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

                                   FORM 10-QSB

              1X1 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, 2005

                                       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[ ]

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

         As of August 12, 2005, 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, 2005

                                TABLE OF CONTENTS

PART I FINANCIAL INFORMATION..................................................1

    ITEM 1.  FINANCIAL STATEMENTS.............................................1

    ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.......14

    RISK FACTORS.............................................................25

    ITEM 3.  CONTROLS AND PROCEDURES.........................................28

PART II OTHER INFORMATION....................................................29

    ITEM 1.  LEGAL PROCEEDINGS...............................................29

    ITEM 2   CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF
             EQUITY SECURITIES...............................................29

    ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.................................29

    ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............29

    ITEM 5.  OTHER INFORMATION...............................................29

    ITEM 6. EXHIBITS.........................................................29

SIGNATURES...................................................................31



         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. BECAUSE THE
COMPANY IS CURRENTLY ISSUING "PENNY STOCK" AS DEFINED IN RULE 3a51-1 UNDER THE
EXCHANGE ACT, THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 DO NOT APPLY TO THE COMPANY.











                                       i
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

              NATIONAL RESIDENTIAL PROPERTIES, INC AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
                                  JUNE 30, 2005

                                     ASSETS




Cash and cash equivalents                                           $    23,299
Inventory - real estate holdings                                      1,300,000
Fixed assets, net of depreciation                                        19,168
Loan origination fees, net                                                7,899
Mortgage receivable and other                                            37,782
                                                                    -----------
TOTAL ASSETS                                                        $ 1,388,148
                                                                    ===========

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
































                                       1
<PAGE>

             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED) (UNAUDITED)
                                  JUNE 30, 2005

            LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' (DEFICIT)


LIABILITIES
  Accounts payable and accrued expenses                             $    72,763
  Debentures payable                                                    199,202
  Notes-other                                                            43,443
  Notes and mortgages payable                                           727,599
                                                                    -----------

      Total Liabilities                                               1,043,007
                                                                    -----------

TEMPORARY EQUITY                                                      4,417,938

STOCKHOLDERS' (DEFICIT)
  Common Stock, $.001 Par Value; 1,000,000 shares
    authorized and 1,000,000 shares issued and outstanding,
    respectively                                                          1,000
  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                                                            (7,680,377)
                                                                    -----------

      Total Stockholders' (Deficit)                                  (4,072,797)
                                                                    -----------

TOTAL LIABILITIES, TEMPORARY EQUITY AND
   STOCKHOLDERS' (DEFICIT)                                          $ 1,388,148
                                                                    ===========


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


















                                       2
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
           FOR THE NINE AND THREE MONTHS ENDED JUNE 30, 2005 AND 2004

                                                       NINE MONTHS ENDED                      THREE MONTHS ENDED

                                                  June 30,            June 30,           June 30,        June 30,

                                                    2005                2004               2005            2004
                                                    ----                ----               ----            ----
<S>                                              <C>             <C>                 <C>              <C>
OPERATING REVENUES

  Revenue                                         $    2,800      $1,600,120          $        -       $    3,586

  Cost of sales                                            -      (1,471,084)                  -                -
                                                  -----------     -----------         -----------      -----------
GROSS PROFIT                                           2,800         129,036                   -            3,586


OPERATING EXPENSES

   Professional fees and compensation expenses       130,344         546,436              23,187           74,829

   Bad debt                                            2,524               -                   -                -

   Advertising -                                       3,247               -                   -

   Travel and automobile expenses                     15,368          60,341                   -           16,928

   Telephone and utilities                               616           9,356                   -            2,470

   Real estate taxes and property maintenance          2,606          21,097                 408            5,523

   Office expenses                                     2,886          14,589                   -            4,209

   Miscellaneous                                      19,101          21,879               6,618            8,068

   Depreciation and amortization                      18,234          41,556               6,078           10,052
                                                  -----------     -----------         -----------      -----------
       Total Operating Expenses                      191,679         718,501              36,291          122,079
                                                  -----------     -----------         -----------      -----------

LOSS BEFORE OTHER INCOME (EXPENSE)                  (188,879)       (589,465)            (36,291)        (118,493)


OTHER INCOME (EXPENSE)

   Interest expense                                  (35,930)        (12,386)            (10,195)          (1,647)

   Interest income                                     4,135          13,156                   -              886
                                                  -----------     -----------         -----------      -----------
       Total Other Income (Expense)                  (31,795)            770             (10,195)            (761)
                                                  -----------     -----------         -----------      -----------


NET LOSS BEFORE PROVISION FOR INCOME TAXES        $ (220,674)     $ (588,695)         $  (46,486)      $ (119,254)

Provision for Income Taxes                                 -               -                   -                -
                                                  -----------     -----------         -----------      -----------

NET LOSS APPLICABLE TO COMMON SHARES              $ (220,674)     $ (588,695)         $  (46,486)      $ (119,254)
                                                  ===========     ===========         ===========      ===========

NET LOSS PER BASIC AND DILUTED SHARES             $    (0.22)     $    (0.59)         $    (0.05)      $    (0.12)
                                                  ===========     ===========         ===========      ===========

WEIGHTED AVERAGE NUMBER OF COMMON

    SHARES OUTSTANDING                             1,000,000       1,000,000           1,000,000        1,000,000
                                                  ===========     ===========         ===========      ===========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
                                       3
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                FOR THE NINE MONTHS ENDED JUNE 30, 2005 AND 2004


                                                                                       2005              2004

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                <C>              <C>
     Net loss                                                                       $ (220,674)      $ (588,695)
                                                                                    -----------      -----------
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:                                             18,234           41,556

     Changes in assets and liabilities

        Decrease in inventory - real estate holdings                                         -        1,216,383

        (Increase) in escrow receivable (5,000)

        Increase (decrease) in loan receivable-others                                  116,600          (32,490)

        (Increase) in deposits                                                               -           (2,200)

        Decrease in mortgage receivable and others                                      30,824                -

        Decrease in investment securities                                                2,523                -

        Increase (decrease) in accounts payable and
         and accrued expenses                                                           40,131          (62,992)
                                                                                    -----------      -----------
        Total adjustments                                                              208,312        1,155,257
                                                                                    -----------      -----------
       Net cash provided (used in) by operating activities                             (12,362)         566,562

CASH FLOWS FROM INVESTING ACTIVITIES

     (Acquisition) of fixed assets                                                           -           (8,653)

     Loans to/from others                                                               43,443                -

     (Increase) in mortgage and notes receivable                                             -         (138,811)
                                                                                    -----------      -----------
     Net cash provided by (used in) investing activities                                43,443         (147,464)
                                                                                    -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES

     Net change in notes and mortgages payable                                         (32,802)      (1,156,200)
                                                                                    -----------      -----------
     Net cash (used in) financing activities                                           (32,802)      (1,156,200)
                                                                                    -----------      -----------
NET (DECREASE) IN

     CASH AND CASH EQUIVALENTS                                                          (1,721)        (737,102)

CASH AND CASH EQUIVALENTS -
     BEGINNING OF PERIOD                                                                25,020          794,715
                                                                                    -----------      -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD                                           $   23,299       $   57,613
                                                                                    ===========      ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

CASH PAID DURING THE PERIOD FOR:

     Interest expense                                                               $   35,930       $    2,934
                                                                                    ===========      ===========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
                                       4
<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, 2005 AND 2004


                                                                  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>
Balance, September 30, 2003   1,000,000    $    1,000           -     $       -     $ 3,606,580    $(6,332,982)    $ (2,725,402)
                              ---------    ----------    --------     -----------   -----------    ------------    -------------
Net loss                              -             -           -             -               -       (588,695)        (588,695)

Balance, June 30, 2004        1,000,000    $    1,000           -     $       -     $ 3,606,580    $(6,921,677)    $ (3,314,097)
                              =========    ==========    ========     ===========   ===========    ============    =============

Balance, September 30, 2004   1,000,000    $    1,000           -     $       -     $ 3,606,580    $(7,459,703)    $ (3,852,123)

Net loss                              -             -           -             -               -       (220,674)        (220,674)
                              ---------    ----------    --------     -----------   -----------    ------------    -------------
Balance, June 30, 2005        1,000,000    $    1,000           -     $       -     $ 3,606,580    $(7,680,377)    $ (4,072,797)
                              =========    ==========    ========     ===========   ===========    ============    =============
</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 STATEMENTS OF CHANGES IN TEMPORARY EQUITY (UNAUDITED)
                FOR THE NINE MONTHS ENDED JUNE 30, 2005 AND 2004


                                                        Class A                      Additional
                         Common Stock                Common Stock                      Paid-In
                    Shares        Amount         Shares      Amount      Discount      Capital       Totals
                -------------   ----------     ---------   ----------   ----------   ----------    ----------

<S>             <C>             <C>            <C>         <C>          <C>          <C>            <C>
Balance,        1,937,566,046   $1,937,566     1,000,000   $    1,000   $(687,311)   $3,166,683     4,417,938
September 30,
2003

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

Balance, June   1,937,566,046   $1,937,566     1,000,000   $    1,000   $(687,311)   $3,166,683    $4,417,938
30, 2004        =============   ==========     =========   ==========   ==========   ==========    ==========


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

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

Balance, June   1,937,566,046   $1,937,566     1,000,000   $    1,000   $(687,311)   $3,166,683    $4,417,938
30, 2005        =============   ==========     =========   ==========   ==========   ==========    ==========
</TABLE>


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



















                                       6
<PAGE>

             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2005 AND 2004

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

            The condensed consolidated unaudited interim financial statements
            included herein have been prepared, without audit, pursuant to the
            rules and regulations of the Securities and Exchange Commission. The
            condensed consolidated financial statements and notes are presented
            as permitted on Form 10-QSB and do not contain information included
            in the National Residential Properties, Inc.'s (the "COMPANY")
            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
            September 30, 2004 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, changes in permanent stockholders equity
            (deficit), changes in temporary equity and cash flows for the
            periods presented.

            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 National Rehab
            Properties, Inc., a Florida corporation formed on October 1, 1993.
            The surviving Nevada corporation changed its name to National Rehab
            Properties, Inc. and became authorized to conduct business in the
            State of Florida on August 17, 1995. On September 13, 2000, the
            Company changed its name to National Residential Properties, Inc.

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

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

                                       7
<PAGE>
            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.

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

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

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

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

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

            PRINCIPLES OF CONSOLIDATION

                                       8
<PAGE>
            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 when each of the criteria in paragraph 5 of SFAS 66 are met.
            Under that method, gain is not recognized until the collectibility
            of the sales price is reasonably assured and the earnings process is
            virtually complete. When a sale does not meet the requirements for
            income recognition a gain is deferred until those requirements are
            met.

            The Company recorded the sale of property to Genesis Capital
            Corporation 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) As such, this
            transaction did not impact the Company's statement of operations for
            any period until the cost of the property was recovered.

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

            The Company also recognizes revenue from the loan origination fees
            upon the closing of the various mortgages it provides. The company
            follows SFAS 91, whereby loan origination fees are deferred and
            recognized over the life of the loan as an adjustment of yield
            (interest income).

            CASH AND CASH EQUIVALENTS

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

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

            FIXED ASSETS

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

            Equipment and other                 3 to 5 Years
            Vehicles                            5 Years

            INCOME TAXES

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

                                       9
<PAGE>
            ADVERTISING

            Costs of advertising are expensed as incurred. Advertising costs
            were $0 and $3,247 for the nine months ended June 30, 2005 and 2004,
            respectively.

            EARNINGS (LOSS) PER SHARE OF COMMON STOCK

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

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

            Net Loss                                  $ (220,674)   $ (588,695)
                                                      -----------   -----------
            Weighted-average common shares outstanding
              (Basic)                                  1,000,000     1,000,000

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

            Weighted-average common shares outstanding
              (Diluted)                                1,000,000     1,000,000

            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, 2005 and 2004.

            INVESTMENT SECURITIES

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

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

            Available-for-sale securities: Available-for-sale securities consist
            of marketable equity securities not classified as trading
            securities. Available-for-sale securities are stated at fair value,
            and unrealized holding gains and losses, net of the related deferred
            tax effect, are reported as a separate component of stockholders'
            equity unless the change in value is deemed permanent. If the
            decline in value is other than temporary, the security shall be
            written down to fair value as a new cost

                                       10
<PAGE>
            basis and the amount shall be included in earnings and accounted for
            as a realized loss. The new cost basis shall not be charged for
            subsequent recoveries in fair value.

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

            LOAN ORIGINATION FEES

            Represent fees in connection with obtaining mortgages on the various
            properties. Loan origination fees are written off over the life of
            the loan. Should the loan be paid off sooner prior to the full term
            of the loan, the remaining capitalized costs will be charged against
            income at that time. Amortization expense for the nine months ended
            June 30, 2005 and 2004 is $9,789 and $38,532, respectively.

            RECLASSIFICATIONS

            Certain amounts for the nine months ended June 30, 2004 have been
            reclassified to conform with the presentation of the June 30, 2005
            amounts. The reclassifications have no effect on net income for the
            nine months ended June 30, 2004.

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.

            The Company follows SFAS 144 accounting for the impairment or
            disposal of long-lived assets. An impairment loss shall be
            recognized only if the carrying value of a long lived-asset (asset
            group) is not recoverable and exceeds its fair value. Since the
            Company's assets are not generating income, the fair value is
            determined and estimated by management and current market
            conditions, the amount at which the asset could be bought or sold in
            a current transaction between willing parties, that is other than a
            forced or liquidation sale.


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

            Represents amounts due from individuals who purchased property from
            the Company or amounts due from individuals the Company loaned money
            to in the form of mortgages. Amounts due at June 30, 2005 were
            $37,782.

NOTE 5-     FIXED ASSETS
            ------------

            Fixed assets consist of the following at June 30, 2005:

                                       11
<PAGE>
            Office Equipment and other         $ 30,968
            Vehicles                             31,509
                                               ---------
            Subtotal                             62,477
            Accumulated Depreciation            (43,309)
                                               ---------
            Total                              $ 19,168
                                               =========

            Depreciation expense was $8,445 and $9,193 for the nine months ended
            June 30, 2005 and 2004, respectively.

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

            Mortgages and notes payable consist of the following at June 30,
            2005:

            The Company has various mortgages and construction loans payable
            aggregating $729,000 at June 30, 2005. These amounts are payable at
            various times ranging through June 30, 2005, bearing interest at
            various rates ranging from 5% through 7% per year. The mortgages and
            construction notes are secured by the land and buildings held for
            development by the Company.

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

            The Company has convertible debentures outstanding at June 30, 2005
            in the amount of $199,202. These debentures accrue interest at 8%
            per annum. These debentures matured along with the related interest
            at November 2004, however, no repayments or further conversions were
            made. The debentures are convertible at the discretion of the
            investors pursuant to the convertible debenture agreement.

            Interest expense for the nine months ended June 30, 2005 and 2004
            relating to the debentures were $7,960 and $7,960, respectively.

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

            On February 10, 2000, the Company acquired MAS XV Acquisitions Corp.
            for 1,500,000 shares of its common stock valued at $.19 per share or
            $285,000. Additionally, on April 1, 2000, the Company acquired 80%
            of the Encore Services, Inc. for 250,000 shares of its common stock
            valued at $33,750. The Company restated its September 30, 2000
            consolidated financial statements and expensed the entire amounts of
            these acquisitions because they were determined to have no value.
            Both companies had no assets or liabilities upon the purchase.

            On May 8, 2001, the Company merged with Connecticut Acquisition
            Corp. No. 1 and acquired a parcel of land in Hebron, Connecticut.
            This parcel of land was subsequently conveyed on October 31, 2001 to
            Genesis Capital Corporation of Nevada, an entity related to the
            Company through common officers and directors.

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

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

            The Company during the year ended September 30, 2001, became aware
            that some or all of certain changes 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 10).

                                       12
<PAGE>
            In addition to the Company's issuance of shares of common stock
            above the Company's authorized amount, the Company issued shares of
            common stock that at the time may not have been sold 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 ended June 30,
            2002. This account acts as a reserve for capital that the Company
            may be required to repay.

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

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

            The Company has recorded on its balance sheet as a temporary equity
            account for those securities issued that may not be in compliance
            with the registration provisions of Section 5 of the Securities Act
            of 1933, as amended and for the issuance of common stock issued
            above its authorized amount. All related amounts that were
            previously included in common stock and additional paid-in capital
            of the permanent stockholders' equity (deficit) section have been
            reclassified to temporary equity as their redemption may not be
            solely within the control of the issuer. Temporary equity at June
            30, 2005 and 2004, were $4,417,938 and $4,417,938, respectively.
            Substantially all the shares issued in connection with the
            conversion of debentures have been reclassified as temporary equity.

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

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

            The Company issued 843,265,695 shares of common stock for the three
            months ended December 31, 2001, and there have been no issuances of
            common stock since this time period. These shares are recorded in
            temporary equity (See Note 10). All of these shares were issued in
            excess of authorized limits.

            As of June 30, 2005 and 2004, there were 0 shares authorized and 0
            shares issued and outstanding of the Company's Class A Voting common
            stock with a par value of $.001. (See Note 9).

NOTE 12-    INCOME TAXES

            There was no income tax benefit recognized at June 30, 2005 and
            2004.

            The net deferred tax assets in the accompanying condensed
            consolidated balance sheet include benefit of utilizing net
            operating losses of approximately $7,680,377 (at June 30, 2005),
            however due to the uncertainty of utilizing the net operating
            losses, an offsetting valuation allowance has been established.

NOTE 13-    LITIGATION

            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 the
            foreclosure of a mechanic's lien with respect to the Conquistador
            Plaza development. Encore Builders asserts that $504,076.03 is due
            from Conquistador Plaza, Inc. The company paid


                                       13
<PAGE>
            $342,858 in 2003, and the remaining balance of $161,218 was written
            off at September 30, 2003 as the case has been settled.

            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. On June 30, 2004, the Circuit Court granted the Town of
            Bay Harbor Islands' summary judgment motion.

            On April 7, 2005, the Company entered into an Agreement for Purchase
            and Sale with Bay Harbor Island Associates, L.P. to sell the Bay
            Harbor property. The Agreement for Purchase and Sale provides that
            the Company will transfer fee simple title and all related interests
            in the property in exchange for $1.4 million. On August 3, 2005, the
            Company completed the transfer of the Bay Harbor property.

NOTE 14     SUBSEQUENT EVENT
            ----------------

            On August 5, 2005 the Company filed a definitive Information
            Statement on Schedule 14C. As set forth in the Information
            Statement, the board of directors of the Company has proposed the
            following actions which are expected to be approved by the Company's
            majority shareholders:

            1. To amend the Company's articles of incorporation to increase the
               number of authorized shares of common stock to 21 billion shares
               and accordingly increase the total number of authorized shares of
               all classes of stock the Company is authorized to issue.

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

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

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

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

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

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.

         THE COMPANY CAUTIONS INVESTORS THAT ITS BUSINESS AND FINANCIAL
PERFORMANCE ARE SUBJECT TO SUBSTANTIAL RISKS AND UNCERTAINTIES. IN EVALUATING
THE COMPANY'S BUSINESS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE


                                       14
<PAGE>
INFORMATION SET FORTH IN THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB/A FOR THE
YEAR ENDED SEPTEMBER 30, 2004 UNDER THE CAPTION "RISK FACTORS" IN ADDITION TO
THE OTHER INFORMATION SET FORTH HEREIN.

BACKGROUND CAPITALIZATION INFORMATION

         The original Articles of Incorporation (the "ARTICLES") of National
Residential Properties, Inc., a Nevada corporation (the "COMPANY") 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. After their initial issuance,
approximately 22% of these shares were transferred by Mr. and Mrs. Astrom to
their family members, and were then resold into the public market. While Mr. and
Mrs. Astrom did transfer these shares, the Company's assumption is that, because
the shares are largely fungible, the shares transferred by Mr. and Mrs. Astrom
were those issued in excess of the Company's authorized amount. If the Company
is incorrect in this assumption, Mr. and Mrs. Astrom would no longer be the
owners of a majority of the Company's validly issued shares. The Company's
former transfer agent's records show that the remainder of these shares
(including those shares that the Company assumes were validly issued) were still
held by Richard and Pamela Astrom, as tenants by the entireties when the
Company's former transfer agent and the Company severed relations. The Company's
current transfer agent's records confirm that these shares can be traced from
that time to the present, as they are still held by Richard and Pamela Astrom,
as tenants by the entireties, and have not been sold or otherwise transferred.
As such, Richard Astrom and Pamela Gay Astrom, as tenants by the entireties,
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. Based on the Company's discussions with Nevada
counsel and the assumption that the shares transferred to Mr. and Mrs. Astrom's
family members described above included only those shares that were issued in
excess of the Company's authorized amount, the Company determined (and currently
believes) that Richard and Pamela Astrom can amend the Company's Articles of
Incorporation to increase the Company's authorized shares of common stock. 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's board of directors intends to cure and ratify the overissuances and
the Capital Changes after Richard and Pamela Astrom amend the Articles of
Incorporation to increase the number of authorized shares. The Company also
intends to file an Information Statement on Schedule 14C reflecting the
foregoing, and other actions taken by Richard and Pamela Astrom, as appropriate.

                                       15
<PAGE>
OVERVIEW
         o    The Company 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 shareholders. 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. The surviving entity
              subsequently changed its name to National Rehab Properties, Inc.
              and became authorized to conduct business in the State of Florida
              on August 17, 1995.

         o    In January 1999, the Company attempted to effect the 1999 Reverse
              Stock Split.

         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 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 2002,
              Encore Services has been inactive.

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

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

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

         o    On April 12, 2001, the Company's wholly-owned subsidiary,
              Connecticut Acquisition Corp. No. 1 ("CONNECTICUT ACQUISITION")
              obtained a loan from accredited investors evidenced by its 8%
              Series A Senior Subordinated Convertible Redeemable Debentures due
              April 12, 2003 (the "CONNECTICUT ACQUISITION DEBENTURES"), which
              were convertible from time to time into shares of Connecticut
              Acquisition's Class A common stock. On May 8, 2001, Connecticut
              Acquisition merged with and into the Company, with the Company
              remaining as the surviving entity. As a result,
                                       16
<PAGE>
              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 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. In this report, references to shares of NRES
              Common Stock that do not reflect the Capital Changes referenced
              above are noted as such.

         o    Additionally, 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 May 13, 2005, 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 shareholders.

OPERATING HISTORY

         From 1993 until 1999, the Company's business concentrated on investing
in and revitalizing single family homes in established older residential
neighborhoods in urban areas. The Company either bought single unit vacant
properties and built single family homes on them, or bought abandoned homes
which the company then renovated and sold. During 1999, while retaining its
efforts in the renovation of urban single family homes as one aspect of its
business, the Company entered a second phase of business - the development,
construction and ownership of multifamily housing projects. In 2004, the Company
commenced operations as a mortgage lender.

         The Company has become licensed to extend credit as a mortgage lender,
implemented an online appraisal service and has begun active efforts to locate
potential borrowers, including increased advertising efforts and discussions
with mortgage brokers. Although the Company has determined to develop its
mortgage lending business, it has not discontinued its real estate development
business. The Company plans to continue its real estate development business in
tandem with its mortgage lending business to the extent appropriate development
                                       17
<PAGE>
opportunities present themselves and become available to the Company. The
Company has not hired additional personnel to engage in its mortgage lending
business. As of June 30, 2005, the Company has approximately $37,000 outstanding
in credit extended to borrowers.

CONNECTICUT PROPERTIES

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

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

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

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

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 (now known as Capital
Solutions I, Inc.), which may be deemed an affiliate of the Company.

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


                                       18
<PAGE>
take action to protect its interest if Conquistador Plaza did not return the
entire balance by May 19, 2002. Although the Company was not liable on the
Conquistador Plaza loan, the Company invested substantial funds in the
Conquistador Plaza development and would have lost its investment were the
lender to foreclose on the lender's mortgage. In order to repay the lender,
Conquistador Plaza entered into a contract to sell the Conquistador Plaza
project. The Company entered into a contract dated June 24, 2002, to sell this
property to Shamrock at the Gables LLC for $3.5 million. This transaction was
completed on October 8, 2002.

         On August 2, 2002, Encore Builders filed suit against Conquistador
Plaza in the Circuit Court of the Eleventh Judicial Circuit in Miami-Dade
County, Florida seeking foreclosure of a mechanic's lien with respect to the
Conquistador Plaza development. 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.

BARCELONA APARTMENTS

         On this property, located in Miami, Florida and purchased in 2000, the
Company intended to construct 70 rental apartments. On March 12, 2004, the
Company completed the sale of the Barcelona Apartments and transferred title to
the Barcelona Apartments to Salomon Yuken for $1,550,000 in cash. Mortgages and
closing expenses totaled $1,166,796.79. A $100,000 deposit was previously paid
to the Company by Salomon Yuken. Net proceeds totaled $285,849.57. The purchase
price for the Barcelona Apartments was determined through arms-length
negotiations. The transfer was made pursuant to the terms of a Special Warranty
Deed dated March 12, 2004, by and between the Registrant and Salomon Yuken. The
Barcelona property had a carrying value of $1,290,194 and $1,221,467 at,
September 30, 2003 and 2002, respectively.

                               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. The property still held by the Company is
described below in detail along with the status of each project. In 2004, the
Company commenced operations as a mortgage lender. Although the Company has
determined to develop its mortgage lending business, it has not discontinued its
real estate development business. The Company plans to continue its real estate
development business in tandem with its mortgage lending business to the extent
appropriate development opportunities present themselves and become available to
the Company. The Company has not hired additional personnel to engage in its
mortgage lending business. As of June 30, 2005, the Company has approximately
$37,000 outstanding in credit extended to borrowers.

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 the permit was not 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 2002 or upon the issuance of a
building


                                       19
<PAGE>
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. At a hearing on June 30, 2004, the Circuit Court
granted the Town of Bay Harbor's motion for summary judgment. The Company has no
plans to appeal the ruling. As of June 30, 2005 this property was subject to an
outstanding mortgage in the amount of approximately $705,000.

         On April 7, 2005, the Company entered into an Agreement for Purchase
and Sale (the "BAY HARBOR AGREEMENT") with Bay Harbor Island Associates, L.P. to
sell the Bay Harbor property. The Bay Harbor Agreement provided that the Company
would transfer fee simple title and all related interests in the property in
exchange for $1.4 million. The transaction was subject to a 30 day inspection
period and was scheduled to close on August 5, 2005 (subject to the right of Bay
Harbor Island Associates, L.P. to advance the closing date upon notice to the
Company). The Bay Harbor Agreement contained representations, warranties and
conditions customary for a transaction of this type. On August 3, 2005, the
Company completed the sale of the Bay Harbor Property and transferred title to
Bay Harbor Island Associates, L.P. in exchange for $1,297,183.38 in cash and the
release of an aggregate of $140,000 which had been previously placed in escrow.
Net proceeds totaled $696,820.33 and the satisfaction of outstanding mortgages
and other expenses totaled $734,489.67. The Company was also reimbursed $31,310
pursuant to the Bay Harbor Agreement. The purchase price for the Bay Harbor
property was determined through arms-length negotiations. The Bay Harbor
property had a carrying value of $1,756,037 and $1,300,000 at June 30, 2004 and
2005, respectively.

RESULTS OF OPERATIONS

         THE FOLLOWING IS A DISCUSSION OF THE CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE COMPANY FOR THE PERIOD ENDED JUNE 30, 2005 AND
2004, WHICH SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED IN ITS ENTIRETY
BY, THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE
IN THIS REPORT.

         For the nine months ending June 30, 2004, the Company incurred a net
loss of $588,695, compared to a net loss of $220,674 for the comparable 2005
period. This approximate 63% decrease is largely due to the fact that
professional fees and compensation expense was reduced by more than $416,000 due
to the Company's reduced operations.

RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDING JUNE 30, 2005 AND JUNE 30, 2004

REVENUES

         Total revenues were $3,586 for the three months ending June 30, 2004,
as compared to no revenues for the three months ending June 30, 2005. This
decrease is due to the fact that the Company no longer receives rental income
from a property the Company has since disposed of and the fact that the Company
did not dispose of any of its properties in the period ending June 30, 2005.

OPERATING EXPENSES

         PROFESSIONAL FEES AND COMPENSATION EXPENSES

         Professional fees and compensation expenses totaled $74,829 and $23,187
for the three months ended June 30, 2004 and 2005, respectively. This 69%
decrease was mainly due to decreased activity in the Company's real estate
business and the resolution of litigation matters.

         TRAVEL AND AUTOMOBILE EXPENSES

         Travel and automobile expenses totaled $16,928 and $0 for the three
months ended June 30, 2004 and 2005, respectively. This decrease was due to the
disposition of a major capital asset of the Company, a rental property, during
2004 and the resulting decreasing travel burden on the Company's management
team.

                                       20
<PAGE>
         REAL ESTATE TAXES AND PROPERTY INSURANCE

         Real estate taxes and property insurance totaled $5,523 and $408 for
the three months ended June 30, 2004 and 2005, respectively. This 93% decrease
was due to the fact that the Company's held only one property.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDING JUNE 30, 2005 AND JUNE 30, 2004

REVENUES

         Total revenues were $1,660,120 for the nine months ending June 30,
2004, as compared to $2,800 for the nine months ending June 30, 2005. This
decrease is due to the fact that the Company disposed of one of its remaining
two properties in the 2004 period and made no disposition in the 2005 period.

OPERATING EXPENSES

         PROFESSIONAL FEES AND COMPENSATION EXPENSES

         Professional fees and compensation expenses totaled $546,436 and
$130,344 for the nine months ended June 30, 2004 and 2005, respectively. This
76% decrease was mainly due to decreased activity in the Company's real estate
business and the resolution of litigation matters.

         TRAVEL AND AUTOMOBILE EXPENSES

         Travel and automobile expenses totaled $60,341 and $15,368 for the nine
months ended June 30, 2004 and 2005, respectively. This 76% decrease was due to
the disposition of a major capital asset of the Company, a rental property,
during 2004 and the resulting decreasing travel burden on the Company's
management team.

         REAL ESTATE TAXES AND PROPERTY INSURANCE

         Real estate taxes and property insurance totaled $21,097 and $2,606 for
the nine months ended June 30, 2004 and 2005, respectively. This 87% decrease
was due to the fact that the Company's held only one property.

LIQUIDITY AND CAPITAL RESOURCES

         To date, the Company has financed its operations primarily through
mortgage debt and the issuance of NRES Debentures. At June 30, 2005, the Company
had $23,299 in cash and cash equivalents, a decrease of $34,314 from June 30,
2004. The Company made no acquisitions of real estate either in the period
ending June 30, 2004, or 2005. The Company plans to seek additional means of
funding after the Company is satisfied that it has satisfactorily satisfied its
outstanding legal concerns. See "Risk Factors." 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 used $147,464 in investing activities during the nine
months ending June 30, 2004, as compared to $43,443 provided by investing
activities during the nine months ending June 30, 2005. This increase in cash
provided is primarily due to a collection of loan receivables.

         The Company had net cash flow of $566,562 from operating activities for
the nine months ending June 30, 2004 as compared to a negative net cash flow of
$12,362 from operating activities for the nine months ending June 30, 2005. The
decrease in net cash flow from operating activities is primarily attributable to
the Company's disposal of one of its remaining two properties in the 2004
period. Net cash used in financing activities was $1,156,200 for the nine months
ending June 30, 2004 as compared to $32,802 used in the nine months ending June
30, 2005. The decrease in net cash used in financing activities is attributable
to the payment and satisfaction of mortgages when a property was sold.

                                       21
<PAGE>
         The Company had stockholders' deficit of $4,072,797 at June 30, 2005 as
compared to $3,314,097 at June 30, 2004. The Company's determination that it has
issued shares in excess of its authorized amount resulted in the Company's
determination to continue to classify all shares issued in excess of 1 million
as temporary equity.

         The Company believes that through its operations as a mortgage lender
and the sale of its remaining property, it has sufficient cash resources to
maintain operations for a period of at least 12 months. However, although the
Company believes it has sufficient cash resources to maintain operations for at
least 12 months, because the Company recently began its lending operations and
only holds only one property (which it has agreed to sell), there can be no
assurance that such funds will actually be liquid and available. See "Outlook",
below for a discussion on possible limits on the Company's ability to raise
capital. Cash requirements will largely depend upon the availability of real
estate acquisition opportunities, the costs to continue funding its real estate
development projects, and costs related to its lending operations.

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

OUTLOOK

         The Company invested substantial funds in its previous projects, but
only realized material profits from these projects upon the sale of the real
estate. With the completion of the sale of the Bay Harbor property on August 3,
2005, the Company has disposed of its last remaining property. The Company
estimates the general overhead costs necessary to sustain its existence
(excluding expenses related newly commenced mortgage business) to be $65,000 per
month. [UPDATE NUMBER?]

         Currently, the Company is using its available cash on hand as resources
to begin its mortgage business. Much of these funds were derived from the
Company's recent sales of its real property holdings.

         On August 5, 2005, the Company filed a definitive Information Statement
on Schedule 14C with the SEC and mailed the Information Statement to its
shareholders. The board of directors of the Company proposed the following
actions which are expected to be approved by the Company's majority
shareholders:
                                       22
<PAGE>
         o    To amend the Company's articles of incorporation to increase the
              number of authorized shares of common stock to 21 billion shares
              and accordingly increase the total number of authorized shares of
              all classes of stock the Company is authorized to issue.

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

         o    To amend the Company's articles of incorporation to change the par
              value of the Company's common stock.

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

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

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

         Once shareholder approval has been obtained and the changes to the
capital structure of the Company have been effected, the Company intends to
enter into a financing agreement with an as of yet unidentified third party to
generate cash to broaden its mortgage lending business. The Company currently
has no third party funding source for loans it originates. The Company intends
both to originate and service loans.

         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.

                                       23
<PAGE>
         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 August 12, 2005, 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's
officers and directors 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.

         Section 5 of the Securities Act prohibits the public sale of securities
absent an effective registration statement being filed with the SEC, unless an
exemption from registration applies. All shares of NRES Common Stock issued upon
conversion of the NRES Debentures were sold by holders of the NRES Debentures
following conversion. This occurred during the period beginning on may 16, 2001
and ending on July 13, 2001 for the NRES Connecticut Debentures and beginning on
November 5, 2001 and ending on August 2, 2002 for the NRES DC Power Debentures.
In October 2000, the Company issued debentures pursuant to a merger with 2217
Acquisition Inc., a Nevada corporation. These debentures were also converted
into NRES Common Stock. These transactions were performed in a manner thought to
be exempt from the registration requirements of Section 5 of the Securities Act.
However, the requirements of the exemptions relied on do not appear to have been
satisfied. 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
$199,202 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.
















                                       24
<PAGE>

         The Company may also have violated the federal proxy rules by either
(i) not obtaining the requisite shareholder approval to effect the changes in
capital structure described above or (ii) not providing shareholders with an
Information Statement on Schedule 14C. As such, it appears the Company has only
1 million shares of NRES Common Stock authorized. Until the Company's board of
directors and shareholders cure and ratify the 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. These holders can demand the issuance of the shares in excess
of the Company's authorized amount be rescinded, causing the Company to purchase
the shares at the price at which they were sold. The Company still may be
subject to an enforcement action for possible violations of this and other
provisions of the federal securities laws.

The Company's ability to meet its continuing operating expenses largely depends
on its ability to continue to raise capital (i) through the sale of debt or
equity, (ii) through construction and permanent mortgage financing, (iii)
through the completion and sale, or sale prior to completion, of the Company's
real estate projects, (iv) through the sale of land purchased, but not
developed, by the Company and (v) through operations as a mortgage lender. 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.

OFF-BALANCE SHEET TRANSACTIONS

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

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

                                       25
<PAGE>
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 August 12, 2005, 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). These holders can demand the
issuance of the shares in excess of the Company's authorized amount be
rescinded, causing the Company to purchase the shares at the price at which they
were sold. The 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's officers and directors may have also
violated their fiduciary duties to the Company by permitting the Company to
issue shares in excess of its authorized amount and by not having sufficient
shares available upon the conversion of the debentures issued by the Company.

         THE COMPANY HAS VIOLATED SECTION 5 OF THE SECURITIES ACT

         Section 5 of the Securities Act prohibits the public sale of securities
absent an effective registration statement being filed with the SEC, unless an
exemption from registration applies. All shares of 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 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 this report, the Company has not received $540,000 in
additional proceeds from the sale of the NRES DC Power Debentures and has
$199,202 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.

                                       26
<PAGE>
         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

         The Company plans to seek shareholder approval to cure and ratify the
Capital Changes as described in the definitive Information Statement on Schedule
14C filed with the SEC and sent to the Company's shareholders on August 5, 2005.
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
from the purchase and sale of properties and 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 IS IN DEFAULT OF THE NRES DEBENTURES

         Company is 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. The Company
is currently working with the holders to reach a mutually satisfactory
resolution.

OTHER RISKS

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

         The trading price of 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.



                                       27
<PAGE>
         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 formal procedures in place for processing and assembling
information to be disclosed in the Company's periodic reports. The Company's
system is designed so that information is retained by the Company and relayed to
counsel and the Company's accountants as it becomes available. Though the
Company has had difficulty implementing its disclosure controls and procedures
in the past, the Company's principal executive officer and principal financial
officer believe that as of the end of the period being reported, the Company's
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act) are effective in ensuring that (i) information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and (ii) information required to
be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company's management,
including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure. The Company also notes that while its disclosure controls
and procedures might not have been effective for a larger entity, the Company's
principal executive officer and principal financial officer came to the
aforementioned determination in part based on the fact that the Company only has
one asset. Further, the Company believes that, given its size, an extensive
disclosure controls and procedures system is not necessary.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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


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<PAGE>
                                     PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

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

ITEM 2     CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF
           EQUITY SECURITIES

         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 do not appear to have been validly
adopted by the Company's board of directors, approved by the Company's
shareholders or filed with the Secretary of State of the State of Nevada, as
required by the laws of the State of Nevada. 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. All references to shares of Common Stock in this report that
do not reflect the Capital Changes are noted as such.

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.

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

         None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS

EXHIBIT
NUMBER   DESCRIPTION

3.1(1)   Articles of Incorporation of the Company.

3.2(3)   Certificate of Amendment to Articles of Incorporation of the Company.

3.4(1)   Bylaws of the Company.

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<PAGE>

4.1(2)   8% Series SPB Senior Subordinated Convertible Redeemable Debentures due
         November 3, 2002

4.2(2)   8% Series SPC Senior Subordinated Convertible Redeemable Debentures due
         April 12, 2003

4.3(2)   8% Series SPD Senior Subordinated Convertible Redeemable Debentures due
         October 17, 2003

10.1(2)  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(2)  Assignment and Assumption Agreement dated as of November 3, 2000 by and
         between 2217 Acquisition Inc. and National Residential Properties, Inc.

10.3(2)  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(2)  Assignment and Assumption Agreement dated as of April 19, 2001 by and
         between Connecticut Acquisition Corp. 1 and National Residential
         Properties, Inc.

10.5(2)  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(2)  Assignment and Assumption Agreement dated as of November 5, 2001 by and
         between DC Power Acquisition Corp. and National Residential Properties,
         Inc.

10.7(4)  Agreement for Purchase and Sale dated April 7, 2005 by and between the
         Company and Bay Harbor Island Associates, L.P.

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

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

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

(1)  Previously filed.

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

(3)  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.

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

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<PAGE>


                                   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.

Date:  August 22, 2005                  NATIONAL RESIDENTIAL PROPERTIES, INC.


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

Date:  August 22, 2005                  By:  /s/ CHRISTOPHER ASTROM
                                        Christopher Astrom
                                        Vice President, Chief Financial Officer,
                                        Secretary and Director






































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