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

                                   FORM 10-QSB

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



                                     0-27159

                            (COMMISSION FILE NUMBER)

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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 August 15, 2004, there were 1,938,566,046 shares of the
Registrant's Common Stock, $.001 par value per share, outstanding.

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







<PAGE>
                      NATIONAL RESIDENTIAL PROPERTIES, INC.
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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. 16

         RISK FACTORS....................................................... 23

         ITEM 3.  CONTROLS AND PROCEDURES................................... 25

PART II  OTHER INFORMATION.................................................. 26

         ITEM 1.  LEGAL PROCEEDINGS......................................... 26

         ITEM 2.  CHANGES IN SECURITIES INCREASES IN AUTHORIZED SHARES...... 26

         ITEM 3.  DEFAULTS UPON SENIOR SECURITIES........................... 26

         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....... 26

         ITEM 5.  OTHER INFORMATION......................................... 26

         ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.......................... 27

SIGNATURES.................................................................. 28



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 SHEETS


                                          ASSETS
                                          ------
                                                                      JUNE 30,
                                                                        2004
                                                                    (UNAUDITED)

Cash and cash equivalents                                        $       57,613
Inventory - Real Estate Holdings                                      1,756,037
Escrow receivable                                                         5,000
Fixed assets, net of depreciation                                        30,991
Loan receivable - others                                                 46,367
Mortgage receivable and other                                           172,447
Investment securities                                                     2,523
Deposits                                                                 10,925
Loan origination fees, net of amortization                               41,151
                                                                  -------------

TOTAL ASSETS                                                     $    2,123,054
                                                                  =============

























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



                                       3
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS (CONTINUED)



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

                                                                      JUNE 30,
                                                                       2004
                                                                    (UNAUDITED)

LIABILITIES
   Accounts payable and accrued expenses                         $       29,440
   Convertible debentures payable                                       199,202
   Notes and mortgages payable                                          773,821
                                                                  -------------
         TOTAL LIABILITIES                                            1,002,463

TEMPORARY EQUITY                                                      4,417,938
                                                                  -------------
STOCKHOLDERS' EQUITY (DEFICIT)
   Common Stock, $.001 Par Value; 1,000,000 shares authorized and
     1,000,000 shares issued and outstanding                              1,000
   Common Stock Class A Voting, $.001 Par Value; 0 shares authorized
     and 0 shares issued and outstanding
   Additional Paid-in Capital                                         3,606,580
   Deficit                                                           (6,904,927)
                                                                  -------------

         TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                        (3,297,347)
                                                                  -------------
TOTAL LIABILITIES, TEMPORARY EQUITY AND
STOCKHOLDERS' EQUITY (DEFICIT)                                   $    2,123,054
                                                                  =============

















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




                                       4
<PAGE>
<TABLE>
<CAPTION>
NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
    OPERATIONS FOR THE NINE AND THREE MONTHS ENDED JUNE 30, 2004 AND 2003 (UNAUDITED)


                                                        NINE MONTHS ENDED               THREE MONTHS ENDED
                                                    JUNE 30,         JUNE 30,        JUNE 30,         JUNE 30,
                                                      2004             2003            2004             2003
                                                      ----             ----            ----             ----
<S>                                              <C>              <C>              <C>              <C>
OPERATING REVENUES
   Revenue                                       $ 1,613,989      $ 3,564,353      $     3,586      $    21,451
   Cost of sales                                  (1,471,084)      (4,345,639)               -                -
GROSS PROFIT                                         142,905         (781,286)           3,586           21,451

OPERATING EXPENSES
   Professional fees and compensation expenses       546,436          482,558           74,829          195,783
   Advertising                                         3,247            3,845                -                -
   Travel and automobile expenses                     60,341           41,803           16,928           20,296
   Telephone and utilities                             9,356            7,326            2,471            3,914
   Real estate taxes and property maintenance         21,097           14,094            5,523            6,032
   Office expenses                                    14,589           15,430            4,209            5,936
   Miscellaneous                                      21,879           12,590            8,068            5,552
   Depreciation and amortization                      47,725           12,444            5,827            6,299
         TOTAL OPERATING EXPENSES                    724,670          590,090          117,855          243,812

LOSS BEFORE OTHER INCOME (EXPENSE)                  (581,765)      (1,371,376)        (114,269)        (222,361)

OTHER INCOME (EXPENSE)
   Interest expense                                  (12,386)         (14,566)          (1,647)          (4,958)
   Interest income                                    13,156              613              886              578

         TOTAL OTHER INCOME (EXPENSE)                    770          (13,953)            (761)          (4,380)

NET LOSS BEFORE PROVISION FOR INCOME TAXES       $  (580,995)     $(1,385,329)     $  (115,030)     $  (226,741)
PROVISION FOR INCOME TAXES                                 -                -                                 -

NET LOSS APPLICABLE TO COMMON SHARES             $  (580,995)     $(1,385,329)     $  (115,030)     $  (226,741)

NET LOSS PER BASIC AND DILUTED SHARES            $   (0.5810)     $   (1.3853)     $   (0.1150)     $   (0.2267)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING                                 1,000,000        1,000,000        1,000,000        1,000,000
</TABLE>









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



                                       5
<PAGE>
<TABLE>
<CAPTION>
        NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED
                       JUNE 30, 2004 AND 2003 (UNAUDITED)



                                                                        2004              2003
                                                                        ----              ----
<S>                                                               <C>               <C>
CASH FLOW FROM OPERATING ACTIVITIES
   Net loss                                                       $     (580,995)   $   (1,385,329)
                                                                  ---------------   ---------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
   PROVIDED BY OPERATING EXPENSES:
   Depreciation and amortization                                          47,725            12,444

CHANGES IN ASSETS AND LIABILITIES
   (Increase) decrease in inventory - real estate holdings             1,216,383         3,750,488
   (Increase) in escrow receivable                                        (5,000)         (462,741)
   (Increase) in loan receivable-others                                  (46,367)                -
   (Increase) in deposits                                                 (2,200)                -
   Increase (Decrease) in accounts payable and accrued expenses          (62,984)            3,005
                                                                  ---------------   ---------------
   Total adjustments                                                   1,147,557         3,303,196
                                                                  ---------------   ---------------

         NET CASH PROVIDED BY OPERATING ACTIVITIES                       566,562         1,917,867
                                                                  ---------------   ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property, plant and equipment                              (8,653)                -
   Loans to / from others                                                      -           246,174
   (Increase) decrease in mortgage receivables                          (138,811)           40,931
                                                                  ---------------   ---------------

         NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES            (147,464)          287,105

















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



                                       6
<PAGE>
        NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES CONDENSED
         CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE NINE
                MONTHS ENDED JUNE 30, 2004 AND 2003 (UNAUDITED)


                                                                        2004              2003
                                                                        ----              ----
CASH FLOWS FROM FINANCING ACTIVITIES
   Loan origination fees                                                       -    $       (88,181)
   Net change in notes and mortgages payable                          (1,156,200)        (2,499,553)
                                                                  ---------------   ----------------
NET CASH (USED IN) FINANCING ACTIVITIES                               (1,156,200)        (2,587,734)
                                                                  ---------------   ----------------

NET (DECREASE) IN
   CASH AND CASH EQUIVALENTS                                            (737,102)          (382,762)

CASH AND CASH EQUIVALENTS -
   BEGINNING OF PERIOD                                                   794,715            481,609
                                                                  ---------------   ----------------

CASH AND CASH EQUIVALENTS - END OF PERIOD                         $       57,613    $        98,847
                                                                  ===============   ================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

CASH PAID DURING THE YEAR FOR:
   Interest expense                                               $        2,934    $         2,626
                                                                  ===============   ================
</TABLE>




















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




                                       7
<PAGE>
<TABLE>
<CAPTION>
                   NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)
                      FOR THE NINE MONTHS ENDED JUNE 30, 2004 AND 2003

                                                           CLASS A           ADDITIONAL
                                  COMMON STOCK           COMMON STOCK         PAID-IN        ACCUMULATED
                                SHARES      AMOUNT     SHARES    AMOUNT       CAPITAL          DEFICIT           TOTALS
                              ---------  ----------    ------  ---------    -----------    -------------    --------------
<S>                           <C>        <C>           <C>     <C>          <C>            <C>              <C>
BALANCE, SEPTEMBER 30, 2002   1,000,000  $   1,000         -   $      -     $ 3,606,580    $ (4,197,046)    $    (589,466)

Net loss                              -           -        -          -               -      (1,385,329)       (1,385,329)
                              ---------  ----------    ------  ---------    -----------    -------------    --------------
BALANCE, JUNE 30, 2003        1,000,000  $   1,000         -   $      -     $ 3,606,580    $ (5,582,375)    $  (1,974,795)
                              =========  ==========    ======  =========    ===========    =============    ==============

BALANCE, SEPTEMBER 30, 2003   1,000,000  $   1,000         -   $      -     $ 3,606,580    $ (6,323,932)    $  (2,716,352)

Net loss                              -           -        -          -               -        (580,995)         (580,995)
                              ---------  ----------    ------  ---------    -----------    -------------    --------------
BALANCE, JUNE 30, 2004        1,000,000  $   1,000         -   $      -     $ 3,606,580    $ (6,904,927)    $  (3,297,347)
                              =========  ==========    ======  =========    ===========    =============    ==============
</TABLE>


























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





                                       8
<PAGE>
<TABLE>
<CAPTION>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              STATEMENT OF CHANGES IN TEMPORARY EQUITY (UNAUDITED)
                FOR THE NINE MONTHS ENDED JUNE 30, 2004 AND 2003

                                                                  CLASS A                       ADDITIONAL
                                      COMMON STOCK              COMMON STOCK                     PAID-IN    ACCUMULATED
                                 SHARES        AMOUNT        SHARES      AMOUNT    DISCOUNT      CAPITAL      DEFICIT     TOTALS
                             -------------  -----------   ---------    -------    ----------   ----------  -----------  ----------
<S>                          <C>            <C>           <C>          <C>        <C>          <C>         <C>          <C>
BALANCE, SEPTEMBER 30, 2002  1,937,566,046  $ 1,937,566   1,000,000    $ 1,000    $(687,311)   $3,166,653  $      -     $4,417,938

No activity                              -            -           -          -            -             -                        -
                             -------------  -----------   ---------    -------    ----------   ----------  -----------  ----------
BALANCE, JUNE 30, 2003       1,937,566,046  $ 1,937,566   1,000,000    $ 1,000    $(687,311)   $3,166,653               $4,417,938
                             =============  ===========   =========    =======    ==========   ==========  ===========  ==========

BALANCE, SEPTEMBER 30, 2003  1,937,566,046  $ 1,937,566   1,000,000    $ 1,000    $(687,311)   $3,166,653  $      -     $4,417,938

No activity                              -            -           -          -            -             -                        -
                             -------------  -----------   ---------    -------    ----------   ----------  -----------  ----------
BALANCE, SEPTEMBER 30, 2004  1,937,566,046  $ 1,937,566   1,000,000    $ 1,000    $(687,311)   $3,166,653               $4,417,938
                             =============  ===========   =========    =======    ==========   ==========  ===========  ==========
</TABLE>



























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





                                        9
<PAGE>
             NATIONAL RESIDENTIAL PROPERTIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 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 the
         National Residential Properties, Inc.'s (the "COMPANY") annual
         consolidated statements and notes. Certain information and footnote
         disclosures normally included in financial statements prepared in
         accordance with accounting principles generally accepted in the United
         States of America have been condensed or omitted pursuant to such rules
         and regulations, although the Company believes that the disclosures are
         adequate to make the information presented not misleading. It is
         suggested that these condensed consolidated financial statements be
         read in conjunction with the September 30, 2003 audited consolidated
         financial statements and the accompanying notes thereto. While
         management believes the procedures followed in preparing these
         condensed consolidated financial statements are reasonable, the
         accuracy of the amounts are in some respects dependent upon the facts
         that will exist, and procedures that will be accomplished by the
         Company later in the year.

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

         The Company was originally incorporated in the State of Nevada on
         October 18, 1971 under the name of Mister Las Vegas, Inc. On December
         15, 1994, the Company merged with 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 one aspect of the business, the Company entered a second phase
         of business, the development, construction and ownership of multifamily
         housing projects.

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

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

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

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

                                       10
<PAGE>
         In contemplation of the financing of this project, on April 12, 2001,
         Connecticut Acquisition obtained a loan from accredited investors
         evidenced by its 8% Series A Senior Subordinated Convertible Redeemable
         Debentures due April 13, 2003 (the "CONNECTICUT ACQUISITION
         Debentures"), which were convertible from time to time into shares of
         Connecticut Acquisition's Class A Common Stock. On May 8, 2001,
         following the acquisition of the Hebron Parcel, Connecticut Acquisition
         was merged into the Company. As a result, all rights and obligations of
         Connecticut Acquisition inured to the benefit of and became binding
         upon the Company. Pursuant to the merger, the Connecticut Acquisition
         Debentures were surrendered and canceled, and new debentures, identical
         to the Connecticut Acquisition Debentures, together with accompanying
         conversion rights into authorized but unissued shares of the Company's
         common stock, par value $.001 per share ("NRES COMMON STOCK"), were
         issued by the Company to the holders of the Connecticut Acquisition
         Debentures.

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

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

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

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


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

         PRINCIPLES OF CONSOLIDATION

         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.

                                       11
<PAGE>
         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 they provide.

         CASH AND CASH EQUIVALENTS

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

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

         FIXED ASSETS

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

         Equipment and other 3 to 5 Years Vehicles 5 Years

         INCOME TAXES

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

         ADVERTISING

         Costs of advertising are expensed as incurred. Advertising costs were
         $3,247 and $3,845 for the nine months ended June 30, 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) includes additional dilution from common stock
         equivalents, such as stock issuable pursuant to the exercise of stock
         options and warrants. Common stock equivalents were not included in the
         computation of diluted earnings per share when the Company reported a
         loss because to do so would be antidilutive for periods presented.

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

                                       12
<PAGE>
<TABLE>
<CAPTION>
                                                                JUNE 30,        JUNE 30,
                                                                  2004            2003
                                                              -----------    -------------

<S>                                                           <C>            <C>
         Net Loss                                             $ (580,995)    $ (1,385,329)
                                                              -----------    -------------

         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 June
         30, 2004 and 2003.

         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.

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

         FAIR VALUE OF FINANCIAL INSTRUMENTS

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

         LOAN ORIGINATION FEES

         Represent fees in connection with obtaining mortgages on the various
         properties. The loan origination fees are being amortized straight-line
         over a five-year period. When the loans are paid off, the Company
         recognizes the entire loan origination fee as amortization expense.
         Amortization expense for the nine months ended June 30, 2004 and 2003
         is $38,532 and $4,089, respectively.

                                       13
<PAGE>
         RECLASSIFICATIONS

         Certain amounts for the nine months ended June 30, 2003 have been
         reclassified to conform with the presentation of the June 30, 2004
         amounts. The reclassifications have no effect on net income for the
         nine months ended June 30, 2003.

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

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

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

         Represents amounts due from individuals who purchased property from the
         Company or amounts due from individuals who the Company loaned money to
         in the form of mortgages. Amounts due at June 30, 2004 and 2003 were
         $172,447 and $34,079.


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

         Fixed assets consist of the following at June 30, 2004:

         Office Equipment and other                  $ 30,968
         Vehicles                                      31,509
                                                     ---------
            Subtotal                                   62,477
                Accumulated Depreciation              (31,486)
                                                     ---------

                                       Total         $ 30,991
                                                     ---------


         Depreciation expense was $9,193 and $8,355 for the nine months ended
         June 30, 2004 and 2003, respectively.

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

         Mortgages and notes payable consist of the following at June 30, 2003:

         The Company has various mortgages and construction loans payable
         aggregating $773,821 at June 30, 2004. These amounts are payable at
         various times ranging through 2003 and 2004, bearing interest at
         various rates ranging from 5% through 7% per year. The mortgages and
         construction notes are secured by the land and buildings held for
         development by the Company.

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

         The Company has convertible debentures outstanding at June 30, 2004 in
         the amount of $199,202. These debentures accrue interest at 8% per
         annum. These debentures mature along with the related interest at
         November 2003. The debentures are convertible at the investors
         discretion pursuant to the convertible debenture agreement.

         Interest expense for the nine months ended June 30, 2004 and 2003
         relating to the debentures were $7,960 and $7,960, respectively.


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

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

                                       14
<PAGE>
         On May 8, 2001, the Company merged with Connecticut Acquisition Corp.
         No. 1 upon the acquisition of a parcel of land in Hebron, Connecticut.
         This parcel of land was subsequently conveyed on October 31, 2001 to
         Genesis Capital Corporation of Nevada, an entity related to the Company
         through common officers and directors.

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

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

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

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

         The Company expects to reclassify certain amounts from temporary equity
         to permanent stockholders' equity after curing any over issuances of
         its common stock.


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

         The Company has recorded on its balance sheet as a temporary equity
         account for those securities issued that may not be in compliance with
         the registration provisions of Section 5 of the Securities Act of 1933,
         as amended, and for the issuance of common stock issued above its
         authorized amount. All related amounts that were previously included in
         common stock and additional paid-in capital of the permanent
         stockholders' equity (deficit) section have been reclassified to
         temporary equity as their redemption may not be solely within the
         control of the issuer. Temporary equity at June 30, 2004 and 2003, were
         $4,417,938, respectively. Substantially all the shares issued in
         connection with the conversion of debentures have been reclassified as
         temporary equity.

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

         As of June 30, 2004 and 2003, there were 1,000,000 authorized shares,
         and 1,000,000 shares validly issued and outstanding of the Company's
         common stock with a par value of $.001.

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

         As of June 30, 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).

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

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

         There was no income tax benefit recognized at June 30, 2004 and 2003.

         The net deferred tax assets in the accompanying condensed consolidated
         balance sheet include benefit of utilizing net operating losses of
         approximately $2,800,000 (at June 30, 2004), however due to the
         uncertainty of utilizing the net operating losses, an offsetting
         valuation allowance has been established.

                                       15
<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, 2003 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. The Company's former transfer
agent's records show that these shares can be traced to such point that the
Company's former transfer agent and the Company severed relations, when they
were still held by Richard and Pamela Astrom, as tenants by the entireties. The
Company's current transfer agent's records confirm that these shares can be
traced from that time to the present, as they are still held by Richard and
Pamela Astrom, as tenants by the entireties, and have not been sold or otherwise
transferred. As such, Richard Astrom and Pamela Gay Astrom, as tenants by the
entireties, appear to hold a majority of the validly issued shares of NRES
Common Stock.

         After making the aforementioned factual findings, the Company proceeded
to retain local counsel in the State of Nevada to determine the effect of the
invalidity of some or all of the Capital Changes and to confirm the foregoing
analysis under Nevada law. The Company believes that Richard and Pamela Astrom,
as the valid owners of a majority of the Company's validly issued shares, can
amend the Articles to increase the Company's authorized number of shares. The
Company also believes that the issuance of NRES Common Stock in excess of the
authorized amount can be cured by the Company's board of directors. The Company
and Richard and Pamela Astrom intend to amend the Company's Articles and cure
and ratify any issuances of shares issued in excess of the authorized amount
after the Company's local counsel renders these opinions. The Company also
intends to file an Information Statement on Schedule 14C reflecting these
actions, as appropriate.

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
                                       16
<PAGE>
         the Company was authorized to issue 1 million shares of NRES Common
         Stock. On December 15, 1994, the Company's board of directors approved
         the 1994 Stock Split, giving Richard Astrom 400,000 of the issued and
         outstanding shares of NRES Common Stock.

     o   On December 15, 1994, the Company entered into an agreement of merger
         with National Rehab Properties, Inc. On May 15, 1995, the merger became
         effective and National Rehab Properties, Inc. merged with and into the
         Company, with National Rehab Properties, Inc. remaining as the
         surviving entity. Pursuant to the agreement of merger, each share of
         National Rehab Properties, Inc.'s common stock was converted into one
         share of NRES Common Stock and each share of NRES Common Stock before
         the merger remained as one share of NRES Common Stock. At the time of
         the merger, Richard Astrom owned 1,000 shares of National Rehab
         Properties, Inc.'s common stock. After the merger, Richard Astrom and
         members of his family held 401,000 shares of the issued and outstanding
         shares of NRES Common Stock. The surviving entity subsequently changed
         its name to National Rehab Properties, Inc. and became authorized to
         conduct business in the State of Florida on August 17, 1995.

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

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

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

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

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

     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
                                       17
<PAGE>
         Power merged with and into the Company with the Company remaining as
         the surviving entity. As a result, all rights and obligations of DC
         Power inured to the benefit of and became binding upon the Company.
         Pursuant to the merger, the DC Power Debentures were surrendered and
         canceled, and new debentures, identical to the DC Power Debentures (the
         "NRES DC POWER DEBENTURES" and together with the NRES Connecticut
         Debentures, the "NRES DEBENTURES"), but convertible into authorized and
         unissued shares of NRES Common Stock, were issued by the Company to the
         holders of the DC Power Debentures.

     o   The Company's Articles of Incorporation, as amended, currently provide
         that the Company is authorized to issue up to 1.5 billion shares of
         NRES Common Stock. However, the Company concluded that the 1994 Stock
         Split, the 1999 Reverse Stock Split, the 40 Million Share Increase, the
         250 Million Share Increase, the 750 Million Share Increase and the 1.5
         Billion Share Increase may not have been validly adopted by the
         Company's board of directors, approved by the Company's shareholders or
         filed with the Secretary of State of the State of Nevada, as required
         by the laws of the State of Nevada. As such, the Company believes it
         currently has only 1 million shares of NRES Common Stock authorized, a
         majority of which are owned by Richard and Pamela Gay Astrom, as
         tenants by the entireties. As such, all references to shares of NRES
         Common Stock do not reflect the Capital Changes referenced above
         (including any stock splits).

     o   It has come to the Company's attention that, as a result of the
         conversion of the NRES Debentures into NRES Common Stock and the
         decrease in the price of NRES Common Stock, investors were entitled to
         more shares than authorized. As a result, the Company, as of May 17,
         2004, has 1,938,566,046 shares of NRES Common Stock issued, which
         exceeds the number of authorized shares. Under the state law of Nevada,
         it may be possible that the transactions for shares in excess of the
         number of authorized shares will not be viewed as valid and the Company
         may be responsible for taking corrective action or compensating the
         stockholders.

     o   The Company currently is a land development company that purchases
         zoned, but undeveloped real property, develops architectural plans for
         the real property, obtains building permits for the real property and
         subsequently sells the real property when it is ready for development.
         During the period ended December 31, 2003, the Company commenced
         operations as a mortgage lender. Among other things, 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. The Company has not hired additional
         personnel to engage in its mortgage lending business. As of June 30,
         2004, the Company has approximately $173,000 outstanding in credit
         extended to borrowers.

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. During the period
ending December 31, 2003, the Company commenced operations as a mortgage lender.

         Among other things, 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. The Company has not hired additional
personnel to engage in its mortgage lending business.

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.
                                       18
<PAGE>
         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, which may be deemed an
affiliate of the Company.

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

         On April 18, 2002, the Company's subsidiary, Conquistador Plaza, Inc.
("CONQUISTADOR PLAZA") received a notice of default from its lender. The notice
cited violations of loan covenants by Conquistador Plaza, specifically relating
to the proceeds of the construction loan being insufficient to complete
construction of the Conquistador Plaza development. The notice of default also
cited the termination of work on the project for a period of more than 20 days.
As a consequence of the defaults, the lender accelerated and declared due and
payable Conquistador Plaza's entire indebtedness of $3,205,317.89, and advised
Conquistador Plaza that the lender would take action to protect its interest if
Conquistador Plaza did not return the entire balance by May 19, 2002. Although
the Company is not liable on the Conquistador Plaza loan, the Company has
invested substantial funds in the Conquistador Plaza development and would lose
its investment were the lender to foreclose on the lender's mortgage. In order
to repay the lender, Conquistador Plaza entered into a contract to sell the
Conquistador Plaza project. 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. Litigation relating to the
Barcelona Apartments is discussed under "Part II, Item 1 - Legal Proceedings".
The Company's July 31, 2002 contract to sell this property to Antonio Sarmiento
fell through. The Company is currently continuing its efforts to sell this
property. The Company entered into an agreement for purchase and sale with
Salomon Yuken to sell the Barcelona Apartments to Salomon Yuken on January 10,
2003. On May 8, 2003, the Company and Salomon Yuken entered into an amendment to
the agreement for purchase and sale. In June 2003, the Company and Salomon Yuken
entered into a second amendment to the agreement for purchase and sale which,
among other things, extended the closing date to October 31, 2003. A $100,000
deposit has been paid to the Company by Salomon Yuken. The closing date was
subsequently extended.

         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
$1,682,227 and $1,480,990 at September 30, 2003 and 2002, respectively.
                                       19
<PAGE>
CURRENT OPERATIONS

         OVERVIEW

         From 1999 until 2002, the Company's business focused on residential
real estate development and building construction services, and in particular on
acquiring properties suitable for development as multifamily housing or multiple
unit single family development tracts. During this time period, the Company
purchased four parcels of land for apartment construction and one 20-acre citrus
grove for subdivision development. The properties still held by the Company are
described below in detail along with the status of each project. During the
period ended December 31, 2003, the Company commenced operations as a mortgage
lender.

         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. A
hearing on June 30, 2004, the Circuit Court granted 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. See "Part II, Item 1 - Legal
Proceedings" for a discussion of the related litigation. The carrying value of
the Bay Harbor property was $1,290,194 and $1,221,467 at September 30, 2003 and
September 30, 2002, respectively. As of September 30, 2003 and September 30,
2002 this property was subject to an outstanding mortgage in the amount of
$781,981 and 591,000, respectively. The Company currently has fee simple
ownership of the property, subject to a mortgages. The first mortgage is due in
September 2004 and the second mortgage is due in 2006.

         Although the Company believes there will be sufficient demand for the
individual units once construction is completed, it is unlikely that the Company
will realize any benefit from such demand as the Company has executed an
agreement to dispose of the property, as described above.

         The Company believes the property is adequately covered by insurance.
The Company's tax basis in the property as of September 30, 2003 is $1,290,194
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 JUNE 30, 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 nine months ending June 30, 2003, the Company incurred a net
loss of $1,385,329, compared to a net loss of $580,995 for the comparable 2004
period. The difference is primarily due to the fact that during the period
ending June 30, 2003, the Company sold properties in its portfolio, generating
cash flow and yet still incurring a net loss in that the expenses exceeded the
sales prices.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDING JUNE 30, 2004 AND JUNE 30,
2003

REVENUES

         Total revenues were $21,451 for the three months ending June 30, 2003,
as compared to $3,586 for the three months ending June 30, 2004. This decrease
is due to the fact that during the period ending June 30, 2003, the Company was
receiving rental income of approximately $7,000 per month from a property the
Company has since disposed of. This source of revenue has since ceased.

                                       20
<PAGE>
OPERATING EXPENSES

         PROFESSIONAL FEES AND COMPENSATION EXPENSES

         Professional fees and compensation expenses totaled $195,783 and
$74,829 for the three months ended June 30, 2003 and 2004, respectively. This
62% decrease was mainly due to (i) legal fees related to the sale of the
Company's Conquistador property and (ii) a reduction in reimbursed legal fees as
less time was required from legal counsel to work through and resolve the
Company's outstanding legal issues.

         TELEPHONE AND UTILITIES

         Telephone and utilities expenses totaled $3,914 and $2,471 for the
three months ended June 30, 2003 and 2004, respectively. The reason for this 37%
decrease was due to increased inactivity in the Company's real estate business.

         OFFICE EXPENSES

         Office expenses totaled $5,936 and $4,209 for the three months ended
June 30, 2003 and 2004, respectively. The reason for this 29% decrease was also
the increased inactivity in the Company's real estate business.

         TRAVEL AND AUTOMOBILE EXPENSES

         Travel and automobile expenses totaled $20,296 and $16,928 for the
three months ended June 30, 2003 and 2004, respectively. The reason for this 17%
decrease was also the increased inactivity in the Company's real estate
business.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDING JUNE 30, 2004 AND JUNE 30, 2003

REVENUES

         Total revenues were $3,564,353 for the nine months ending June 30,
2003, as compared to $1,613,989 for the nine months ending June 30, 2004. This
decrease is due to the fact that the Company disposed of properties contained in
its real estate portfolio generating more cash flow during the period ending
June 30, 2003, than during the period ending June 30, 2004.

OPERATING EXPENSES

         PROFESSIONAL FEES AND COMPENSATION EXPENSES

         Professional fees and compensation expenses totaled $482,558 and
$546,436 for the nine months ended June 30, 2003 and 2004, respectively. The
reason for this 13% increase were fees incurred with respect to the Company's
then-outstanding litigation and in attempting to resolve the Company's
outstanding securities and state law issues. See "Risk Factors".

         TRAVEL AND AUTOMOBILE EXPENSES

         Travel and automobile expenses totaled $41,803 and $60,341 for the nine
months ending June 30, 2003 and 2004, respectively. The reason for this 44%
increase was that the Company began exploring possibilities to expand its
business during the period ending June 30, 2004.

         DEPRECIATION AND AMORTIZATION

         Depreciation and amortization expenses totaled $12,444 and $47,725 for
the nine months ended June 30, 2003 and 2004, respectively. This 284% increase
is due to the amortization of loan fees during the period ending June 30, 2004.

LIQUIDITY AND CAPITAL RESOURCES

         To date, the Company has financed its operations primarily through
mortgage debt and the sale of NRES Common Stock issued through converting the
NRES Debentures. At June 30, 2004, the Company had $57,613 in cash and cash
equivalents, a decrease of $41,234 from June 30, 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 June 30, 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".

                                       21
<PAGE>
         The Company earned $287,105 from investing activities for the period
ended June 30, 2003, as compared to $147,464 used in the period ended June 30,
2004. Net cash used in financing activities was $2,587,734 for the period ended
June 30, 2003, as compared to $1,156,200 used in the three months ended June 30,
2004. This decrease in net cash used in financing activities is attributable to
the Company paying down principal on the mortgage of its property upon the
disposition thereof.

         The Company had negative net cash flow of $1,385,329 from operating
activities for the nine months ended June 30, 2003 as compared to negative net
cash flow of $580,995 for the nine months ended June 30, 2004.

         The Company had stockholders' deficit of $3,297,347 at June 30, 2004 as
compared to $1,974,795 at June 30, 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.

         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 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
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.
                                       22
<PAGE>
         It has come to the Company's attention that, as a result of the
conversion of the debentures issued by the Company into NRES Common Stock,
coupled with the decrease in the trading price of NRES Common Stock, investors
were entitled to more shares of NRES Common Stock than is authorized under the
Company's Articles of Incorporation. As a result, the Company has 1,938,566,046
shares of NRES Common Stock issued, which exceeds the number of shares
authorized. As stated above, the Company believes the holders of a majority of
the Company's validly issued and outstanding shares and the board of directors
can cure and ratify the overissuances of stock. If this cannot be accomplished,
the Company may be liable to the holders of the NRES Common Stock issued in
excess of the authorized amount in an amount equal to 1,937,566,046 shares (the
number of shares issued in excess of the amount authorized) multiplied by the
price each such share was issued for (which ranged from approximately $.0001 to
$5.4 per share). The overissuance, together with the Company's inability to
increase its authorized number of shares, has eliminated the Company's ability
to raise capital through issuances of publicly registered securities. The
Company believes it will not be able to continue trading NRES Common Stock or
increase its capital resources through selling publicly registered securities
until the overissuance is cured and the Company increases the authorized number
of shares of NRES Common Stock. The Company may also have violated other
provisions of Nevada law with respect to the duties of officers and directors to
the Company and by not having sufficient shares available upon the conversion of
debentures issued by the Company.

         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.

         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. 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
                                       23
<PAGE>
board of directors can cure and ratify the overissuances of stock and the
aforementioned changes in capital structure. Until that time, the Company may be
liable to the holders of the NRES Common Stock issued in excess of the
authorized amount. The Company also believes the issuance of Class A common
stock to Christopher Astrom was not authorized as an amendment to the Company's
Articles of Incorporation was never filed with the Secretary of State of the
State of Nevada. The Company believes the recipient of the unauthorized shares,
Christopher Astrom, may have a claim against the Company for damages, but it is
unlikely that Christopher Astrom will file a claim against the Company as he is
an officer, director and principal shareholder of the Company. Also, as
discussed below, the Company's board of directors and the holders of a majority
of its validly issued shares intend to authorize the creation of Class A common
stock and issue shares to Christopher Astrom.

         It has come to the Company's attention that, as a result of the
conversion of the debentures issued by the Company into NRES Common Stock,
coupled with the decrease in the trading price of NRES Common Stock, investors
were entitled to more shares of NRES Common Stock than is authorized under the
Company's Articles of Incorporation. As a result, as of February 5, 2004, the
Company has 1,938,566,046 shares of NRES Common Stock issued, which exceeds the
number of shares authorized. As stated above, the Company believes the holders
of a majority of the Company's validly issued and outstanding shares and the
board of directors can cure and ratify the overissuances of stock. If this
cannot be accomplished, the Company may be liable to the holders of the NRES
Common Stock issued in excess of the authorized amount in an amount equal to
1,937,566,046 shares (the number of shares issued in excess of the amount
authorized) multiplied by the price each such share was issued for (which ranged
from approximately $.0001 to $5.4 per share). The overissuance, together with
the Company's inability to increase its authorized number of shares, has
eliminated the Company's ability to raise capital through issuances of publicly
registered securities. The Company believes it will not be able to continue
trading NRES Common Stock or increase its capital resources through selling
publicly registered securities until the overissuance is cured and the Company
increases the authorized number of shares of NRES Common Stock. The Company may
also have violated other provisions of Nevada law with respect to the duties of
officers and directors to the Company and by not having sufficient shares
available upon the conversion of debentures issued by the Company.

         THE COMPANY 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.

         THE COMPANY MAY HAVE VIOLATED THE FEDERAL PROXY RULES

         At the time of its incorporation, the Company had 1 million shares of
its common stock authorized. Since that time, the Company believed it had
effected the 1994 Stock Split, the 1999 Reverse Stock Split, the 40 Million
Share Increase, the 250 Million Share Increase, the 750 Million Share Increase
and the 1.5 Billion Share Increase. These changes in capital structure appear to
have not been validly adopted by the Company's board of directors, approved by
the Company's shareholders or filed with the Secretary of State of the State of
Nevada, as required by the laws of the State of Nevada. The Company may have
violated the federal proxy rules by either (i) not obtaining the requisite
shareholder approval to effect these changes or (ii) not providing shareholders
with an Information Statement on Schedule 14C. As such, it appears the Company
has only 1 million shares of NRES Common Stock authorized. Until the Company's
board of directors and shareholders cure and ratify the overissuances of stock,
the 40 Million Share Increase, the 250 Million Share Increase, the 750 Million
Share Increase and the 1.5 Billion Share Increase and comply with the federal
proxy rules in doing so by properly obtaining shareholder approval, the Company
may be liable to the holders of the NRES Common Stock issued in excess of the
authorized amount. The Company still may be subject to an enforcement action for
possible violations of this and other provisions of the federal securities laws.

         THE COMPANY MAY NOT BE ABLE TO RAISE ADDITIONAL CAPITAL

         On March 17, 2004, the Company filed a preliminary information
statement on Schedule 14C proposing the following actions: (i) to approve an
amendment to the Company's Articles of Incorporation to increase the number of
authorized shares of NRES Common Stock to 21 billion, (ii) to create and issue
Class A common stock, (iii) to approve an amendment to the Company's Articles of
Incorporation to change the par value of the NRES Common Stock, (iv) to effect a
1 for 200 reverse split of the NRES Common Stock, (v) to ratify past changes of
the Company's name and (vi) to adopt and approve Amended and Restated Articles
of Incorporation. The Company plans to provide a definitive information
statement on Schedule 14C to its stockholders shortly after the
                                       24
<PAGE>
Company is satisfied it has resolved any of the SEC's comments. Pending
resolution of this matter, the Company will not be able to realize any proceeds
from the sale of the NRES Debentures, other debt, or equity (other than proceeds
from mortgages on properties). Even if the Company were able to increase its
authorized capital, there can be no assurance that the Company will be able to
raise additional capital on a debt or equity basis, or to obtain mortgage
financing, to complete any of its projects under development (should they be
completed), or land purchased for resale or development at a profit.

         THE COMPANY MAY BE IN DEFAULT OF THE NRES DEBENTURES

         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.

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.

         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 to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
exchange act is recorded, processed, summarized and reported, within the
required time periods. 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.

                                       25
<PAGE>
                                     PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On December 13, 2002, the Company filed an Amended Complaint against
the Town of Bay Harbor Islands and the Director of the Town of Bay Harbor
Islands, Building and Zoning Department in the Circuit Court of the 11th
Judicial Circuit for Miami-Dade County, Florida regarding (i) an application by
the Company for zoning approval for a planned residential development overlay
district and (ii) approval from the Town of Bay Harbor for the development of
the Residences at Bay Harbor. Subsequent to the filing of this case, the Company
filed a related complaint in the United States District Court for the Southern
District of Florida. The federal claim was dismissed with prejudice on May 20,
2003. In July 2003 the Company filed a Second Amended Complaint amending its
complaint to add state law counts that were previously asserted by the Company
in its federal complaint. On June 30, 2004, the Circuit Court granted the Town
of Bay Harbor Island's summary judgment motion.

         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 was authorized to issue 1
million shares of NRES Common Stock.

         Since the time of its incorporation, the Company believed it had
effected the 1994 Stock Split, the 1999 Reverse Stock Split, the 40 Million
Share Increase, the 250 Million Share Increase, the 750 Million Share Increase
and the 1.5 Billion Share Increase. These changes in capital structure appear to
have not been validly adopted by the Company's board of directors, approved by
the Company's shareholders or filed with the Secretary of State of the State of
Nevada, as required by the laws of the State of Nevada. As such, it appears the
currently has only 1 million shares of NRES Common Stock authorized, and the
majority of the validly issued shares are held by Richard and Pamela Astrom as
tenants by the entireties. The Company believes a majority of the Company's
validly issued and outstanding shares and the board of directors can cure and
ratify the overissuances of stock, the 40 Million Share Increase, the 250
Million Share Increase, the 750 Million Share Increase and the 1.5 Billion Share
Increase. Until that time, the Company may be liable to the holders of the NRES
Common Stock issued in excess of the authorized amount. All references to shares
of Common Stock in this report take into account the 1 for 10 reverse stock
split and the 3 for 1 stock split discussed above.

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.

                                       26
<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.

                                       27
<PAGE>

(B) REPORTS ON FORM 8-K:

     None.

                                   SIGNATURES

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

Date:  August 16, 2004           NATIONAL RESIDENTIAL PROPERTIES, INC.


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


Date:  August 16, 2004           By:   /s/ Christopher Astrom
                                    -------------------------
                                       Christopher Astrom
                                       Vice President, Chief Financial Officer,
                                       Secretary and Director