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

                                   FORM 10-QSB

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

                                     0-27159

                            (COMMISSION FILE NUMBER)

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004

                                       OR

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

                      NATIONAL RESIDENTIAL PROPERTIES, INC.

             (Exact Name of Registrant as Specified in its Charter)

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

                                  6915 RED ROAD
                                   SUITE #222
                           CORAL GABLES, FLORIDA 33143
                                 (305) 666-6565

               (Address, including zip code, and telephone number,
                  of registrant's principal executive offices)

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

         As of February 22, 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|













                                       1
<PAGE>

                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004

                                TABLE OF CONTENTS

PART I FINANCIAL INFORMATION..................................................3

         ITEM 1.  FINANCIAL STATEMENTS........................................3

         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..19

         RISK FACTORS........................................................29

         ITEM 3.  CONTROLS AND PROCEDURES....................................32

PART II OTHER INFORMATION....................................................33

         ITEM 1.  LEGAL PROCEEDINGS..........................................33

         ITEM 2.  CHANGES IN SECURITIES INCREASES IN AUTHORIZED SHARES.......33

         ITEM 3.  DEFAULTS UPON SENIOR SECURITIES............................33

         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........33

         ITEM 5.  OTHER INFORMATION..........................................33

         ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K...........................34

SIGNATURES...................................................................35




         THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. SUCH STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ASSUMPTIONS,
ESTIMATES AND PROJECTIONS ABOUT THE COMPANY AND ITS INDUSTRY. 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.










                                       2
<PAGE>
                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2004

                                                ASSETS



  Cash and cash equivalents                                      $      10,391
  Inventory - real estate holdings                                   1,300,000
  Fixed assets, net of depreciation                                     24,798
  Loan origination fees, net                                            14,425
  Loan receivable - other                                               26,028
  Mortgages receivable and other                                        70,955
                                                                 --------------

TOTAL ASSETS                                                     $   1,446,597





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





























                                       3
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
                                DECEMBER 31, 2004

        LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)


LIABILITIES
  Accounts payable and accrued expenses                          $      22,757
  Debentures payable                                                   199,202
  Notes and mortgages payable                                          756,336
                                                                 --------------

      TOTAL LIABILITIES                                                978,295
                                                                 --------------

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

STOCKHOLDERS' EQUITY (DEFICIT)
  Common Stock, $.001 Par Value; 1,000,000 shares
   authorized and 1,000,000 shares issued and outstanding,
   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
  Accumulated Deficit                                               (7,557,216)
                                                                 --------------

      TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                          (3,949,636)
                                                                 --------------

TOTAL LIABILITIES, TEMPORARY EQUITY AND
   STOCKHOLDERS' EQUITY (DEFICIT)                                $   1,446,597
                                                                 ==============





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
















                                       4
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003

                                                                  (RESTATED)
                                                    2004             2003
                                               --------------  ---------------
OPERATING REVENUES
  Revenue                                      $       2,800      $    22,284

COST OF SALES                                              -                -
                                               --------------  ---------------

GROSS PROFIT                                           2,800           22,284
                                               --------------  ---------------

OPERATING EXPENSES
   Professional fees and compensation expenses        44,233          187,172
   Advertising                                             -            2,130
   Bad debt                                            2,524                -
   Travel and automobile expenses                     15,368           16,775
   Telephone and utilities                               616            2,517
   Real estate taxes and property maintenance          2,198            6,565
   Office expenses                                     1,700            4,527
   Miscellaneous                                       8,531            7,830
   Depreciation and amortization                       6,078           13,930
                                               --------------  ---------------
       TOTAL OPERATING EXPENSES                       81,248          241,446
                                               --------------  ---------------

LOSS BEFORE OTHER INCOME (EXPENSE)                   (78,448)        (219,162)
                                               --------------  ---------------

OTHER INCOME (EXPENSE)
   Interest expense                                  (21,900)          (5,316)
   Interest income                                     2,835            5,592
                                               --------------  ---------------
       TOTAL OTHER INCOME (EXPENSE)                  (19,065)             276
                                               --------------  ---------------

NET LOSS BEFORE PROVISION FOR INCOME TAXES           (97,513)        (218,886)
  Provision for Income Taxes                               -                -
                                               --------------  ---------------

NET LOSS APPLICABLE TO COMMON SHARES           $     (97,513)  $     (218,886)
                                               ==============  ===============

NET LOSS PER BASIC AND DILUTED SHARES          $       (0.10)  $        (0.22)
                                               ==============  ===============

WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                             1,000,000        1,000,000
                                               ==============  ===============

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


                                       5
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
             FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003

                                                     CLASS A        ADDITIONAL     (RESTATED)
                             COMMON STOCK         COMMON STOCK        PAID-IN     ACCUMULATED
                          SHARES      AMOUNT    SHARES     AMOUNT     CAPITAL       DEFICIT          TOTALS
                        ----------  ---------  --------  ---------  -----------  --------------  ---------------
<C>                      <C>        <C>        <C>       <C>        <C>          <C>             <C>
Balance, September 30,
2003                     1,000,000  $   1,000         -  $       -  $ 3,606,580  $  (6,323,982)  $   (2,716,402)
                        ----------  ---------  --------  ---------  -----------  --------------  ---------------

Net loss                         -          -         -          -            -       (218,886)        (218,886)
                        ----------  ---------  --------  ---------  -----------  --------------  ---------------

Balance, December 31,
2003                     1,000,000  $   1,000         -  $       -  $ 3,606,580  $  (6,542,868)  $   (2,935,288)
                        ==========  =========  ========  =========  ===========  ==============  ===============


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

Net loss                         -          -         -          -            -        (97,513)         (97,513)
                        ----------  ---------  --------  ---------  -----------  --------------  ---------------

Balance, December 31,
2004                     1,000,000  $   1,000         -  $       -  $ 3,606,580  $  (7,557,216)  $   (3,949,636)
                        ==========  =========  ========  =========  ===========  ==============  ===============
</TABLE>





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


















                                       6
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY EQUITY
              FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003

                                                                                                 ADDITIONAL
                                      COMMON STOCK              COMMON STOCK                      PAID-IN
                                   SHARES       AMOUNT        SHARES    AMOUNT     DISCOUNT       CAPITAL        TOTALS
                               ------------- -------------  --------- ---------  ------------  -------------  -------------
<S>                            <C>           <C>            <C>       <C>        <C>           <C>            <C>
Balance, September 30, 2003    1,937,566,046 $   1,937,566  1,000,000 $   1,000  $  (687,311)  $   3,166,683      4,417,938

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

Balance, December 31, 2003     1,937,566,046 $   1,937,566  1,000,000 $   1,000  $  (687,311)  $   3,166,683  $   4,417,938
                               ============= =============  ========= =========  ============  =============  =============


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

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

Balance, December 31, 2004     1,937,566,046 $   1,937,566  1,000,000 $   1,000  $  (687,311)  $   3,166,683  $   4,417,938
                               ============= =============  ========= =========  ============  =============  =============
</TABLE>





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



                                       7
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003

                                                                            (RESTATED)
                                                                 2004          2003
                                                             -----------  ------------
<S>                                                          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                  $  (97,513)  $  (218,886)
                                                             -----------  ------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
     Depreciation and amortization                                6,077        13,930

  CHANGES IN ASSETS AND LIABILITIES
     (Increase) in inventory - real estate holdings                   -       (32,465)

     (Increase) in deposits                                           -        (2,200)
     (Decrease) in accounts payable and
       and accrued expenses                                      (9,875)      (44,628)
                                                             -----------  ------------
     Total adjustments                                           (3,798)      (65,363)
                                                             -----------  ------------

     NET CASH (USED IN) OPERATING ACTIVITIES                   (101,311)     (284,249)
                                                             -----------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES
    (Acquisition) disposal of fixed assets - net                      -        (1,590)

    Decrease in investment securities                             2,523             -
    Loans receivable to/from others                              90,572             -
    (Increase) decrease in mortgages and notes receivable        (2,349)     (206,057)
                                                             -----------  ------------

     NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES         90,746     (207,647)
                                                             -----------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES

    Net change in notes and mortgages payable                    (4,064)       (8,663)
                                                             -----------  ------------
        NET CASH (USED IN) FINANCING ACTIVITIES                  (4,064)       (8,663)
                                                             -----------  ------------

NET (DECREASE) IN
    CASH AND CASH EQUIVALENTS                                   (14,629)     (500,559)

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

CASH AND CASH EQUIVALENTS - END OF PERIOD                    $   10,391   $   294,156
                                                             ===========  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

CASH PAID DURING THE PERIOD FOR:
    Interest expense                                         $    5,475   $     1,336
                                                             ===========  ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.

                                       8
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                                   (UNAUDITED)

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

            The condensed consolidated unaudited interim financial statements
            included herein have been prepared, without audit, pursuant to the
            rules and regulations of the Securities and Exchange Commission. The
            condensed consolidated financial statements and notes are presented
            as permitted on Form 10-QSB and do not contain information included
            in National Residential Properties, Inc. (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.

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

                                       9
<PAGE>
            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.

            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




                                       10
<PAGE>
            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 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.

            The Company has restated its audited consolidated financial
            statements for September 30, 2001. The Company adjusted its
            consolidated financial statements for certain expenses not
            previously recognized relating to the amortization of discount on
            debenture conversions and fees and interest associated with the
            debentures in the amount of $1,830,731 that occurred in that fiscal
            year. There were also adjustments made to the statements of
            operations due to a change in the way the Company accounts for its
            sales of its real estate inventory. The changes resulted in an
            increase in the operating revenues of $232,000, an increase in the
            cost of sales of $200,149 and an increase in its gross profit and
            operating expenses of $31,851 for the year ended September 30, 2001.
            Cumulatively, the Company's accumulated deficit increased $1,830,731
            to $3,849,533 from $2,108,802 at September 30, 2001 and the net loss
            of the Company increased to $2,414,375 from $583,644. Additionally,
            in September 30, 2003 the Company restated its financial statements
            to adjust for the under reporting of amortization expense in the
            amount of $9,050.


                                       11
<PAGE>
NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
            ------------------------------------------

            PRINCIPLES OF CONSOLIDATION

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

            USE OF ESTIMATES

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

            REVENUE AND COST RECOGNITION

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

            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)

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

            The Company also recognizes revenue from 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.

                                       12
<PAGE>
            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 7 Years
            Vehicles                               5   Years

            INCOME TAXES

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

            ADVERTISING

            Costs of advertising are expensed as incurred. Advertising costs
            were $0 and $2,130 for the three months ended December 31, 2004 and
            2003, 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) include additional dilution from common
            stock equivalents, such as stock issuable pursuant to the exercise
            of stock options and warrants. Common stock equivalents were not
            included in the computation of diluted earnings per share when the
            Company reported a loss because to do so would be antidilutive for
            periods presented.

            The following is a reconciliation of the computation for basic and
            diluted EPS:
<TABLE>
<CAPTION>
                                                                 December 31,   December 31,
                                                                     2004          2003
                                                                 -----------    -----------

<S>                                                              <C>            <C>
            Net Loss                                             $  (97,513)    $ (218,886)
                                                                 -----------    -----------

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

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

                                                                 -----------    -----------
            Weighted-average common shares outstanding (Diluted)  1,000,000      1,000,000
                                                                 ===========    ===========
</TABLE>
            Options and warrants outstanding to purchase stock were not included
            in the computation of diluted EPS because inclusion would have been
            antidilutive.

            There are no options and warrants outstanding to purchase stock at
            December 31, 2004 and 2003.

                                       13
<PAGE>
            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 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 three months ended
            December 31, 2004 and 2003 is $3,263 and $11,023, respectively.

            RECLASSIFICATIONS

            Certain amounts for the three months ended December 31, 2003 have
            been reclassified to conform to the presentation of the December 31,
            2004 amounts. The reclassifications have no effect on net income for
            the three months ended December 31, 2003.

                                       14
<PAGE>
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 valued 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 December 31, 2004 and
            2003 were $70,955 and $239,693, respectively.

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

            Fixed assets consist of the following at December 31, 2004:

                 Office Equipment and furniture            $30,968
                 Vehicles                                   31,509
                     Subtotal                               62,477
                 Accumulated Depreciation                  (37,679)

                                                  Total    $24,798
                                                           -------

            Depreciation expense was $2,815 and $2,907 for the three
            months ended December 31, 2004 and 2003, respectively.

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

            Mortgages and notes payable consist of the following at December 31,
            2004:

            The Company has various mortgages and construction loans payable
            aggregating $756,336 at December 31, 2004. These amounts are payable
            at various times ranging through December 31, 2004, bearing interest
            at various rates ranging from 7% through 14% per year. The mortgages
            and construction notes are secured by the land and buildings held
            for development by the Company.

                                       15
<PAGE>
NOTE 7 -    CONVERTIBLE DEBENTURES PAYABLE
            ------------------------------

            The Company has convertible debentures outstanding at December 31,
            2004 in the amount of $199,202. These debentures accrue interest at
            8% per annum. These debentures matured along with the related
            interest at November 2003, however, no repayments or further
            conversions were made. The debentures are convertible at the
            discretion of the investors pursuant to the convertible debenture
            agreement. As of December 31, 2004 the Company believes it may be in
            default under these debentures. The investors have not contacted the
            Company about new payment terms. The Company purports that the
            investors will wait until the Company resolves any legal
            uncertainties (See Note 9).

            Interest expense for the three months ended December 31, 2004 and
            2003 relating to the debentures was $3,980 and $3,980, 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 Notes 10 and 11).

                                       16
<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 was 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 it has resolved
            certain changes to its capital structure and cured any overissuances
            of its common stock.

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

            The Company has recorded on its balance sheet as a temporary equity
            account for those securities that may not have been issued 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 December 31, 2004 and 2003, was $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 December 31, 2004 and 2003, there were 1,000,000 shares
            authorized, and 1,000,000 shares issued and outstanding of the
            Company's common stock with a par value of $.001.

            The Company issued 843,265,695 shares of common stock for the 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 December 31, 2004 and 2003, 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 December 31, 2004 and
            2003.

            The net deferred tax assets in the accompanying condensed
            consolidated balance sheet include benefit of utilizing net
            operating losses of approximately $7,557,216 (at December 31, 2004),
            however due to the uncertainty of utilizing the net operating
            losses, an offsetting valuation allowance has been established.

                                       17
<PAGE>
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 $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 complain 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. As a result, the Company does not
            expect its pending disposition of Bay Harbor to close as the
            acquisition transaction was conditional upon the Company receiving a
            building permit for 60 units, which it no longer expects to obtain.
            The Company's management team is currently exploring the Company's
            options with respect to the Bay Harbor property. While the Company
            has not entered into a purchase agreement with respect to the Bay
            Harbor property, the Company has been soliciting offers for the Bay
            Harbor property, and has received an offer of $1.3 million. As
            management continues to consider its options, the Company has also
            been working closely with the city to determine what permitting
            flexibility can be obtained with respect to the Bay Harbor property.

                                       18
<PAGE>
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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

         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
INFORMATION SET FORTH IN THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB 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. 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.

                                       19
<PAGE>
         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.

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 stockholders. At this time the Company was
                  authorized to issue 1 million shares of NRES Common Stock. On
                  December 15, 1994, the Company's board of directors approved
                  the 1994 Stock Split, giving Richard Astrom 400,000 of the
                  issued and outstanding shares of NRES Common Stock.

              o   On December 15, 1994, the Company entered into an agreement of
                  merger with National Rehab Properties, Inc. On May 15, 1995,
                  the merger became effective and National Rehab Properties,
                  Inc. merged with and into the Company, with National Rehab
                  Properties, Inc. remaining as the surviving entity. The
                  surviving entity subsequently changed its name to National
                  Rehab Properties, Inc. and became authorized to conduct
                  business in the State of Florida on August 17, 1995.

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

              o   Between the date of its incorporation and January of 2001, the
                  Company attempted to increase the number of shares the Company
                  was authorized to issue from 1 million to 40 million shares of
                  Common Stock pursuant to the 40 Million Share Increase.

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

                                       20
<PAGE>
              o   In April of 2000, the Company acquired 80% of Encore Services,
                  Inc. ("ENCORE SERVICES"). Encore Services served as the
                  Company's general construction contractor, but was
                  subsequently replaced by Encore Builders, Inc. ("ENCORE
                  BUILDERS"), a former subsidiary (through March 21, 2002) of
                  Vacation Ownership Marketing, Inc. Vacation Ownership
                  Marketing, Inc. ("VACATION OWNERSHIP") is an affiliate of the
                  Company. Encore Builders was the general construction
                  contractor for the Company's Conquistador Plaza project in
                  Miami, Florida. Since the time Encore Builders replaced Encore
                  Services as the general construction contractor of the
                  Company's Conquistador Plaza project, to the time the Company
                  severed its relationship with Encore Services in March of
                  2002, Encore Services has been inactive.

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

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

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

              o   On April 12, 2001, the Company's wholly-owned subsidiary,
                  Connecticut Acquisition Corp. No. 1 ("CONNECTICUT
                  ACQUISITION") obtained a loan from accredited investors
                  evidenced by its 8% Series A Senior Subordinated

                  Convertible Redeemable Debentures due April 12, 2003 (the
                  "CONNECTICUT ACQUISITION DEBENTURES"), which were convertible
                  from time to time into shares of Connecticut Acquisition's
                  Class A common stock. On May 8, 2001, Connecticut Acquisition
                  merged with and into the Company, with the Company remaining
                  as the surviving entity. As a result, all rights and
                  obligations of Connecticut Acquisition inured to the benefit
                  of and became binding upon the Company. Pursuant to the
                  merger, the Connecticut Acquisition Debentures were
                  surrendered and canceled, and new debentures, identical to the
                  Connecticut Acquisition Debentures (the "NRES CONNECTICUT
                  DEBENTURES"), but convertible into authorized and unissued
                  shares of NRES Common Stock, were issued by the Company to the
                  holders of the Connecticut Acquisition Debentures.

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

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

                                       21
<PAGE>
              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, all references to shares of NRES
                  Common Stock do not reflect the Capital Changes referenced
                  above (including any stock splits).

              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
                  February 22, 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
                  stockholders.

              o   As of December 31, 2004, the Company engages in operations as
                  a land development company that purchases zoned, but
                  undeveloped real property, develops architectural plans for
                  the real property, obtains building permits for the real
                  property and subsequently sells the real property when it is
                  ready for development, as a mortgage lender.

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
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 December 31, 2004, the Company has approximately $96,983
outstanding in credit extended to borrowers.

                                       22
<PAGE>
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 of 2002, the Company returned the shares of
Encore Services, the Company's wholly-owned inactive company.

                                       23
<PAGE>
         On April 18, 2002, the Company's subsidiary, Conquistador Plaza, Inc.
("CONQUISTADOR PLAZA") received a notice of default from its lender. The notice
cited violations of loan covenants by Conquistador Plaza, specifically relating
to the proceeds of the construction loan being insufficient to complete
construction of the Conquistador Plaza development. The notice of default also
cited the termination of work on the project for a period of more than 20 days.
As a consequence of the defaults, the lender accelerated and declared due and
payable Conquistador Plaza's entire indebtedness of $3,205,317.89, and advised
Conquistador Plaza that the lender would take action to protect its interest if
Conquistador Plaza did not return the entire balance by May 19, 2002. Although
the Company was not liable on the Conquistador Plaza loan, the Company invested
substantial funds in the Conquistador Plaza development and 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 December 31, 2004, the Company has
approximately $96,983 outstanding in credit extended to borrowers.

                                       24
<PAGE>
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 Residences at Bay Harbor
were built on a 22,500 square foot area with permit approval to construct a 15
story building. The Company intended to construct a 15-story, 60 unit apartment
building on the Bay Harbor property and intended for Encore Builders to handle
the construction. Immediately after closing the acquisition of the land, the
Company applied for a building permit, but to this date, the permit has not been
obtained due to various neighborhood objections to construction. The initial
business plan called for the building to be sold as a condominium project for
$18 million, with construction costs at approximately $12 million. Due to the
Company's relations with Encore Builders and the difficulties with the building
permit, the Company chose not to construct the building and instead, on December
17, 2001, chose to resell the land for $2.2 million to Dennis Almandares, an
independent third party. The transaction contemplated by this agreement did not
close, and the Company subsequently entered into a purchase and sale agreement
dated as of May 20, 2002 to sell this property to Gateway Mortgage Bankers, Inc.
for $2.3 million. The Company expected to close this transaction in September of
2002 or upon the issuance of a building permit by the city building department
for a 15-story building but was unable to obtain the required building permit.
Subsequently, the Company filed a complaint against the Town of Bay Harbor. At a
hearing on June 30, 2004, the Circuit Court granted the Town of Bay Harbor's
motion for summary judgment. As a result of this decision, the Company is
currently determining what options are available to it with respect to the Bay
Harbor property, including building 16 units on the property or disposing of the
land. The Company has no plans to appeal the ruling. The carrying value of the
Bay Harbor property was $1.3 million at September 30, 2004. As of September 30,
2004 and September 30, 2003 this property was subject to an outstanding mortgage
in the amount of $736,493 and 781,981, respectively. The Company currently has
fee simple ownership of the property, subject to mortgages. The first mortgage,
originally due in September 2004, was extended through December 2004. The
Company is in the process of re-renewing the first mortgage. The second mortgage
is due in 2006.

         While the Company has not entered into a purchase agreement with
respect to the Bay Harbor property, the Company has been soliciting offers for
the Bay Harbor property, and has received an offer of $1.3 million. As
management continues to consider its options, the Company has also been working
closely with the city to determine what permitting flexibility can be obtained
with respect to the Bay Harbor property.

         The Company believes the property is adequately covered by insurance.
The Company's tax basis in the property as of September 30, 2004 is $1,300,000
and realty taxes are $16,000 per year. The Company does not depreciate the
property because no construction on the land has taken place.

RESULTS OF OPERATIONS

         THE FOLLOWING IS A DISCUSSION OF THE CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE COMPANY FOR THE PERIOD ENDED DECEMBER 31, 2004
AND 2003, 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 three months ending December 31, 2003, the Company incurred a
net loss of $218,886, compared to a net loss of $97,513 for the comparable 2004
period. This 56% decrease is primarily due to the fact that professional fees
and compensation expense was reduced by $143,000.

                                       25
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDING DECEMBER 31, 2004 AND DECEMBER
31, 2003

REVENUES

         Total revenues were $22,284 for the three months ending December 31,
2003, as compared to $2,800 for the three months ending December 31, 2004. This
87% decrease is due to the fact that the Company no longer receives rental
income from a property the Company has since disposed of.

OPERATING EXPENSES

         PROFESSIONAL FEES AND COMPENSATION EXPENSES

         Professional fees and compensation expenses totaled $187,172 and
$44,233 for the three months ended December 31, 2003 and 2004, respectively.
This 76% decrease was mainly due to increased inactivity in the Company's real
estate business and the resolution of litigation matters.

         REAL ESTATE TAXES AND PROPERTY INSURANCE

         Real estate taxes and property insurance totaled $6,565 and $2,198 for
the three months ended December 31, 2003 and 2004, respectively. This 67%
decrease was due to the fact that the Company's only holds 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 December 31, 2004, the
Company had $10,391 in cash and cash equivalents, a decrease of $283,765 from
December 31, 2003. The amount of cash and cash equivalents held by the Company
fluctuated as the Company sold parcels of real property. The Company made no
acquisitions of real estate either in the period ending December 31, 2003, or
2004. The Company plans to seek additional means of funding after the Company is
satisfied that 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 $206,057 in investing activities during the period
ending December 31, 2003, as compared to $90,746 earned in the period ending
December 31, 2004. This increase in cash earned is primarily due to the Company
lending money under its new mortgage business in the three months ended December
31, 2003 and receiving money back in the three months ended December 31, 2004.

         The Company had negative net cash flow of $218,866 from operating
activities for the three months ended December 31, 2003 as compared to negative
net cash flow of $97,513 for the three months ended December 31, 2004. The
reduction in loss from operating expenses was due to the Company's reduced
activities.

         The Company had stockholders' deficit of $3,949,636 at December 31,
2004 as compared to $2,944,288 at December 31, 2003. 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.

                                       26
<PAGE>
         The Company believes that through its operations as a mortgage lender
and the sale of property owned by it, 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, 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 stockholders 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. While the Company entered into agreements to sell its remaining
property, it cannot guarantee these transactions will close or that the two
sales will occur in a timely fashion. If the Company is unable to close its
disposition transactions on this property, the Company may not be able to
realize additional revenues. The Company estimates the general overhead costs
necessary to sustain its existence (excluding expenses related to its remaining
real estate property and newly commenced mortgage business) to be $65,000 per
month.

         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. Shortly after the Company
files a definitive information statement on Schedule 14C with the SEC to effect
and ratify certain changes to its capital structure, and effects these changes,
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

                                       27
<PAGE>
Nevada, as required by the laws of the State of Nevada. As such, it appears the
Company currently has only 1 million shares of NRES Common Stock authorized, and
the majority of the validly issued shares are held by Richard and Pamela Astrom
as tenants by the entireties. The Company believes a majority of the Company's
validly issued and outstanding shares and the board of directors can cure and
ratify the overissuances of stock and the aforementioned changes in capital
structure. Until that time, the Company may be liable to the holders of the NRES
Common Stock issued in excess of the authorized amount. The Company also
believes the issuance of Class A common stock to Christopher Astrom was not
authorized as an amendment to the Company's Articles of Incorporation was never
filed with the Secretary of State of the State of Nevada. The Company believes
the recipient of the unauthorized shares, Christopher Astrom, may have a claim
against the Company for damages, but it is unlikely that Christopher Astrom will
file a claim against the Company as he is an officer, director and principal
shareholder of the Company. Also, as discussed below, the Company's board of
directors and the holders of a majority of its validly issued shares intend to
authorize the creation of Class A common stock and issue shares to Christopher
Astrom.

         It has come to the Company's attention that, as a result of the
conversion of the debentures issued by the Company into NRES Common Stock,
coupled with the decrease in the trading price of NRES Common Stock, investors
were entitled to more shares of NRES Common Stock than is authorized under the
Company's Articles of Incorporation. As a result, 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.

                                       28
<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.

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

                                       29
<PAGE>
filed with the Secretary of State of the State of Nevada. The Company believes
the recipient of the unauthorized shares, Christopher Astrom, may have a claim
against the Company for damages, but it is unlikely that Christopher Astrom will
file a claim against the Company as he is an officer, director and principal
shareholder of the Company. Also, as discussed below, the Company's board of
directors and the holders of a majority of its validly issued shares intend to
authorize the creation of Class A common stock and issue shares to Christopher
Astrom.

         It has come to the Company's attention that, as a result of the
conversion of the debentures issued by the Company into NRES Common Stock,
coupled with the decrease in the trading price of NRES Common Stock, investors
were entitled to more shares of NRES Common Stock than is authorized under the
Company's Articles of Incorporation. As a result, as of February 22, 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.

                                       30
<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 stockholder approval to cure and ratify the
Capital Changes and provide a related information statement on Schedule 14C to
its stockholders. 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.

                                       31
<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 are effective. 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.

                                       32
<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. See,
however, the discussion under Part I, Item 2, "Management's Discussion and
Analysis or Plan of Operation," under the subheading, "Operating History", with
respect to the foreclosure proceedings on the Company's Conquistador Plaza
project.

ITEM 2.           CHANGES IN SECURITIES INCREASES IN AUTHORIZED SHARES

         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 made
on a post-Capital Changes basis take into account the 1 for 10 reverse stock
split and the 3 for 1 stock split discussed above.

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.

                                       33
<PAGE>
ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits:


EXHIBIT NUMBER                                                       DESCRIPTION

3.1*              Articles of Incorporation of the Company.

3.2***            Certificate of Amendment to Articles of Incorporation of the
                  Company.

3.4*              Bylaws of the Company.

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

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

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

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

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

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

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

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

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

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

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

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

*        Previously filed.

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

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

(B) REPORTS ON FORM 8-K:

         None.

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<PAGE>
                                   SIGNATURES

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

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



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



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




































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