounts,$73,657 of fees related to the
                  convertible debentures, an additional $34,058 of income from
                  the gain on a sale of property for the quarter ended December
                  31, 2001.

                  The net effect of all of these prior period adjustments for
                  the six months ended March 31, 2002 was to decrease the net
                  loss for the six months ended March 31, 2002 $286,135 from a
                  loss of $(1,154,108), as originally stated to ($867,973), as
                  restated.

                  There were no adjustments effecting the quarter ended June 30,
2002.
<TABLE>
<CAPTION>
                  Accordingly, the deficit is restated as follows:

<S>                                                                       <C>
                  Deficit, September 30, 2001, as previously reported     ($ 2,018,802)
                  Prior Period Adjustment, September 30, 2001                (1,830,731)
                                                                          --------------

                  Deficit, September 30, 2001, as restated                ($3,849,533)
                  Net loss for the nine months ended June 30, 2002           (1,031,571)
                                                                          --------------

                  Deficit, June 30, 2002                                  ($4,881,104)
                                                                          ============
</TABLE>
                  Accordingly, related stockholders' equity (deficit) accounts
                  and temporary equity accounts were adjusted to account for
                  this recognition (See Notes 11, 12 and 13).












                                       24
<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 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
("NRES COMMON STOCK"). After its incorporation, the following events occurred:
(i) in December of 1994, the Company attempted to effect a 2 for 1 stock split
(the "1994 STOCK SPLIT"); (ii) in January of 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 of 2001, the Company believed
it increased the number of shares it was authorized to issue from 1 million to
40 million shares of NRES Common Stock (the "40 MILLION SHARE INCREASE"); (iv)
in October of 2000, the Company attempted to increase the number of shares the
Company was authorized to issue from 40 million to 250 million shares of NRES
Common Stock (the "250 MILLION SHARE INCREASE"); (v) in January of 2001, the
Company attempted to increase the number of shares it was authorized to issue
from 250 million to 750 million shares of NRES Common Stock and effected a 3 for
1 stock split (the "750 MILLION SHARE INCREASE"); and (vi) in June of 2001, the
Company attempted to increase the number of shares it was authorized to issue
from 750 million to 1.5 billion shares of NRES 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 never has been
authorized to issue more than 1 million shares of NRES Common Stock. All shares
of NRES Common Stock issued in excess of 1 million shares appear to have been
issued in excess of the authorized amount.

         Given the foregoing, the Company has attempted to determine the
majority owners of the validly issued shares of NRES 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. These shares consisted of the majority of the
Company's validly issued outstanding shares. The Company's former transfer
agent's records show that these shares can be traced to such point that the
Company's former transfer agent and the Company severed relations, when they
were still held by Richard and Pamela Astrom, as tenants by the entireties. 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, appear to hold a majority of the validly issued shares of NRES
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. The Company believes that Richard and Pamela Astrom,
as the valid owners of a majority of the Company's validly issued shares, can
amend the Articles to increase the Company's authorized number of shares. The
Company also believes that the issuance of NRES Common Stock in excess of the
authorized amount can be cured by the Company's board of directors. The Company
and Richard and Pamela Astrom intend to amend the Company's Articles and cure
and ratify any issuances of shares issued in excess of the authorized amount
after the Company's local counsel renders these opinions. The Company also
intends to file an Information Statement on Schedule 14C reflecting these
actions, as appropriate.

RECENT DEVELOPMENTS

     o   The Company entered into a contract dated June 24, 2002, to sell the
         Conquistador Plaza development to Shamrock at the Gables LLC for $3.5
         million. This transaction was completed on October 8, 2002. The sales
         price for that property was $3,500,000. A majority of the proceeds went
         to pay off an existing mortgage on that property of approximately
         $3,164,433.

                                       25
<PAGE>
     o   On July 24, 2002, the Company sold the property known as "Granada
         Grand" located at 5271 SW 8th Street in Miami, Florida. The sales price
         was $1,805,000. The Company received $1,003,360 after satisfaction of
         the mortgages on this property and closing costs.

     o   On August 2, 2002, the Company sold a property located at 1521 NW 84th
         Street in Miami, Florida for $95,000. The Company received $5,500 after
         satisfaction of the mortgage on this property and closing costs.

     o   On August 2, 2002, Encore Builders filed suit against Conquistador
         Plaza, a subsidiary of the Company, 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. The Company acquired Encore Builders in April of 2000.
         Conquistador Plaza retained Encore Builders to construct 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 is due from Conquistador Plaza, Inc. and is seeking 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 to be paid for the benefit
         of Encore Builders and $50,000 was to be paid to Mountbatten Surety
         Company, Inc.

     o   On October 8, 2002, the Company sold its Conquistador Plaza property to
         Shamrock in the Gables. The sales price for that property was
         $3,500,000. A majority of the proceeds went to pay off an existing
         mortgage on that property of approximately $3,164,433. o On November 1,
         2002, the Company sold a vacant lot property located at 3102 NW 61st
         Street in Miami, Florida for $20,000.

     o   On November 1, 2002, the Company sold a vacant lot property located at
         3000 NW 93rd Street in Miami Florida for $20,000. The sale was financed
         with a purchase money mortgage which was paid off in full in December
         2002.

     o   On December 13, 2002, the Company filed an Amended Complaint against
         the Town of Bay Harbor Islands and the Director of the Town of Bay
         Harbor Islands, Building and Zoning Department in the Circuit Court of
         the 11th Judicial Circuit for Miami-Dade County, Florida regarding (i)
         an application by the Company for zoning approval for a planned
         residential development overlay district and (ii) approval from the
         Town of Bay Harbor for the development of the Residences at Bay Harbor.
         Subsequent to the filing of this case, the Company filed a related
         complaint in the United States District Court for the Southern District
         of Florida. The federal claim was dismissed with prejudice on May 20,
         2003. In July 2003, the Company filed a Second Amended Complaint
         amending its complaint to add state law counts that were previously
         asserted by the Company in its federal complaint.

     o   The Eagle Trace Subdivision is a 20 acre citrus grove in Vero Beach,
         Florida that the Company successfully rezoned to a single family
         development. The Company completed construction of 62 single-family
         lots in 2002 and sold the property to WBS Management & Acquisition Corp
         on July 30, 2003, pursuant to a Vacant Land Contract dated as of May
         29, 2003. The purchase price for the property was $1,980,000 and was
         determined through arms-length negotiations.

     o   The Company's July 31, 2002 contract to sell the Barcelona Apartments
         property to Antonio Sarmiento fell through. The Company is currently
         continuing its efforts to sell this property. The Company entered into
         an agreement for purchase and sale with Salomon Yuken to sell the
         Barcelona Apartments to Salomon Yuken on January 10, 2003. On May 8,
         2003, the Company and Salomon Yuken entered into an amendment to the
         agreement for purchase and sale. In June 2003, the Company and Salomon
         Yuken entered into a second amendment to the agreement for purchase and
         sale which, among other things, extended the closing date to October
         31, 2003. A $100,000 deposit has been paid to the Company by Salomon
         Yuken. The closing date was subsequently extended to January 2004.

                                       26
<PAGE>
     o   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 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, the Company believes it currently has only 1 million
         shares of NRES Common Stock authorized, a majority of which are owned
         by Richard and Pamela Astrom as tenants by the entireties.

OVERVIEW

     o   National Residential Properties, 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 NRES Common Stock from the
         Company's then controlling stockholders. At this time the Company was
         authorized to issue 1 million shares of NRES 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 NRES 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 into the
         Company, with National Rehab Properties, Inc. remaining as the
         surviving entity. Pursuant to the agreement of merger, each share of
         National Rehab Properties, Inc.'s common stock was converted into one
         share of NRES Common Stock and each share of NRES Common Stock before
         the merger remained as one share of NRES Common Stock. At the time of
         the merger, Richard Astrom owned 1,000 shares of National Rehab
         Properties, Inc.'s common stock. After the merger, Richard Astrom and
         members of his family held 401,000 shares of the issued and outstanding
         shares of NRES Common Stock. 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 of 1999, the Company attempted to effect the 1999 Reverse
         Stock Split.

     o   Between the date of its incorporation and January of 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 per share and to issue 1 million
         shares of its newly authorized Class A Common Stock to Christopher
         Astrom.

     o   In April of 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 Vacation Ownership Marketing, Inc. Vacation Ownership
         Marketing, Inc. ("VACATION OWNERSHIP") 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 of 2002,
         Encore Services has been inactive.

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

                                       27
<PAGE>
     o   In October of 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 of 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 "NRES CONNECTICUT DEBENTURES"), but convertible into
         authorized and unissued shares of NRES Common Stock, were issued by the
         Company to the holders of the Connecticut Acquisition Debentures.

     o   In June of 2001, the Company filed a Certificate of Amendment with the
         Nevada Secretary of State 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 and
         canceled, and new debentures, identical to the DC Power Debentures (the
         "NRES DC POWER DEBENTURES" and together with the NRES Connecticut
         Debentures, the "NRES DEBENTURES")), but convertible into authorized
         and unissued shares of NRES Common Stock, were issued by the Company to
         the holders of the DC Power Debentures.

     o   The Company's Articles of Incorporation, as amended, currently provide
         that the Company is authorized to issue up to 1.5 billion shares of
         NRES 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. As such, the Company believes it
         currently has only 1 million shares of NRES Common Stock authorized, a
         majority of which are owned by Richard and Pamela Gay Astrom, as
         tenants by the entireties. As such, all references to shares of NRES
         Common Stock do not reflect the Capital Changes referenced above
         (including any stock splits).

     o   It has come to the Company's attention that, as a result of the
         conversion of the NRES Debentures into NRES Common Stock and the
         decrease in the price of NRES Common Stock, investors were entitled to
         more shares than authorized. As a result, the Company, as of December
         19, 2003, has 1,938,566,046 shares of NRES Common Stock issued, which
         exceeds the number of authorized shares. Under the state law 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
         stockholders.

     o   The Company currently is a land development company that purchases
         zoned, but undeveloped real property, develops architectural plans for
         the real property, obtains building permits for the real property and
         subsequently sells the real property when it is ready for development.
         The Company has the potential to realize profit with these activities
         because developers who purchase the real property will not need to
         delay obtaining construction financing until they receive a building
         permit.

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<PAGE>
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.

     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.

         The land development agreement called for Connecticut Acquisition to
advance funds to the Kahn Entities earmarked for a specific option and a
specific set of itemized expenses related to a specific property and for each
option in question to serve as collateral for the funds advanced by Connecticut
Acquisition. If the advance is not timely repaid, that option, and all attendant
rights thereto, revert to, and become the property of, Connecticut Acquisition.

         The land development agreement provided that Connecticut Acquisition
would fund the initial costs of acquisition and development, and, after
deduction of expenses from gross revenues, profits would be divided 50-50
between Connecticut Acquisition and the Kahn Entities. 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 NRES Connecticut
Debentures, which were convertible into NRES Common Stock, were issued by the
Company to the holders of the Connecticut Acquisition Debentures.

         Pursuant to an agreement executed on December 26, 2001, made effective
as of October 31, 2001 and a statutory warranty deed dated October 31, 2001, the
Company sold 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. The agreement contemplated that the Company
would assume two mortgages having an aggregate principal balance of $315,000 and
be issued 20 million shares of restricted Genesis common stock ("GENESIS COMMON
STOCK") based on a value of $.10 per share, which value was determined by the
average bid price of Genesis Common Stock during the week prior to the October
31, 2001 effective date. While the agreed upon consideration was $2 million, the
net effect of this transaction was to transfer $1.685 million in Genesis Common
Stock after deducting the aggregate principal balance on the mortgages. The
value of the assets sold has not been appraised by any independent party.

         On February 1, 2002, the Company received the 20 million shares of
Genesis Common Stock. If, at the earlier of (a) the expiration of three years
from the date of the conveyance, or (b) the time the Company has sold all of the
shares of


                                       29
<PAGE>
Genesis Common Stock, the market value or gross sale proceeds realized by the
Company for the sale of the Genesis Common Stock is less than $2 million,
Genesis must issue the Company additional shares of Genesis Common Stock in an
amount based on the closing bid price of Genesis Common Stock as quoted on the
OTC Bulletin Board the day before the date of such additional shares are issued
to make up the difference between the market value or gross sale proceeds and $2
million. The value of the Genesis Common Stock on February 1, 2002 was $180,000.
The ability of the Company to realize $2 million from the sale of these assets
is dependent upon a number of factors, including, without limitation: (i) the
Company's ability to sell shares of Genesis Common Stock into the public markets
in accordance with the rules of the SEC; (ii) the trading volume of Genesis
Common Stock at the time or times the Company sells stock into the markets;
(iii) the operating results of Genesis and the market reaction to such operating
results; (iv) the number of shares of Genesis Common Stock tradable on the OTC
Bulletin Board; and (v) other factors affecting the market price of, and market
for, Genesis Common Stock. There can be no assurance the Company will realize $2
million from the development or sale of these assets, or that it will have a
fair market value of $2 million. Further, Genesis and the Company may be deemed
affiliates of one another and, therefore, there can be no assurance that the
terms of sale, including the value assigned to the parties by the assets, would
be the same as, or similar to, the terms to which unrelated parties would agree
in an arm's-length transaction.

     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 Vacation Ownership, which may be deemed an
affiliate of the Company.

         Encore Builders, a subsidiary of Vacation Ownership 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 of 2002, the
Company returned the shares of Encore Services, the Company's wholly-owned
inactive company.

         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 is not liable on the Conquistador Plaza loan, the Company has
invested substantial funds in the Conquistador Plaza development and would lose
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. Litigation with Encore Builders is described in more
detail in "Legal Proceedings". 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.

CURRENT OPERATIONS

     Overview

         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. During this time period, the Company
purchased four parcels of land for apartment construction and one 20-acre citrus
grove for subdivision development. These properties are described below in
detail along with the status of each project in light of the transition in the
Company's business plan.

     Granada Grand Apartments

                                       30
<PAGE>
         This property is in the Hazelton subdivision in Miami, Florida and was
purchased with the intention of constructing a 60-unit apartment building on it.
The land was purchased for $800,000. The Company intended for Encore Builders to
handle the construction of the building and obtained a mortgage commitment from
First Housing Development Corporation of Florida and was due to close on the
mortgage, but one day prior to closing, Encore Builders' construction
performance bond was revoked. Encore Builders attempted unsuccessfully to get
rebonded (including performing a merger with the Company's affiliate, Vacation
Ownership). In December of 2001, the Company entered into a contract with G&F
Corp. to sell the property as a vacant parcel. Although resale was not the
original goal of the purchase, it allowed the Company to realize a profit on the
purchase and sale of Granada Grand. The Company sold the five lots of real
property to G&F Corp. for $1,805,500 in cash on July 24, 2002. Mortgages and
closing expenses totaled $801,870. G&F Corp. assigned the purchase contract to
M.E.D. of Miami, LLC before closing on July 24, 2002. The Company received
$1,003,360 after satisfaction of the mortgages on this property and closing
costs. The Company never built on the property. The purchase price was
determined through arms-length negotiations.

     Eagle Trace Subdivision

         This property is a 20 acre citrus grove in Vero Beach, Florida that the
Company successfully rezoned to a single family development. The Company
completed construction of 62 single-family lots in 2002 and sold the property to
WBS Management & Acquisition Corp on July 30, 2003 pursuant to a Vacant Land
Contract dated as of May 29, 2003. The purchase price for the property was
$1,980,000 and was determined through arms-length negotiations.

     Barcelona Apartments

         On this property, located in Miami, Florida and purchased in 2000, the
Company intended to construct 70 rental apartments. Litigation relating to the
Barcelona Apartments is discussed under "Item 1 of Part II - Legal Proceedings".
The Company's July 31, 2002 contract to sell this property to Antonio Sarmiento
fell through. The Company is currently continuing its efforts to sell this
property. The Company entered into an agreement for purchase and sale with
Salomon Yuken to sell the Barcelona Apartments to Salomon Yuken on January 10,
2003. On May 8, 2003, the Company and Salomon Yuken entered into an amendment to
the agreement for purchase and sale. In June 2003, the Company and Salomon Yuken
entered into a second amendment to the agreement for purchase and sale which,
among other things, extended the closing date to October 31, 2003. A $100,000
deposit has been paid to the Company by Salomon Yuken. The closing date was
subsequently extended to January 2004.

     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 to this
date, the permit has not been obtained 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. 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. See "Item 1 of Part II - Legal
Proceedings" for a discussion of the related litigation.

     Other Properties

         On July 31, 2001, the Company sold a property located at 3104 NW 61st
Street in Miami, Florida for $92,000. The Company received $29,953 after
satisfaction of the mortgage on this property and closing costs.

                                       31
<PAGE>
         On August 2, 2002, the Company sold a property located at 1521 NW 84th
Street in Miami, Florida for $95,000. The Company received $5,500 after
satisfaction of the mortgage on this property and closing costs.

         On November 1, 2002, the Company sold a vacant lot property located at
3102 NW 61st Street in Miami, Florida for $20,000.

         On November 1, 2002, the Company sold a vacant lot property located at
3000 NW 93rd Street in Miami Florida for $20,000. The sale was financed with a
purchase money mortgage.

RESULTS OF OPERATIONS

         The following is a discussion of the consolidated financial condition
and results of operations of the Company for the three and nine months ended
June 30, 2002 and 2001, 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.

         Please note this discussion of the Company's results of operations
includes restated financial information for the period ending June 30, 2001. As
reported in the Company's current reports on Form 8-K filed on July 23, 2001 and
amended on August 9, 2001 and August 10, 2001, the Company changed independent
accountants and auditors as of the fiscal quarter ended June 30, 2001.

         For the three and nine months ended June 30, 2002, the Company incurred
net loss of $163,598 and $1,031,571, respectively, compared to net loss of
$85,884 and $425,621 for the comparable 2001 periods. The net loss in 2002 is
primarily attributable to increases in professional fees and compensation
attributable to reclassifications of officer loans, and amortization on discount
on debenture conversions.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001

REVENUES

         Total revenues essentially remained unchanged at $21,452 for the three
months ended June 30, 2002, as compared to $21,972 for the three months ended
June 30, 2001. The primary source of revenues for both quarterly periods was
rental income related to the Barcelona Apartments.

OPERATING EXPENSES

     Professional Fees and Compensation Expenses

         Professional fees and compensation expenses for the three months ended
June 30, 2002 totaled $145,720 compared to $49,008 for the three months ended
June 30, 2001. This 197% increase is primarily due to professional fees related
to bringing the Company into compliance with the federal securities laws.

     Advertising

         Advertising expenses for the three months ended June 30, 2002 totaled
$140 compared to $11,889 for the three months ended June 30, 2001. This 99%
decrease in advertising expenses is primarily due to the fact that the Company
had been actively engaged in development and related advertising during its
fiscal year ended 2001, but had slowed its development operations during its
fiscal year ended 2002.

     Travel and Automobile Expenses

         Travel and automobile expenses for the three months ended June 30, 2002
totaled $7,241 compared to $1,442 for the three months ended June 30, 2001. This
402% increase is primarily due to the fact that meetings relating to the
Company's business and financing opportunities were less regional in nature and
involved additional air travel.

     Telephone and Utilities

                                       32
<PAGE>
         Telephone and utilities expenses for the three months ended June 30,
2002 totaled $1,744 compared to $5,385 for the three months ended June 30, 2001.
This 68% decrease is primarily related to the Company's relocation of its
principal executive offices to a smaller, more cost-effective location.

     Real Estate Taxes and Property Maintenance

         Real estate taxes and property maintenance expenses for the three
months ended June 30, 2002 totaled $3,928 compared to $12,844 for the three
months ended June 30, 2001. This 69% decrease is primarily due to the Company's
decreased real estate holdings.

DEPRECIATION AND AMORTIZATION

         Depreciation and amortization remained unchanged at $532 for the three
months ended June 30, 2002 and for the three months ended June 30, 2001.

OTHER INCOME (EXPENSE)

         Other income (expense) for the quarterly period ended June 30, 2001,
was income of $5,670, which decreased to an expense of $4,701 for the quarterly
period ended June 30, 2002. This decrease was primarily the result of the
Company recording an interest expense related to conversions of debentures.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001

REVENUES

         Total revenues increased from $48,559 for the nine months ended June
30, 2001, to $155,116 for the nine months ended June 30, 2002. The primary
source of revenues for the nine months ended June 30, 2002 was rental income
from the Company's properties.

OPERATING EXPENSES

     Management Fees

         Management fees for the nine months ended June 30, 2002 totaled $39,271
compared to $133,849 for the nine months ended June 30, 2001. This 71% decrease
in management fees is primarily due to the Company's determination to decrease
management fee expenses in favor of paying its officers compensation.

     Professional Fees and Compensation Expenses

         Professional fees and compensation expenses for the nine months ended
June 30, 2002 totaled $697,808 compared to $207,720 for the nine months ended
June 30, 2001. This 236% increase is primarily related to the incurrence of
legal fees and related reimbursements relating to bringing the Company into
compliance with state corporate law and federal securities laws as well as the
Company's Bay Harbor lawsuit.

     Advertising

         Advertising expenses for the nine months ended June 30, 2002 totaled
$3,258 compared to $25,541 for the nine months ended June 30, 2001. This 87%
decrease in advertising expenses is primarily due to the fact that the Company
had been actively engaged in development and related advertising during its
fiscal year ended 2001, but had slowed its development operations during its
fiscal year ended 2002..

     Telephone and Utilities

                                       33
<PAGE>
         Telephone and utilities expenses for the nine months ended June 30,
2002 totaled $7,679 compared to $10,675 for the nine months ended June 30, 2001.
This 28% decrease is primarily related to the Company's relocation of its
principal executive offices to a smaller, more cost-effective location..

     Real Estate Taxes and Property Maintenance

         Real estate taxes and property maintenance expenses for the nine months
ended June 30, 2002 totaled $9,327 compared to $30,842 for the nine months ended
June 30, 2001. This 70% decrease is primarily due to the Company's decreased
real estate holdings.

DEPRECIATION AND AMORTIZATION

         Depreciation and amortization for the nine months ended June 30, 2002,
totaled $1,596 as compared to $3,123 for the nine months ended June 30, 2001.

OTHER INCOME (EXPENSE)

         Other income (expense) for the nine months ended June 30, 2001, was an
expense of $12,404, which increased to an expense of $339,537 for the nine
months ended June 30, 2002. This increase in expenses was primarily the result
of amortization of discount of debenture conversions and unrealized losses on
Company investments.

LIQUIDITY AND CAPITAL RESOURCES

         To date, the Company has financed its operations primarily through
mortgage debt and the sale of NRES Common Stock issued through converting the
NRES Debentures. At June 30, 2002, the Company had $39,254 in cash and cash
equivalents, a decrease of $41,510 from September 30, 2001. This 86% decrease in
cash and cash equivalents is attributable to the conversion of NRES Debentures.
The Company acquired $0 of real estate holdings in the nine-month period ended
June 30, 2002, compared to real estate acquisitions of $900,000 in the
comparable 2001 period, as the Company continued at a diminished rate its
business plan to develop, construct and own multifamily housing.

         The Company used $191,771 in investing activities for the nine months
ended June 30, 2002, as compared to $216,925 used in the nine months ended June
30, 2001. Net cash provided by financing activities was $2,398,595 for the nine
months ended June 30, 2002, as compared to $4,157,742 for the nine months ended
June 30, 2001. This decrease in net cash provided by financing activities is
attributable to the shift in the Company's business away from purchasing and
holding properties. This change reflects the substantial decrease in the
Company's proceeds from the NRES Debentures and NRES Common Stock issuances, and
also from notes and mortgages payable.

         The Company had stockholders' equity of $1,000 at June 30, 2002. The
Company's determination that it has issued shares in excess of its authorized
amount resulted in the Company's determination that all shares issued in excess
of 1 million would be reclassified as temporary equity.

         The Company believes that when considered together with anticipated
income from the sale of real property, it has sufficient cash resources to
maintain operations for a period of at least twelve months. The Company's cash
requirements will largely depend upon the availability of real estate
acquisition opportunities and the costs to continue funding its real estate
development projects. There can be no assurance that funds required by the
Company for these purposes, or to meet its operating requirements, will be
available or, if they are, that they will be available on acceptable terms and
at such times as the Company requires. See "Outlook", below for a discussion on
possible limits on the Company's ability to raise capital.

OUTLOOK

         The Company invested substantial funds in its existing projects, but
only realized material profits from these projects upon the sale of the real
estate. While the Company entered into agreements to sell certain of its
remaining properties, it cannot guarantee these transactions will close or that
the sales will occur in a timely fashion. Further, the Company faces litigation
with respect to the Conquistador Plaza project resulting from the termination of
the project's


                                       34
<PAGE>
contractor, a former subsidiary of the Company whose president was a director of
the Company. The Company terminated the project's contractor because of its
inability 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. See "Item 1 of Part II - Legal
Proceedings."

         The Company's ability to meet its continuing operating expenses largely
depends on its ability to continue to raise capital through (i) the sale of debt
or equity, (ii) through construction and permanent mortgage financing, (iii)
through the completion and sale, or sale prior to completion, of the Company's
real estate projects and (iv) through the sale of land purchased, but not
developed, by the Company. In the likely event the Company is forced to sell its
remaining property prior to completion or the time such property appreciates
substantially, should such increase occur, the Company's profit, if any, from
its real estate activities would be materially adversely affected. 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.

         From time to time the Company has entered into agreements with
unrelated third parties for the sale of property. However, these agreements
contain customary contingencies, such as financing or governmental approval
contingencies, which the Company believes are sufficiently material as to make
uncertain the ability of the Company to complete these sales.

         The Company's operations are principally based in the residential real
estate market in South Florida. This market has historically been both cyclical
and seasonal. The Company experiences generally higher sales in the second and
third fiscal quarters. Therefore, the results of any interim period is not
necessarily indicative of the results that might be expected during a full
fiscal year.

         Section 5 of the Securities Act of 1933, as amended (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. On April 12, 2001, Connecticut Acquisition issued the Connecticut
Acquisition Debentures and on October 17, 2001, DC Power issued the DC Power
Debentures. The Connecticut Acquisition Debentures were exchanged for the NRES
Connecticut Debentures and the DC Power Debentures were exchanged for the NRES
DC Power Debentures. The shares of NRES Common Stock underlying the converted
portion of the NRES Debentures were sold by the holders of the NRES Debentures.
These two series of 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 is thereby exposed to possible litigation under Section
12(a)(1) of the Securities Act. 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. If actions by the holders of NRES Common Stock received upon
conversion of the NRES Debentures are barred by this statute of limitations, the
Company expects to reclassify certain amounts from temporary equity to permanent
stockholder equity (after curing any overissuances).

         It appears that approximately $1,103,500 of principal, $19,400 in
interest, $144,943 in bookkeeping fees, $168,020 in investor fees, $258,434 in
professional fees and $30,000 in fees for the right to borrow funds (a total of
$1,724,297) were converted by the investors of the NRES Connecticut Debentures
during the period beginning on May 16, 2001 and ending on July 13, 2001.
Although the Company believes it has been able to accurately calculate the
aggregate amount converted and the amount of capital raised, the Company has
estimated the exact breakdown of various fees and debt relating to the NRES
Connecticut Debentures that have been converted. Additionally, $160,798 of
principal (out of a total amount of $460,000 funded), $4,922 of interest paid
and $68,735 in bookkeeping fees (a total of $234,455) was converted during the
period beginning on November 5, 2001 and ending on August 2, 2002 ($299,202
remains payable). The holders of the NRES Connecticut Debentures received a
total of approximately 590,442,628 shares of NRES Common Stock with an average
price of $.00266 per share through conversions and the holders of the NRES DC
Power Debentures received a total of approximately 716,365,695 shares of NRES
Common Stock with an average price of $.000327 per share through conversions.
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. The closing market prices
during
                                       35
<PAGE>
this time ranged from $.0036 to $.0076 per share and $.0001 to $.0017 per share,
respectively. 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 almost run, it is unlikely that a large portion of these holders
of NRES 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 and capital resources. The ramifications of this may entail a possible
rescission offer to the stockholders affected within the past year. Other
possible ramifications include an enforcement action by the SEC.

         As of the date of this report, the Company has not received $540,000 in
additional proceeds from the sale of the NRES DC Power Debentures and has
$299,202 in NRES DC Power Debentures outstanding. The Company has no plans to
issue additional NRES Debentures for any amounts not yet received and has no
plans to permit outstanding NRES Debentures to be converted.

         In October of 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. Because these debentures were all converted
into NRES Common Stock and sold over one year ago, it is unlikely that a Section
5 action could be maintained against the Company for offering these debentures
or the underlying NRES Common Stock.

         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. 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 such, it appears the Company
currently has only 1 million shares of NRES Common Stock authorized, and the
majority of the validly issued shares are held by Richard and Pamela Astrom as
tenants by the entireties. The Company believes a majority of the Company's
validly issued and outstanding shares and the board of directors can cure and
ratify the overissuances of stock and the aforementioned changes in capital
structure. Until that time, the Company may be liable to the holders of the NRES
Common Stock issued in excess of the authorized amount. The Company also
believes that the issuance of Class A common stock to Christopher Astrom was not
authorized as an amendment to the Company's Articles of Incorporation was never
filed with the Secretary of State of the State of Nevada. The Company believes
the recipient of the unauthorized shares, Christopher Astrom, may have a claim
against the Company for damages, but it is unlikely that Christopher Astrom will
file a claim against the Company as he is an officer, director and principal
shareholder of the Company. Also, as discussed below, the Company's board of
directors and the holders of a majority of its validly issued shares intend to
authorize the creation of Class A common stock and issue shares to Christopher
Astrom.

         It has come to the Company's attention that, as a result of the
conversion of the debentures issued by the Company into NRES Common Stock,
coupled with the decrease in the trading price of NRES Common Stock, investors
were entitled to more shares of NRES Common Stock than is authorized under the
Company's Articles of Incorporation. As a result, as of January 8, 2004, the
Company has 1,938,566,046 shares of NRES Common Stock issued, which exceeds the
number of shares authorized. As stated above, the Company believes the holders
of a majority of the Company's validly issued and outstanding shares and the
board of directors can cure and ratify the overissuances of stock. If this
cannot be accomplished, the Company may be liable to the holders of the NRES
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). The overissuance, together with
the Company's inability to increase its authorized number of shares, has
eliminated the Company's ability to raise capital through issuances of publicly
registered securities. The Company believes it will not be able to continue
trading NRES 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 NRES Common Stock. The Company may
also have violated other provisions of Nevada law with respect to the duties of
officers and directors to the Company and by not having sufficient shares
available upon the conversion of debentures issued by the Company.

                                       36
<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
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, it appears the
Company currently has only 1 million shares of NRES Common Stock authorized, and
the majority of the validly issued shares are held by Richard and Pamela Astrom
as tenants by the entireties. The Company believes a majority of the Company's
validly issued and outstanding shares and the board of directors can cure and
ratify the overissuances of stock and the aforementioned changes in capital
structure. Until that time, the Company may be liable to the holders of the NRES
Common Stock issued in excess of the authorized amount. The Company also
believes the issuance of Class A common stock to Christopher Astrom was not
authorized as an amendment to the Company's Articles of Incorporation was never
filed with the Secretary of State of the State of Nevada. The Company believes
the recipient of the unauthorized shares, Christopher Astrom, may have a claim
against the Company for damages, but it is unlikely that Christopher Astrom will
file a claim against the Company as he is an officer, director and principal
shareholder of the Company. Also, as discussed below, the Company's board of
directors and the holders of a majority of its validly issued shares intend to
authorize the creation of Class A common stock and issue shares to Christopher
Astrom.

         It has come to the Company's attention that, as a result of the
conversion of the debentures issued by the Company into NRES Common Stock,
coupled with the decrease in the trading price of NRES Common Stock, investors
were entitled to more shares of NRES Common Stock than is authorized under the
Company's Articles of Incorporation. As a result, as of January 8, 2004, the
Company has 1,938,566,046 shares of NRES Common Stock issued, which exceeds the
number of shares authorized. As stated above, the Company believes the holders
of a majority of the Company's validly issued and outstanding shares and the
board of directors can cure and ratify the overissuances of stock. If this
cannot be accomplished, the Company may be liable to the holders of the NRES
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). The overissuance, together with
the Company's inability to increase its authorized number of shares, has
eliminated the Company's ability to raise capital through issuances of publicly
registered securities. The Company believes it will not be able to continue
trading NRES 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 NRES Common Stock. The Company may
also have violated other provisions of Nevada law with respect to the duties of
officers and directors to the Company and by not having sufficient shares
available upon the conversion of debentures issued by the Company.

     The Company May Face Litigation For Issuing Securities in Violation of
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 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 of 2000, the Company issued debentures pursuant to a merger with 2217
Acquisition

                                       37
<PAGE>
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. As of the date of the filing of this report, because there have been
no actions filed against the Company based upon a violation of Section 5 and
because the statute of limitations has run, it is unlikely that these holders of
NRES 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 and capital resources. The ramifications of this may entail a possible
rescission offer to the stockholders affected within the past year. Other
possible ramifications include an enforcement action by the SEC.

         As of the date of this report, the Company has not received $540,000 in
additional proceeds from the sale of the NRES DC Power Debentures and has
$299,202 in NRES DC Power Debentures outstanding. The Company has no plans to
issue additional NRES Debentures for any amounts not yet received and has no
plans to permit outstanding NRES 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. 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. 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 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 overissuances 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. The Company still may be subject to an enforcement action for
possible violations of this and other provisions of the federal securities laws.

     The Company May Not be Able to Raise Additional Capital

         On December 6, 2001, the Company filed an Information Statement on
Schedule 14C with the SEC to increase the number of shares of authorized NRES
Common Stock from 1.5 billion shares to 5 billion shares, among other things.
The Company plans to seek stockholder approval to cure and ratify the Capital
Changes and provide a related information statement on Schedule 14C to its
stockholders shortly after the Company is satisfied it has resolved any of the
SEC's comments. Pending resolution of this matter, the Company will not be able
to realize any proceeds from the sale of the NRES Debentures, other debt, or
equity (other than proceeds from mortgages on properties). Even if the Company
were able to increase its authorized capital, there can be no assurance that the
Company will be able to raise additional capital on a debt or equity basis, or
to obtain mortgage financing, to complete any of its projects under development
(should they be completed), or land purchased for resale or development at a
profit.

     The Company May Be In Default of the NRES Debentures

         It appears the Company is or will be in default under the terms of the
NRES Debentures because, among other things, the Company has no plans to
register additional NRES Common Stock to be issued upon conversion of the NRES
Debentures that are currently outstanding and has no plans to complete the
issuance of the NRES Debentures. Given the foregoing, the Company could face
litigation by the holders of the NRES 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.



                                       38
<PAGE>
OTHER RISKS

     There Is Substantial Doubt About The Company's Ability To Continue As A
Going Concern

         The Company has incurred substantial net losses. There is no guarantee
whether the Company will be able to generate enough revenue and/or raise capital
to support those operations. Further, the Company has a considerable
stockholders' deficiency. These facts raise substantial doubt about the
Company's ability to continue as a going concern.

     The Company's Stock Price Has Declined Significantly and May Not Recover

         The trading price of NRES Common Stock has declined significantly since
approximately October 2001. The market for NRES 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 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
10-QSB, 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 specific 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 filing date of this report, the Company's disclosure controls and
procedures are effective to ensure that 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 required time periods.

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.



                                       39
<PAGE>
                                     PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On February 4, 2002, O.M. Investments, Inc. ("O.M. INVESTMENTS") filed
suit against the Company in the Circuit Court for Miami-Dade County seeking
foreclosure on the Company's Barcelona Apartments property. O.M. Investments
sought to foreclose on a purchase money second mortgage executed and delivered
on December 13, 2000 with respect to the Barcelona Apartments property that
allegedly was in default. O.M. Investments sought $100,000 plus interest on this
mortgage amount as well as reasonable attorney's fees. A final judgment of
foreclosure was entered on April 8, 2002. The Company paid $114,437.75 on July
10, 2002 and O.M. Investments subsequently filed an acknowledgement that full
payment and satisfaction had been received.

         On August 2, 2002, Encore Builders filed suit against Conquistador
Plaza, a subsidiary of the Company, 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. Conquistador
Plaza retained Encore Builders to construct 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 is due from Conquistador Plaza, Inc. and is
seeking 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 to be paid for the benefit of Encore
Builders and $50,000 was to be paid to Mountbatten Surety Company, Inc.

         On December 13, 2002, the Company filed an Amended Complaint against
the Town of Bay Harbor Islands and the Director of the Town of Bay Harbor
Islands, Building and Zoning Department in the Circuit Court of the 11th
Judicial Circuit for Miami-Dade County, Florida regarding (i) an application by
the Company for zoning approval for a planned residential development overlay
district and (ii) approval from the Town of Bay Harbor for the development of
the Residences at Bay Harbor. Subsequent to the filing of this case, the Company
filed a related complaint in the United States District Court for the Southern
District of Florida. The federal claim was dismissed with prejudice on May 20,
2003. In July 2003 the Company filed a Second Amended Complaint amending its
complaint to add state law counts that were previously asserted by the Company
in its federal complaint.

         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. See,
however, the discussion under Item 2, "Management's Discussion and Analysis or
Plan of Operation" under the subheading, "Operating History", with respect to
the foreclosure proceedings on the Company's Conquistador Plaza project.

ITEM 2.  CHANGES IN SECURITIES

INCREASES IN AUTHORIZED SHARES

     o   At the time of its incorporation, the Company was authorized to issue 1
million shares of NRES Common Stock.

     o   Since the time of its incorporation, 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, it appears the currently
         has only 1 million shares of NRES Common Stock authorized, and the
         majority of the validly issued shares are held by Richard and Pamela
         Astrom as tenants by the entireties. The Company believes a majority of
         the Company's validly issued and outstanding shares and the board of
         directors can cure and ratify the overissuances of stock, the 40
         Million Share Increase, the 250 Million Share Increase, the 750 Million
         Share Increase and the 1.5 Billion Share Increase. Until that time, the
         Company may be liable to the holders

                                       40
<PAGE>
of the NRES Common Stock issued in excess of the authorized amount. All
references to shares of Common Stock in this report take into account the 1 for
10 reverse stock split and the 3 for 1 stock split discussed above.

RECENT SALES OF UNREGISTERED SECURITIES

NRES Debentures

         The Company has issued debentures to accredited investors in
transactions believed at the time to be exempt from registration under the
Securities Act. These debentures are convertible into NRES Common Stock and, as
result, have had a dilutive effect on outstanding NRES Common Stock.

         Pursuant to a securities subscription agreement, in May 2001,
Connecticut Acquisition issued the Connecticut Acquisition Debentures to Louvre
Investors LLC, Yellow Stream Company LLC and Carlsbad Capital LLC (together, the
"CONNECTICUT INVESTORS") which were convertible into Connecticut Acquisition's
common stock. Subsequently, Connecticut Acquisition merged with and into the
Company. Pursuant to an assignment and assumption agreement, the Company assumed
all the conditions and obligations of the subscription agreement and the
Connecticut Acquisition Debentures.

         Pursuant to a securities subscription agreement, in October 2001, DC
Power issued the DC Power Debentures to Sea Lion Investors LLC, Equity Planners
LLC and Myrtle Holdings LLC (together, the "DC POWER INVESTORS") which were
convertible into shares of DC Power's common stock. Subsequently, DC Power
merged with and into the Company. Pursuant to an assignment and assumption
agreement, the Company assumed all the conditions and obligations of the
subscription agreement and the DC Power Debentures.

         Other parties involved in the issuance of the Connecticut Acquisition
Debentures and the DC Power Debentures were Guy Stewart, attorney for the
Company and Jonathan Shephard. Guy Stewart received approximately $30,000 and
Jonathan Shepard received approximately $30,000.

         The official title of the NRES Connecticut Debentures issued in
exchange for the Connecticut Acquisition Debentures is "8% Series SPC Senior
Subordinated Convertible Redeemable Debentures due April 12, 2003." and the
official title of the NRES DC Debentures issued in exchange for the DC Power
Debentures is "8% Series SPD Senior Subordinated Convertible Redeemable
Debentures due October 17, 2003." It appears approximately $1,103,500 of
principal, $19,400 in interest, $144,943 in bookkeeping fees, $168,020 in
investor fees, $258,434 in professional fees and $30,000 in fees for the right
to borrow funds (a total of $1,724,297) were converted by the investors of the
Connecticut Investors during the period beginning on May 16, 2001 and ending on
July 13, 2001. Although the Company believes it has been able to accurately
calculate the aggregate amount converted and the amount of capital raised, the
Company has estimated the exact breakdown of various fees and debt relating to
the NRES Connecticut Debentures that have been converted. Additionally, $160,798
of principal (out of a total amount of $460,000 funded), $4,922 of interest paid
and $68,735 in bookkeeping fees (a total of $234,455) was converted by the DC
Power Investors during the period beginning on November 5, 2001 and ending on
August 2, 2002 ($299,202 remains payable). The Connecticut Investors received a
total of approximately 590,442,628 shares of NRES Common Stock with an average
price of $.00266 per share through conversions. The DC Investors received a
total of approximately 716,365,695 shares of NRES Common Stock with an average
price of $.000327 per share through conversions. All shares of NRES Common Stock
issued upon conversion were sold 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. The closing market prices during this
time ranged from $.0036 to $.0076 per share and $.0001 to $.0017 per share,
respectively. As of the date of this report, the Company has not received
$540,000 in additional proceeds from the sale of the NRES DC Power Debentures
and has $299,202 in NRES DC Power Debentures outstanding. The Company has no
plans to issue additional NRES Debentures for any amounts not yet received and
has no plans to permit outstanding NRES Debentures to be converted.

         The Company claimed the issuance of the Connecticut Debentures and the
DC Power Debentures was exempt from registration under Section 5 of the
Securities Act pursuant to Rule 504 of Regulation D promulgated under the
Securities Act. The Company relied on, among other things, its belief that (i)
Connecticut Acquisition and DC Power were not subject to the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act, (ii)
Connecticut Acquisition


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<PAGE>
and DC Power were not investment companies, (iii) Connecticut Acquisition and DC
Power were not development stage companies with no specific business plan other
than to engage in a business combination with an unidentified company, (iv) the
dollar amount of the offering of Connecticut Acquisition's and DC Power's Common
Stock would not exceed $1 million, (v) Connecticut Acquisition's and DC Power's
common stock would be issued under a state law exemption that permitted general
solicitation and general advertising (so long as sales are made only to
"accredited investors" as that term is defined in Rule 501 promulgated under the
Securities Act) and (vi) the Connecticut Investors and the DC Power Investors
represented themselves to be "accredited investors". The requirements of this
exemption do not appear to have been satisfied as a result of the Company's
subsequent merger with these two entities. The Company claimed the issuance of
the NRES Debentures and the NRES Common Stock issued upon conversion of the NRES
Debentures was exempt from registration under Section 5 of the Securities Act
pursuant to Section 3(a)(9) of the Securities Act. In reaching this conclusion,
the Company relied on an opinion rendered by its former counsel opining to this
effect and citing various SEC interpretations as its basis.

         Any amount over $10,000 of the principal face amount of the NRES
Debentures is at the option of the holders, convertible into freely tradable
shares of NRES Common Stock at a conversion price for each share of NRES Common
Stock equal to 70% of the lowest closing bid price of the NRES Common Stock on
the trading day a notice of conversion is received by the Company. If the
conversion would require stockholder approval of the issuance, the Company is
required to take the necessary steps to seek such approval. Pursuant to the NRES
Debentures, the Company is obligated to pay the Connecticut Investors and the DC
Power Investors 8% interest per year in the form of NRES Common Stock. Pursuant
to the subscription agreement, notwithstanding the conversion rights listed in
the NRES Debentures, the Connecticut Investors and the DC Power Investors and
their respective affiliates may not convert any portion of the NRES Debentures
that, together with any shares of NRES Common Stock already owned by the
Connecticut Investors and DC Power Investors, would result in beneficial
ownership by the Connecticut Investors and the DC Power Investors and their
respective affiliates of more than 4.999% of the then issued and outstanding
NRES Common Stock.

         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. Because these debentures were all converted
into NRES Common Stock over one year ago, it is unlikely a Section 5 action
could be maintained against the Company for offering these debentures or the
underlying NRES Common Stock.

     Escrow Agreement

         In escrow agreements with Sroya Holdings LLC, as escrow agent
("SROYA"), the Company agreed to deposit shares of NRES Common Stock with Sroya
for conversion of the NRES Debentures. If the Company does not have a sufficient
number of shares of NRES Common Stock to meet this requirement, it must deposit
with Sroya the number of shares of NRES Common Stock authorized but unissued,
and upon authorization of a sufficient additional number of shares, deposit
additional shares with Sroya. Further notices of conversion of the NRES
Debentures must be simultaneously sent to the Company and to Sroya as shares
issued upon conversion of the NRES Debentures are released by Sroya. "Freely
tradeable" securities must be deposited into the escrow. The Company believed it
could rely on an exemption to Section 5 of the Securities Act to issue the NRES
Common Stock upon conversion of the NRES Debentures. The Company currently
believes that it will not be able to rely on an exemption to Section 5 of the
Securities Act and, as such, will not be able to deposit "freely tradeable"
securities into the escrow. Choosing not to deposit "freely tradeable"
securities into the escrow may constitute a breach under the terms of the NRES
Debentures. As of the date of this report, Sroya does not hold any shares of
NRES Common Stock. The Company does not plan to issue additional Common Stock to
Sroya. The Company and the holders of the NRES Debentures agreed to indemnify
Sroya, for acts relating to the escrow of NRES Common Stock.

         For a description of the legal issues surrounding the sale and
conversion of the debentures, see "RISK FACTORS -- Risk Related to Legal
Uncertainties."

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

         See the discussion in Part I, Item 2 and "RISK FACTORS - Risks Related
to Legal Uncertainties" regarding the Company's inability to provide NRES Common
Stock to the NRES Debenture holders upon conversion of the NRES Debentures,
which items are incorporated into this Item 3 by this reference.

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<PAGE>
ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

ITEM 5.       OTHER INFORMATION

         None.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits:

    Exhibit
    Number                                     Description
    ------                                     -----------

     3.1*        Articles of Incorporation of the Company.
     3.2**       Certificate of Amendment to Articles of Incorporation of the
                 Company.
     3.4*        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         Real Estate Purchase and Sale Agreement dated as of December
                 17, 2001 by and between Dennis Almendares and National
                 Residential Properties, Inc.
    10.8         Real Estate Purchase and Sale Agreement dated as of May 20,
                 2002 by and between Gateway Mortgage Bankers and National
                 Residential Properties, Inc.
    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

*        Previously filed.

**       Filed as an exhibit to the Company's annual report on Form 10-KSB for
the period ended September 30, 2000, filed with the Securities and Exchange
Commission on January 16, 2001.

         (b) Reports on Form 8-K:

         None.

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<PAGE>
                                   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 RESIDENTIAL PROPERTIES, INC.



Date: January 8, 2004          By:  /s/ Richard Astrom
                                    ----------------------------------------
                                 Richard Astrom
                                 President, Chief Executive Officer and Director


Date: January 8, 2004          By:  /s/ Christopher Astrom
                                    --------------------------------------------
                                 Christopher Astrom
                                 Vice President, Chief Financial Officer,
                                 Secretary and Director







































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