**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D. C. 20549




**FORM
      10-QSB**




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




For
                the quarterly period ended:September
                30, 2007





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




For
                the transition period fromto





Commission
      File number 000-27159





**NATIONAL
      REALTY AND MORTGAGE, INC.**


(Exact
      name of registrant as specified in charter)





Nevada
            
            65-0439467(State
                or other jurisdiction of incorporation)
            
            (IRS
                Employer Identification No.)





Daqing
                Hi-Tech Industry Development Zone
              Daqing,
                Heilongjiang, Post Code 163316
              People’s
                Republic of China(Address
                of principal executive offices)





86-459-604-6043


Issuer’s
      telephone number





Check
      whether the issuer (1) has filed all reports required to be filed by
      Section 13 or 15(d) of the Securities Exchange Act of 1934 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 o




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




As
      of
      November 16, 2007, the Company had 19,207,455 shares of its common stock, par
      value $.001 per share, outstanding.




Transitional
      Small Business Disclosure Format:           Yes o No x







**Table
      of Contents**





PART
                I. - FINANCIAL INFORMATIONItem
                1.Financial
                Statements (Unaudited)
            1Notes
                to Condensed Consolidated Financial Statements (Unaudited)
            8Item
                2.Management’s
                Discussion and Analysis or Plan of Operation
            31Item
                3.Controls
                and Procedures
            39PART
                II. - OTHER INFORMATIONItem
                1.Legal
                ProceedingsItem
                2.Unregistered
                Sales of Equity Securities and Use of Proceeds
            40Item
                3.Defaults
                Upon Senior SecuritiesItem
                4.Submission
                of Matters to a Vote of Security Holders
            40Item
                5.Other
                InformationItem
                6.Exhibits
            40Signatures
            41













**PART
      I**


**Item
      1.**  **Financial
      Statements**





**NATIONAL
      REALTY AND MORTGAGE, INC.**


**FINANCIAL
      STATEMENTS (UNAUDITED)**


**SEPTEMBER
      30, 2007 AND 2006**


**(Stated
      in US dollars)**





NATIONAL
      REALTY AND MORTGAGE, INC.








CONTENTS
            
            PAGESBALANCE
                SHEETS
            
            2
                -
                3STATEMENTS
                OF INCOME
            
            4STATEMENTS
                OF STOCKHOLDERS’ EQUITY
            
            5
                -
                6STATEMENTS
                OF CASH FLOWS
            
            7NOTES
                TO FINANCIAL STATEMENTS
            
            8 -
                30





1




**NATIONAL
                REALTY AND MORTGAGE, INC.****CONSOLIDATED
                BALANCE SHEETS****AS
                OF SEPTEMBER 30, 2007 AND DECEMBER 31, 2006****(Stated
                in US Dollars)**





**Note**
            
            **9/30/2007**
            
            **12/31/2006****ASSETS**
            
            
            
            **Unaudited****Current
                assets**Cash
                and cash equivalents
            
            
            
            
            $
            7,148,550
            
            $
            1,749,048Restricted
                Cash
            
            
            
            
            
            661,442
            
            
            -Short
                term investments
            
            
            3
            
            
            3,458,550
            
            
            1,702,718Accounts
                receivable
            
            
            4
            
            
            2,462,440
            
            
            1,467,963Travel
                advances to director
            
            
            5
            
            
            87,693
            
            
            6,457Advances
                to employee
            
            
            
            
            
            346,894
            
            
            54,992Inventories
            
            
            6
            
            
            593,453
            
            
            376,708Advances
                to suppliers
            
            
            
            
            
            2,940,894
            
            
            294,535Tender
                deposits
            
            
            
            
            
            46,530
            
            
            42,924Prepayments
                and other
            
            
            
            
            
            1,870
            
            
            334,658Total
                current assets
            
            
            
            
            
            17,748,316
            
            
            6,030,003**Non-current
                assets**Property,
                plant and equipment, net
            
            
            7
            
            
            4,706,736
            
            
            4,715,150Intangibles
            
            
            8
            
            
            1,184,439
            
            
            1,157,950Other
                assets
            
            
            
            
            
            1,995
            
            
            -Total
                Assets
            
            
            
            
            **$**
            **23,641,487**
            
            **$**
            **11,903,103****LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                liabilities**Short
                term bank loan
            
            
            9
            
            
            199,532
            
            
            191,877Accounts
                payable
            
            
            
            
            
            328,552
            
            
            57,289Warranty
                liability
            
            
            10
            
            
            44,458
            
            
            22,811Taxes
                payable
            
            
            11
            
            
            735,198
            
            
            360,730Customers'
                deposits
            
            
            
            
            
            202,636
            
            
            67,157Accrued
                liabilities
            
            
            
            
            
            19,661
            
            
            167,646Total
                current liabilities
            
            
            
            
            
            1,530,037
            
            
            867,510Total
                Liabilities
            
            
            
            
            $
            1,540,023
            
            $
            867,510











See
      accompanying notes to financial statements and accountant’s report


2




**NATIONAL
                REALTY AND MORTGAGE, INC.****CONSOLIDATED
                BALANCE SHEETS (Continued)****AS
                OF SEPTEMBER 30, 2007 AND DECEMBER 31, 2006****(Stated
                in US Dollars)**





**Note**
            
            **9/30/2007**
            
            **12/31/2006****Unaudited****STOCKHOLDERS'
                EQUITY**Series
                A Convertible Preferred Stock $0.001 par value 400,000 shares authorized;
                228,531 shares issued and outstanding at September 30, 2007 and December
                31, 2006
            
            
            
            
            $
            229
            
            $
            229Series
                B Convertible Preferred Stock $0.001 par value 400,000 shares authorized;
                165,432 shares issued and outstanding at September 30,
                2007
            
            
            
            
            
            165
            
            
            -Common
                stock at $0.001 par value, 100,000,000 shares authorized; 19,207,455
                and
                6,472,766 shares issued and outstanding at September 30, 2007 and
                December
                31, 2006, respectively.
            
            
            
            
            
            19,208
            
            
            6,473Additional
                Paid in Capital
            
            
            
            
            
            9,380,368
            
            
            4,216,933Statutory
                reserves
            
            
            
            
            
            1,121,508
            
            
            1,124,073Retained
                earnings
            
            
            
            
            
            10,604,637
            
            
            4,844,680Accumulated
                other comprehensive income
            
            
            
            
            
            985,335
            
            
            843,205Total
                equity
            
            
            
            
            $
            22,111,450
            
            $
            11,035,593Total
                liabilities and stockholders' equity
            
            
            
            
            **$**
            **23,641,487**
            
            **$**
            **11,903,103**













See
      accompanying notes to financial statements and accountant’s report





3




**NATIONAL
                REALTY AND MORTGAGE, INC.****CONSOLIDATED
                STATEMENTS OF INCOME****FOR
                THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND
                2006****(Stated
                in US Dollars)**




**Nine
                months ended**
              **September
                30,**
            
            **Three
                months ended**
              **September
                30,**Notes
            
            **2007**
            
            **2006**
            
            **2007**
            
            **2006**


RevenueSales
            
            
            
            
            $
            9,724,853
            
            $
            6,376,663
            
            $
            4,065,642
            
            $
            2,193,432Cost
                of sales
            
            
            
            
            
            2,777,975
            
            
            1,774,004
            
            
            1,078,360
            
            
            653,727Gross
                profit
            
            
            
            
            
            6,946,879
            
            
            4,602,660
            
            
            2,987,283
            
            
            1,539,706Operating
                expensesSelling
                expenses
            
            
            
            
            
            219,401
            
            
            227,185
            
            
            170,812
            
            
            17,124General
                and administrative
              expenses
            
            
            
            
            
            1,268,853
            
            
            660,943
            
            
            603,635
            
            
            187,756Total
                operating expenses
            
            
            
            
            
            1,488,254
            
            
            888,128
            
            
            774,447
            
            
            204,880Operating
                Income / (Loss)
            
            
            
            
            
            5,458,625
            
            
            3,714,532
            
            
            2,212,836
            
            
            1,334,826Other
                Income (expenses)Gain
                on investments
            
            
            
            
            
            1,306,841
            
            
            -
            
            
            1,306,841
            
            
            -Interest
                income
            
            
            
            
            
            26,022
            
            
            -
            
            
            24,422
            
            
            (4,022
            )Interest
                expenses
            
            
            
            
            
            (9,462
            )
            
            (17,948
            )
            
            (6,170
            )
            
            (5,631
            )Other
                income
            
            
            
            
            
            -
            
            
            -
            
            
            -
            
            
            -Other
                expenses
            
            
            
            
            
            -
            
            
            (72,531
            )
            
            -
            
            
            (189
            )Total
                other income
              (loss)
                and expenses
            
            
            
            
            
            1,323,401
            
            
            (90,480
            )
            
            1,325,093
            
            
            (9,843
            )Income
                before taxation
            
            
            
            
            
            6,782,026
            
            
            3,624,052
            
            
            3,537,928
            
            
            1,324,983Income
                tax
            
            
            12
            
            
            1,024,633
            
            
            543,608
            
            
            527,142
            
            
            186,992Net
                income
            
            
            
            
            $
            5,757,392
            
            $
            3,080,444
            
            $
            3,010,786
            
            $
            1,137,991Basic
                and Diluted net earnings per share
            
            
            
            
            $
            0.30
            
            $
            0.48
            
            $
            0.16
            
            $
            0.18Weighted
                average shares outstanding
            
            
            
            
            
            19,207,455
            
            
            6,472,766
            
            
            19,207,455
            
            
            6,472,766








See
      accompanying notes to financial statements and accountant’s report




4




**NATIONAL
                REALTY AND MORTGAGE, INC.****CONSOLIDATED
                STATEMENTS OF STOCKHOLDERS’ EQUITY****FOR
                THE YEAR ENDED DECEMBER 31, 2006**
              **AND
                NINE-MONTHS ENDED SEPTEMBER 30, 2007****(Stated
                in US Dollars)**




Additional
            
            
            
            
            
            AccumulatedNo.
            
            Preferred
            
            No.
            
            Preferred
            
            No.
            
            
            
            Paid
            
            
            
            
            
            otherShares
            
            Series
            
            Shares
            
            Series
            
            Shares
            
            Common
            
            in
            
            Statutory
            
            Retained
            
            comprehensiveOutstanding
            
            A
            
            Outstanding
            
            B
            
            Outstanding
            
            stock
            
            Capital
            
            reserves
            
            earnings
            
            income
            
            TotalBalance,
                January 1, 2006
            
            
            228,531
            
            $
            229
            
            
            -
            
            $
            -
            
            
            6,472,766
            
            $
            6,473
            
            $
            4,216,923
            
            $
            451,906
            
            $
            1,487,294
            
            $
            128,976
            
            $
            6,291,811Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            4,029,553
            
            
            -
            
            
            4,029,553Appropriations
                to statutory
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -reserves
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            
            
            672,167
            
            
            -672,167
            
            
            -
            
            
            -Dividends
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Unrealized
                Gain/(Loss) on Investment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            -
            
            
            423,537
            
            
            423,537Foreign
                currency translation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            290,692
            
            
            290,692Balance,
                December 31, 2006
            
            
            228,531
            
            $
            229
            
            
            -
            
            $
            -
            
            
            6,472,766
            
            $
            6,473
            
            
            4,216,933
            
            $
            1,124,073
            
            $
            4,844,680
            
            $
            843,205
            
            $
            11,035,593Balance,
                January 1, 2007
            
            
            228,531
            
            $
            229
            
            
            -
            
            $
            -
            
            
            6,472,766
            
            $
            6,473
            
            
            4,216,933
            
            $
            1,124,073
            
            $
            4,844,680
            
            $
            843,205
            
            $
            11,035,593Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,757,392
            
            
            -
            
            
            5,757,392Issuance
                to Vision re: Debentures
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            12,734,689
            
            
            12,735
            
            
            186,467
            
            
            
            
            
            
            
            
            
            
            
            199,202Issuance
                of Series B Convertible Preferred Stock
            
            
            
            
            
            
            
            
            165,432
            
            
            165
            
            
            
            
            
            
            
            
            4,976,968
            
            
            
            
            
            
            
            
            
            
            
            4,977,133Unrealized
                Gain/(Loss) on Investment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            256,350
            
            
            256,350Reverse
                accumulated unrealized gain/(loss)
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (679,887
            )
            
            (679,887
            )Reverse
                over appropriation to statutory reserve
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,565
            )
            
            2,565
            
            
            
            
            
            -Foreign
                currency translation Adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            565,667
            
            
            565,667Balance,
                September 30, 2007
            
            
            228,531
            
            
            229
            
            
            165,432
            
            
            165
            
            
            19,207,455
            
            $
            19,208
            
            
            9,380,368
            
            $
            1,121,508
            
            $
            10,604,637
            
            $
            985,335
            
            $
            22,111,450




See
                accompanying notes to financial statements and accountant’s
                report





5




**NATIONAL
                REALTY AND MORTGAGE, INC.****CONSOLIDATED
                STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)****FOR
                THE YEAR ENDED DECEMBER 31, 2006**
              **AND
                NINE-MONTHS ENDED SEPTEMBER 30, 2007****(Stated
                in US Dollars)**






**Comprehensive**
              **Income**
              **2005**
            
            **Comprehensive**
              **Income**
              **2006**
            
            **Comprehensive**
              **Income**
              **9/30/2007**
            
            **Accumulated**
              **Totals**Net
                Income
            
            
            2,352,996
            
            
            4,029,553
            
            
            5,757,392
            
            
            12,139,941Unrealized
                gain/(loss) on investment
            
            
            -
            
            
            423,537
            
            
            (423,537
            )
            
            -Foreign
                currency translation adjustment
            
            
            128,749
            
            
            290,692
            
            
            565,667
            
            
            985,108Total
            
            
            2,481,745
            
            
            4,743,762
            
            
            5,899,522
            
            
            13,125,049



















See
      accompanying notes to financial statements and accountant’s report




6





**NATIONAL
                REALTY AND MORTGAGE, INC.****STATEMENTS
                OF CASH FLOWS****FOR
                THE THREE AND NINE MONTHS ENDED SEPTMEBER 30, 2007 AND
                2006****(Stated
                in US Dollars)**





**Nine
                months ended**
              **September
                30**
            
            **Three
                months ended**
              **September
                30****2007**
            
            **2006**
            
            **2007**
            
            **2006****Cash
                flow from operating activities**Net
                income
            
            $
            5,757,392
            
            $
            3,080,444
            
            $
            3,010,786
            
            $
            1,137,991Gain
                on investment
            
            
            (1,306,841
            )
            
            -
            
            
            (1,306,841
            )
            
            -Depreciation
            
            
            553,995
            
            
            (89,279
            )
            
            95,309
            
            
            (370,424
            )Amortization
            
            
            19,299
            
            
            140,351
            
            
            5,602
            
            
            128,067Warranty
                expense
            
            
            20,310
            
            
            -
            
            
            646
            
            
            -Change
                in operating assets and liabilities(Increase)
                / decrease in accounts and other receivable
            
            
            (2,460,476
            )
            
            (2,638,822
            )
            
            (731,862
            )
            
            (730,639
            )(increase)
                / decrease in inventories and advances to suppliers
            
            
            (1,205,406
            )
            
            (81,655
            )
            
            (1,023,751
            )
            
            (217,345
            )Increase
                / (decrease) in accounts and other payable
            
            
            474,383
            
            
            (190,608
            )
            
            227,010
            
            
            (42,632
            )Net
                cash provided by/(used in) operating activities
            
            
            1,852,655
            
            
            220,431
            
            
            276,928
            
            
            (94,982
            )**Cash
                flow from investing activities**Investor
                Relation, Legal Fees, etc.
            
            
            (661,442
            )
            
            -
            
            
            38,558
            
            
            -Rental
                Deposit
            
            
            (1,995
            )
            
            -
            
            
            (1,995
            )
            
            -Sales
                of investment fund
            
            
            2,664,547
            
            
            -
            
            
            2,664,547
            
            
            -Purchase
                of investment fund
            
            
            (3,458,551
            )
            
            -
            
            
            (3,458,551
            )
            
            -Sales
                / (purchase) of fixed assets
            
            
            (369,135
            )
            
            -
            
            
            (206,192
            )
            
            (330,591
            )Changes
                in intangibles
            
            
            -
            
            
            (482,487
            )
            
            -
            
            
            -Net
                cash provided by / (used in) investing activities
            
            
            (1,826,576
            )
            
            (482,487
            )
            
            (963,633
            )
            
            (330,591
            )**Cash
                flows from financing activities**Short
                term bank borrowings
            
            
            -
            
            
            378,941
            
            
            -
            
            
            5,771Short
                term bank borrowings repayments
            
            
            -
            
            
            -
            
            
            -
            
            
            261,219Proceeds
                from vision re: Debentures
            
            
            199,202
            
            
            -
            
            
            -
            
            
            -Proceeds
                from issuance of Series B convertible preferred stock
            
            
            4,977,133
            
            
            -
            
            
            -
            
            
            -Net
                cash provided by financing activities
            
            
            5,176,335
            
            
            378,941
            
            
            -
            
            
            266,990**Net
                cash and cash equivalent sourced**
            
            
            5,202,415
            
            
            116,885
            
            
            (686,705
            )
            
            (158,583
            )**Effect
                of foreign currency translation on cash and cash
                equivalent**
            
            
            197,087
            
            
            24,101
            
            
            (32,725
            )
            
            51,944**Beginning
                cash and cash equivalent**
            
            
            1,749,048
            
            
            1,227,224
            
            
            7,867,980
            
            
            1,474,849**Ending
                cash and cash equivalent**
            
            $
            7,148,550
            
            $
            1,368,209
            
            $
            7,148,550
            
            $
            1,368,209





See
      accompanying notes to financial statements and accountant’s report





7


**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**








**1.**
            **ORGANIZATION
                AND****PRINCIPAL
                ACTIVITIES**





*(a)*
            *Organizational
                History of Sunway Global Inc.*





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





From
      1993
      until 1999, our business concentrated on investing in and revitalizing single
      family homes in established older residential neighborhoods in urban areas.
      We
      bought single unit vacant properties and single family homes constructed on
      them, or bought abandoned homes which we then renovated and sold. During 1999,
      while continuing to renovate urban single family homes as one aspect of our
      business, we entered a second phase of business: the development, construction
      and ownership of multifamily housing projects. In 2004, we commenced operations
      as a mortgage lender, which operations have been minimal.





On
      June
      1, 2007, we entered into a securities purchase agreement with Rise Elite
      International Limited, a British Virgin Islands company (“Rise Elite”), Vision
      Opportunity Master Fund, a Cayman Islands company, our then-current directors
      Richard Astrom and Christopher Astrom, and the holders of certain of our
      outstanding convertible debentures, pursuant to which, for a purchase price
      of
      $675,000 in cash, Rise Elite acquired the right to nominate all members of
      our
      board, Vision acquired our then outstanding convertible debentures in the amount
      of $199,202, and the holders of our then outstanding Class A common stock agreed
      to return it to us for cancellation. Pursuant to this agreement, our former
      directors and officers resigned from their position and effective June 1, 2007,
      Mr. Liu Bo has been serving as our Chairman and President and Chief Executive
      Officer and Mr. David Wang has been serving as our Secretary and Chief Financial
      Officer, and effective June 18, 2007, Mr. Liang Deli has been serving as our
      director. Mr. Liu Bo and Mr. Liang Deli hold a 70.39% and a 7.66% ownership
      interest in Rise Elite, respectively. Messrs. Liu Bo, David Wang and Liang
      Deli
      each hold similar management positions at Rise Elite, SWT (defined below) and
      Sunway (defined below).
















8




**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**





Registration
      Rights Agreement





On
      June
      6, 2007, pursuant to the Preferred B Agreement, we entered into a Registration
      Rights Agreement with Vision and Columbia, under which we agreed to file with
      the SEC and maintain the effectiveness of a registration statement, on Form
      SB-2, for our common shares issued upon conversion of our Series B Preferred.
      The deadline for filing the registration statement is 20 days after the closing
      of the private financing, or approximately July 6, 2007. The deadline for
      obtaining the effectiveness of the registration statement is either (i) 120
      days
      after the filing deadline, (ii) if the SEC performs a full review of the
      registration statement, 150 days after the filing deadline, or (iii) if the
      SEC
      provides comments solely on the basis of Rule 415 under the Securities Act,
      180
      days after the filing deadline. The agreement calls for us to maintain the
      effectiveness of the registration statement until either all shares registered
      under it have been sold or all shares registered under it may be sold without
      restrictions under Rule 144 under the Securities Act. If we are unable to
      register all of the agreed common shares under the registration statement based
      on the limitations of Rule 415 under the Securities Act, the agreement provides
      that we will use our best efforts to obtain the registration of the additional
      shares when we are able to do so. If we do not obtain and maintain the
      effectiveness of the registration statement for reasons other than limitations
      of Rule 415, or if our common stock is de-listed from the National Association
      of Securities Dealers’ over-the-counter Bulletin Board, then under the terms of
      the agreement we are required to pay Vision and Columbia an amount equal to
      one
      percent of their initial investment in the Series B Preferred, or approximately
      $67,000, each month until effectiveness is obtained or listing is restored,
      with
      a cap of ten percent of their initial investment, or approximately
      $670,000.





The
      registration rights agreement also calls for us to file with the SEC and
      maintain the effectiveness of a registration statement of Form SB-2 for (i)
      our
      common stock to be issued upon exercise of our Series A, B, J, C, and D
      warrants, (ii) our common stock to be issued upon conversion of Series A
      Preferred that will be either released to Rise Elite or forfeited to Vision
      and
      Columbia under the Securities Escrow Agreement, and (iii) the Listing Penalty
      Shares described in the description of the Preferred B Agreement above, if
      any.
      If we are unable to register all of these common shares under the registration
      statement based on the limitations of Rule 415 under the Securities Act, the
      agreement provides that we will use our best efforts to obtain the registration
      of the additional share when we are able to do so.





These
      and
      all of the other details of the registration obligations of the Company are
      set
      forth in the 8-K (Commission file number 000-27159) the Registration Rights
      Agreement.










9





**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**








*(b)*
            *Organizational
                History of Rise Elite International Ltd, World Through Ltd, Sunway
                World
                Through Technology (Daqing) Co., Ltd and Daqing Sunway Technology
                Co.,
                Ltd.*





Rise
      Elite was incorporated on August 10, 2006 in the Territory of the British Virgin
      Islands by the shareholders of Sunway, including, Liu Bo,  Zhao Qichao, Li
      Jing, Liang Deli, Ma Guohua and Sun Weishan. On August 16, 2006, Rise Elite
      incorporated World Through Limited, a British Virgin Islands corporation (“WTL”)
      as its wholly-owned subsidiary. On February 15, 2007, WTL formed Sunway World
      Through Technology (Daqing) Co., Ltd. (“SWT”) under the laws of the People’s
      Republic of China (the “PRC”). Prior to the reverse merger, none of Rise Elite,
      WTL or SWT had any business operations, assets or liabilities, apart from
      fundraising activities for Sunway (defined below) and serving as Sunway’s
      holding companies.





Daqing
      Sunway Technology Co., Ltd. (“Sunway”) was initially formed as a limited
      liability company in the PRC on July 9, 1997 under the name of Daqing
      Development Zone Sunway Co., Ltd. by Mr. Liu Bo and Daqing Hi-Tech Industry
      Develop Zone Hi-Tech Development Company, holding 54% and 46% of the equity
      interests in Sunway, respectively. Sunway was initially formed to engage in
      the
      business of computer software development consulting, data processing, data
      base
      services, computer equipment maintenance, production and sale of electronic
      and
      communication equipment, sale of medical and household appliances and petroleum
      chemical technical services. The registered capital of Sunway was RMB
      12,000,000. On January 8, 1999, Daqing Hi-Tech Industry Develop Zone Hi-Tech
      Development Company transferred its 46% interest in Sunway to Mr. Liu Bo and
      several other individuals pursuant to a share transfer agreement by and among
      them. On June 22, 2000, Sunway’s registered capital was increased to RMB
      27,000,000. On August 30, 2000, Sunway was changed from a limited liability
      company to a joint-stock company and increased its registered capital to RMB
      35,000,000. The following directors and executive officers of the Company,
      each
      of whom serves as part of the management of Sunway, hold an aggregate of 78.05%
      of Sunway’s equity, all of which has been pledged to SWT along with irrevocable
      proxies.




Set
      forth
      below is the percentage of ownership interest in Sunway owned by each of the
      members of the board of directors and executive officers of the Company as
      of
      June 12, 2007:


**Name**
            
            **Position**
            
            **Ownership
                Percentage**Liu,
                Bo
            
            CEO,
                Director, Chairman of the Board
            
            70.39%Liang,
                Deli
            
            Director
            
            7.66%Wang,
                David
            
            Secretary
                and CFO
            
            -Total
            
            
            
            78.05%





10


**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**





*(c)*
            *Reverse-Merger*





On
      June
      6, 2007, National Realty and Mortgage Inc. (“NRMI” or the “Company”) underwent a
      reverse-merger with WTL involving a share exchange transaction with Rise Elite
      to exchange 210,886 shares of the Company’s Series A Convertible Preferred
      Stock, par value $0.001 per share, for all of the issued and outstanding stock
      of WTL, which was held by Rise Elite. As a result of the share exchange
      transaction, WTL became the wholly-owned subsidiary of the Company, and SWT
      became the indirectly wholly-owned subsidiary of the Company.




In
      connection with the share exchange transaction, on June 6, 2007, the Company
      consummated a private financing transaction, in which the Company issued an
      aggregate of 165,432 shares of its series B convertible preferred stock, and
      warrants (including a warrant issued to the placement agent of the private
      financing transaction) to purchase an aggregate of 19,182,351 shares of its
      common stock, in exchange for $6,700,000 in gross cash proceeds. The share
      exchange transaction and the private financing transaction are collectively
      referred to hereafter as the “reverse merger transaction.”





On
      July
      27, 2007, the Company announced that the holders of a majority of its
      outstanding voting stock, acting by written consent, voted to approve a change
      of the Company’s name to SUNWAY GLOBAL INC. As of August 14, 2007, the name
      change is not yet effective.





The
      share
      exchange transaction has been accounted for as a recapitalization of NRMI where
      the Company (the legal acquirer) is considered the accounting acquiree and
      WTL
      (the legal acquiree) is considered the accounting acquirer. As a result of
      this
      transaction, the Company is deemed to be a continuation of the business of
      WTL.





Accordingly,
      the accompanying consolidated financial statements are those of the accounting
      acquirer (WTL). The historical stockholders’ equity of the accounting acquirer
      prior to the share exchange has been retroactively restated as if the share
      exchange transaction occurred as of the beginning of the first period presented.
      See also Note 12 - Capitalization.





*(d)*
              *PRC**Restructuring
                  Arrangement*





Immediately
      following the above transactions, SWT executed a series of agreements with
      Sunway, as a result of which SWT acquired control over Sunway’s business,
      personnel and finances as if it were a wholly owned subsidiary of SWT
      (collectively, the "Restructuring Agreements"). The reasons that SWT used the
      Restructuring Agreements to acquire control of Sunway, instead of using a
      complete acquisition of Sunway's assets or equity to make Sunway a wholly-owned
      subsidiary of SWT, are that (i) new PRC laws governing share exchanges with
      foreign entities, which became effective on September 8, 2006, make the
      consequences of such acquisitions uncertain and (ii) other than by share
      exchange, PRC law requires that Sunway be acquired for cash and WTL was not
      able
      to raise sufficient financing at a valuation acceptable to it to pay the full
      appraised value for Sunway’s assets or shares as required under PRC
      law.








11


**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**





Certain
      of the transactions contemplated by the Restructuring Agreements are in the
      process of being completed. Specifically, SWT must apply for, and obtain the
      approval of the trademark office, patent office and copyright office for, the
      transfer of intellectual property to it from Sunway, and (iv) SWT must obtain
      a
      new business license from the PRC State Administration for Industry and Commerce
      in Daqing, PRC to reflect SWT's status as an operating company. Because the
      intellectual property transfer involves the approval of PRC governmental
      entities, it is uncertain when they will be completed; however, the patent
      and
      copyright portions of the intellectual property transfer are likely to be
      concluded within approximately three months, and the trademark portion of the
      intellectual property transfer is likely to be concluded within one year. SWT
      currently has a temporary business license, issued by the PRC State
      Administration for Industry and Commerce in Daqing, to conduct operations in
      the
      PRC. If that regulatory agency finds that the Company is not in compliance
      with
      relevant PRC regulations, the temporary business license could be
      cancelled.





The
      following is a summary of the material terms of each of the Restructuring
      Agreements. All references to the Restructuring Agreements and other agreements
      are qualified, in their entirety, by the text of those agreements. The
      transactions contemplated under the Restructuring Agreements are hereinafter
      collectively referred to as the PRC restructuring transactions.





(i)
      Consignment Agreements and Consignment Transfer
      Agreement





Each
      of
      Sunway’s six shareholders, together holding 100% of Sunway’s equity interests
      (collectively, the “Sunway Shareholders”), entered into a Consignment Agreement
      with Rise Elite (each a “Consignment Agreement” and collectively, the
“Consignment Agreements”). Pursuant to these agreements, each such Sunway
      Shareholder consigned all its rights and interests as a shareholder of Sunway
      to
      SWT, including without limitation, its rights to elect directors and officers,
      obtain information about Sunway, dispose of the consigned equity interests
      and
      other shareholder rights and interests. These agreements will remain effective
      until SWT or its designees have acquired 100% of the equity interest of Sunway
      or substantially all assets of Sunway. Prior to the termination of the
      Consignment Agreements, the Sunway Shareholders are prohibited from disposing,
      encumbering, consigning or restructuring the consigned interests without the
      prior written consent of SWT. Pursuant to a Consignment Transfer Agreement
      dated
      the same date, Rise Elite transferred all its rights and interests under the
      Consignment Agreements to WTL.





12


**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**





(ii)
      Exclusive Purchase Option Agreement





Under
      the
      Exclusive Purchase Option Agreement, the Sunway Shareholders granted WTL an
      exclusive option to purchase all or part of the Shareholders’ equity interest in
      Sunway and Sunway granted WTL an exclusive option to purchase all Sunway’s
      assets, when and as permitted under PRC laws and regulations. The agreement
      provides that, unless otherwise required under PRC laws and regulations, the
      consideration for the equity transfer or the asset transfer under the agreement
      will be the lowest price permitted under the PRC laws and regulations.





Prior
      to
      the termination of the Exclusive Purchase Option Agreement, without the prior
      written consent of SWT, Sunway is restricted from, among other things, (i)
      supplementing or amending its articles of association or rules of the company
      in
      any manner, and changing its registered capital or shareholding structure in
      any
      manner, (ii) transferring, mortgaging or otherwise disposing of the lawful
      rights and interests to and in its assets or income, or encumbering its assets
      and income in any way that would affect SWT’s security interest, (iii)
      incurring, assuming or guaranteeing any debts except those that are incurred
      during its normal business operation or agreed to by SWT in advance, (iv)
      entering into any material contract (exceeding RMB5,000,000 in value), unless
      it
      is necessary for the company’s normal business operation; (v) providing any loan
      or guarantee to any third party; (vi) acquiring or consolidating with any third
      party, or investing in any third party; (vii) distributing any dividends to
      the
      shareholders in any manner, and, at SWT’s request, shall promptly distribute all
      distributable dividends to the Sunway Shareholders (collectively, the
“restrictive provisions”).





These
      agreements will remain effective until SWT or its designees have acquired 100%
      of the equity interests of Sunway or substantially all assets of Sunway.





(iii)
      Intellectual Property Transfer Agreement





Under
      the
      Intellectual Property Transfer Agreement, Sunway agreed to transfer to SWT
      all
      of its 13 patents, two trademarks, one registered software program and
      other intellectual property rights, and all rights, titles, related interests
      thereto, including all technical instructions, drawings, designs, and other
      documentation (collectively, the “Transferred IP”) for a purchase price of
      5,000,000 Yuan (or approximately $654,108, which is subject to a purchase price
      adjustment based on the minimum appraised value on IP rights allowed under
      PRC
      laws and regulations for such transfer. This appraisal is expected to be
      completed in 15 days.





(iv)
      Intellectual Property Licensing Agreement





Under
      the
      Intellectual Property Licensing Agreement, SWT agreed to grant an exclusive
      license to Sunway, for a term of 5 years, to use the Transferred IP for an
      annual licensing fee equal to 5% of Sunway’s revenue of that year.










13





**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**





(v)
      Consigned Management Agreement





Pursuant
      to this consigned management agreement between SWT, Sunway and the shareholders
      of Sunway (the "Consigned Management Agreement"), SWT and its shareholders
      agreed to entrust the business operations of Sunway and its management to SWT
      until SWT acquires all of the assets or equity of Sunway (as more fully
      described in the Exclusive Purchase Option Agreement description above). Under
      the Consigned Management Agreement, SWT will provide financial, technical and
      human resources management services to Sunway which will enable SWT to control
      Sunway's operations, assets and cash flow. In turn, it will be entitled to
      3% of
      Sunway’s revenue on a yearly basis.





(vi)
      Loan
      Agreement





Under
      the
      Loan Agreement, SWT agreed to provide a loan to Sunway in the principal amount
      of 40,400,000 Yuan (or approximately $5,298,152) to Sunway to be used as working
      capital for its business operations. Repayment should be made in its entirety
      or
      in part, at SWT’s option and upon 10 days written notice, either (i) in cash, or
      (ii) by a transfer of equity interests of Sunway or all its assets (at the
      minimum price allowed under PRC law with any excess over such price continued
      to
      be subject to repayment obligation under the Loan Agreement). The Loan Agreement
      also provides restrictive provisions substantially similar to those provided
      under the Exclusive Purchase Option Agreement as described above under
“Exclusive Purchase Option Agreement” in this Section.





The
      source of funds for SWT to make payment under the Intellectual Property Transfer
      Agreement and to fund the Loan Agreement is the proceeds of the private
      placement offering.





(vii)
      Equipment Lease Agreement





Under
      the
      Equipment Lease Agreement, SWT agreed to lease all its equipment to be purchased
      using the proceeds from the private financing to Sunway in exchange for an
      annual rental fee equal to 28% of its annual revenue.





Sunway,
      which is the major operating company in PRC, is considered as a VARIABLE
      INTEREST ENTITY pursuant to FASB Interpretation 46 and is, therefore permitted
      to have its financial statements to be included in the Company’s consolidated
      financial statements notwithstanding of the above contractual
      arrangement.




14




**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**








**2.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING
                POLICIES**





*(a)*
            *Method
                of Accounting*





The
      Company maintains its general ledger and journals with the accrual method
      accounting for financial reporting purposes. The financial statements and notes
      are representations of management. Accounting policies adopted by the Company
      conform to generally accepted accounting principles in the United States of
      America and have been consistently applied in the presentation of financial
      statements, which are compiled on the accrual basis of accounting.





*(b)*
            *Principles
                of Consolidation*





The
      consolidated financial statements which include the Company and its
      subsidiaries, are compiled in accordance with generally accepted accounting
      principles in the United States of America. All significant inter-company
      accounts and transactions have been eliminated. The consolidated financial
      statements include 100% of assets, liabilities, and net income or loss of those
      wholly-owned subsidiaries; ownership interest of minority investors are recorded
      as minority interests.





The
      company owned the three subsidiaries since its reverse-merger on June 6, 2007.
      As of September 30, 2007, the detailed identities of the consolidating
      subsidiaries are as follows:





Name
                of Company
            Place
                of Incorporation
            Attributable
                InterestWorld
                Through Limited (WTL)
            British
                Virgin Islands
            100%Sunway
                World Through Technology (Daqing) Co. Ltd. (SWT)
            PRC
            100%Daqing
                Sunway Technology Co. Ltd. (Sunway)
            PRC
            100%Note:
                This is a variable interest entity








15


**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**






*(c)*
            *Use
                of estimates*





The
      preparation of the financial statements in conformity with generally accepted
      accounting principles in the United States of America requires management to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting periods. Management makes these estimates using the best
      information available at the time the estimates are made; however actual results
      could differ materially from those estimates.





*(d)*
            *Economic
                and political risks*





The
      Company’s operations are conducted in the PRC. Accordingly, the Company’s
      business, financial condition and results of operations may be influenced by
      the
      political, economic and legal environment in the PRC, and by the general state
      of the PRC economy.




The
      Company’s operations in the PRC are subject to special considerations and
      significant risks not typically associated with companies in North America
      and
      Western Europe. These include risks associated with, among others, the
      political, economic and legal environment and foreign currency exchange. The
      Company’s results may be adversely affected by changes in the political and
      social conditions in the PRC, and by changes in governmental policies with
      respect to laws and regulations, anti-inflationary measures, currency
      conversion, remittances abroad, and rates and methods of taxation, among other
      things.





*(e)*
            *Intangibles*





Intangibles
      are stated at cost less accumulated amortisation. Amortisation is provided
      over
      the respective useful lives, using the straight-line method. Estimated useful
      lives of the intangibles are as follows:





Land
                use rights
            45
                years




*(f)*
            *Property,
                plant and equipment*





Plant
      and
      equipment are carried at cost less accumulated depreciation. Depreciation is
      provided over their estimated useful lives, using the straight-line method.
      Estimated useful lives of the plant and equipment are as follows:





Buildings
            20
                yearsOffice
                equipment and motor vehicles
            10
                yearsMachinery
                and equipment
            6
                yearsMolds,
                Dies, & Castings
            6
                yearsSoftware
                systems
            3
                years








16





**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**






The
      cost
      and related accumulated depreciation of assets sold or otherwise retired are
      eliminated from the accounts and any gain or loss is included in the statement
      of income. The cost of maintenance and repairs is charged to income as incurred,
      whereas significant renewals and betterments are capitalized.





*(g)*
            *Accounting
                for Software Systems*





The
      Company adopts FASB No. 86 for accounting of software systems, in that all
      expenditures incurred from start-up to completion of feasibility are expensed;
      development costs, after the feasibility study through system completion, are
      capitalized, and are depreciated over a useful life of three years. Expenditures
      incurred after completion are expensed as repairs and maintenance.





*(h)*
            *Accounting
                for the Impairment of Long-Lived
                Assets*





The
      long-lived assets held and used by the Company are reviewed for impairment
      whenever events or changes in circumstances indicate that the carrying amount
      of
      assets may not be recoverable. It is reasonably possible that these assets
      could
      become impaired as a result of technology or other industry changes.
      Determination of recoverability of assets to be held and used is by comparing
      the carrying amount of an asset to future net undiscounted cash flows to be
      generated by the assets.





If
      such
      assets are considered to be impaired, the impairment to be recognized is
      measured by the amount by which the carrying amount of the assets exceeds the
      fair value of the assets. Assets to be disposed of are reported at the lower
      of
      the carrying amount or fair value less costs to sell.





During
      the reporting periods, there was no impairment loss.





*(i)*
            *Inventories*





Inventories
      consisting of raw materials, and finished goods are stated at the lower of
      cost
      or market value. Finished goods are comprised of direct materials, direct labor
      and an appropriate proportion of overhead.





*(j)*
            *Trade
                receivables*





Trade
      receivables are recognized and carried at the original invoice amount less
      allowance for any uncollectible amounts. An allowance for doubtful accounts
      is
      made when collection of the full amount is no longer probable. Bad debts are
      written off as incurred.





*(k)*
            *Cash
                and cash equivalents*





The
      Company considers all highly liquid investments purchased with original
      maturities of three months or less to be cash equivalents. The Company maintains
      bank accounts in the PRC and Hong Kong.




17


**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**








*(l)*
            *Restricted
                cash*





The
      Company maintains an escrow account in the United States of America for the
      purposes of disbursing legal fees, and costs associated with investor relations.
      The establishment of this account was related to the private placement in June
      of 2007. There is no specific time restrictions on the funds placed in the
      escrow account. The restrictions on the account are based on the nature for
      which these funds are to be disbursed, namely investor relations and legal
      fees.





*(m)*
            *Foreign
                currency translation*





The
      accompanying financial statements are presented in United States dollars. The
      functional currency of the Company is the Renminbi (RMB). The financial
      statements are translated into United States dollars from RMB at year-end
      exchange rates as to assets and liabilities and average exchange rates as to
      revenues and expenses. Capital accounts are translated at their historical
      exchange rates when the capital transactions occurred.





*9/30/2007*
            
            12/31/2006
            
            *9/30/2006*Twelve
                months ended
              RMB
                : US$ exchange rate
            -
            
            7.81750
            
            -Nine
                months ended
              RMB
                : US$ exchange rate
            7.5176
            
            -
            
            7.9168Average
                Nine months ended
              RMB
                : US$ exchange rate
            7.67576
            
            -
            
            8.0183Average
                three months end
              RMB
                : US$ exchange rate
            7.56906
            
            -
            
            7.97711






The
      RMB
      is not freely convertible into foreign currency and all foreign exchange
      transactions must take place through authorized institutions. No representation
      is made that the RMB amounts could have been, or could be, converted into US$
      at
      the rates used in translation.




*(n)*
            *Revenue
                recognition*





Revenue
      represents the invoiced value of goods sold recognized upon the delivery of
      goods to customers. Revenue is recognized when all of the following criteria
      are
      met:


·
            Persuasive
                evidence of an arrangement exists;


·
            Delivery
                has occurred or services have been rendered;
                and


·
            The
                seller’s price to the buyer is fixed or
                determinable.





Contract
      revenues are recognized when the manufacturing and installation of the medical
      equipments is completed. Generally, the company receives total contract sum
      from
      clients in 3 installments. Deposit of 30% is received from client when the
      contract is signed. Second payment of 30% is received when the project
      commenced. The final sum of the remaining portion is received after the
      installation is completed within 4 months.





18




**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**








*(o)*
            *Cost
                of Sales*





The
      Company’s cost of sales is comprised of raw materials, factory
      worker salaries and related benefits, machinery supplies, maintenance supplies,
      depreciation, utilities, inbound
      freight, purchasing and receiving costs, inspection and warehousing
      costs.





*(p)*
            *Operating
                lease rental*





Operating
      lease rental payment which is the temporary rental for the office of
      representatives in Hangzhou, included in general and administrative expenses
      were $1,857 and nil for the nine months ended September 30, 2007 and 2006,
      respectively.





The
      Company did not have any non-cancellable operating lease obligations as of
      December 31, 2006 and September 30, 2007.





*(q)*
            *Advertising*





The
      Company expensed all advertising costs as incurred. Advertising expenses
      included in selling expenses were $72,729 and $102,398 for the nine months
      ended
      September 30, 2007 and 2006, respectively.





*(r)*
            *Shipping
                and handling*





All
      shipping and handling are expensed as incurred. Shipping and handling expenses
      included in selling expenses were $22,730 and $20,146 for the nine months ended
      September 30, 2007 and 2006, respectively.





*(s)*
            *Research
                and development*





All
      research and development costs are expensed as incurred. Research and
      development costs included in general and administrative expenses were $174,213
      and $239,339 for the nine months ended September 30, 2007 and 2006,
      respectively.





*(t)*
            *Retirement
                benefits*





Retirement
      benefits in the form of contributions under defined contribution retirement
      plans to the relevant authorities are charged to the statement of income as
      incurred. The retirement benefit expenses included in general and administrative
      expenses were $22,035 and $8,217 for the nine months ended September 30, 2007
      and 2006, respectively.




19





**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


**FOR
      THE NINE-MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**






*(u)*
            *Income
                taxes*





The
      Company accounts for income tax using an asset and liability approach and allows
      for recognition of deferred tax benefits in future years. Under the asset and
      liability approach, deferred taxes are provided for the net tax effects of
      temporary differences between the carrying amounts of assets and liabilities
      for
      financial reporting purposes and the amounts used for income tax purposes.
      A
      valuation allowance is provided for deferred tax assets if it is more likely
      than not these items will either expire before the Company is able to realize
      their benefits, or that future realization is uncertain.





The
      Company is operating in the PRC, and in accordance with the relevant tax laws
      and regulations of PRC, the corporation income tax rate is 33%. However, the
      Company is a high technology company, and in accordance with the relevant
      regulations regarding the favorable tax treatment for high technology companies,
      the Company is entitled to a reduced tax rate of 15% as long as the company
      located and registered in the high and advance technology development
      zone.





*(v)*
            *Statutory
                reserves*





Statutory
      reserves refer to the amount appropriated from the net income in accordance
      with
      laws or regulations, which can be used to recover losses and increase capital,
      as approved, and are to be used to expand production or operations.





*(u)*
            *Comprehensive
                income*





Comprehensive
      income is defined as including all changes to equity, except those resulting
      from investments by owners and distributions to owners. Among other disclosures,
      all items that is required to be recognized under current accounting standards,
      as components of comprehensive income, are required to be reported in a
      financial statement that is presented with the same prominence as other
      financial statements. The Company’s current component of other comprehensive
      income is the foreign currency translation adjustment and the unrealised gain
      on
      investment held for resale.





*(v)*
            *Warranty
                Policy*





The
      estimation of warranty obligations is determined in the same period that revenue
      from the sale of the related products is recognized. The warranty obligation
      is
      based on historical experience and reflects management’s best estimate of
      expected costs at the time products are sold. Warranty accruals are adjusted
      for
      known or anticipated warranty claims as new information becomes available.
      Future events and circumstances could materially change our estimates and
      require adjustments to the warranty obligation. New product launches require
      a
      greater use of judgment in developing estimates until historical experience
      becomes available.




20




**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**








*(w)*
            *Earnings
                per share*





The
      Company computes earnings per share (“EPS’) in accordance with Statement of
      Financial Accounting Standards No. 128, “Earnings per Share” (“SFAS No. 128”),
      and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). SFAS No. 128
      requires companies with complex capital structures to present basic and diluted
      EPS. Basic EPS is measured as the income or loss available to common
      shareholders divided by the weighted average common shares outstanding for
      the
      period. Diluted EPS is similar to basic EPS but presents the dilutive effect
      on
      a per share basis of potential common shares (e.g., convertible securities,
      options, and warrants) as if they had been converted at the beginning of the
      periods presented, or issuance date, if later. Potential common shares that
      have
      an anti-dilutive effect (i.e., those that increase income per share or decrease
      loss per share) are excluded from the calculation of diluted EPS.





The
      calculation of diluted weighted average common shares outstanding for the nine
      months ended September 30, 2007 and 2006 are based on the estimate fair value
      of
      the Company’s common stock during such periods applied to warrants and options
      using the treasury stock method to determine if they are dilutive.





The
      Series A and Series B Convertible Bond and the Warrants are assumed to be
      non-convertible or exercisable within 60 days of the date of issuance of such
      preferred stock and warrants.





The
      following tables are a reconciliation of the weighted average shares used in
      the
      computation of basic and diluted earnings per share for the periods
      presented:








The
      Company did not adjust income for the purposes of calculating diluted earnings
      per share because the convertible preferred stocks outstanding are not dividend
      paying securities.





**Three Months Ended September
                30,****2007**
            
            **2006****Weighted**
            
            
            
            
            
            **Weighted****Average**
            
            
            
            
            
            **Average****Income**
            
            **Shares**
            
            **Per-Share**
            
            **Income**
            
            **Shares**
            
            **Per-Share**Earnings
                per share - basicNet
                income
            
            $
            3,010,786
            
            
            19,207,455
            
            $
            .16
            
            $
            1,137,991
            
            
            6,472,766
            
            $
            .18Effect
                of dilutive securitiesConvertible
                Preferred Stock
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            -Warrants
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            -Earnings
                per share - diluted
            
            $
            3,010,786
            
            
            19,207,455
            
            $
            .16
            
            $
            1,137,991
            
            
            6,472,766
            
            $
            .18




21





**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**







**Nine Months Ended September
                30,****2007**
            
            **2006****Weighted**
            
            
            
            
            
            **Weighted****Average**
            
            
            
            
            
            **Average****Income**
            
            **Shares**
            
            **Per-Share**
            
            **Income**
            
            **Shares**
            
            **Per-Share**Earnings
                per share - basicNet
                income
            
            $
            5,757,392
            
            
            19,207,455
            
            $
            .30
            
            $
            3,080,444
            
            
            6,472,766
            
            $
            .48Effect
                of dilutive securitiesConvertible
                Preferred Stock
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            -
            
            
            -Warrants
            
            
            -
            
            
            
            
            
            
            
            
            -
            
            
            -
            
            
            -Earnings
                per share - diluted
            
            $
            5,757,392
            
            
            19,207,455
            
            $
            0.30
            
            $
            3,080,444
            
            
            6,472,766
            
            $
            0.48








*(x)*
            *Recent
                accounting pronouncements*




In
      May
      2006, the FASB issued a SFAS 154, “Accounting Changes and Error Corrections” to
      replace APB Opinion No. 20, “Accounting Changes” and SFAS 3, “Reporting
      Accounting Changes in Interim Financial Statements” requiring retrospective
      application to prior periods financial statements of changes in accounting
      principle, unless it is impracticable to determine either the period-specific
      effects or the cumulative effect of the change.  When it is impracticable
      to determine the period-specific effects of an accounting change on one or
      more
      individual prior periods presented, SFAS 154 requires the new accounting
      principle be applied to the balances of assets and liabilities as of the
      beginning of the earliest period for which retrospective application is
      practicable and that a corresponding adjustment be made to the opening balance
      of retained earnings (or other appropriate components of equity or net assets
      in
      the statement of financial position) for that period rather than being reported
      in an income statement.  When it is impracticable to determine the
      cumulative effect of applying a change in accounting principle to all prior
      periods, SFAS 154 requires that the new accounting principle be applied as
      if it
      were adopted prospectively from the earliest date practicable.  The
      effective date for this statement is for accounting changes and corrections
      of
      errors made in fiscal year beginning after December 15, 2006.







In
      July
      2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes -
      an
      Interpretation of FASB Statement No. 109, which clarifies the accounting for
      uncertainty in tax positions. This Interpretation requires that the Company
      recognize in its consolidated financial statements the impact of a tax position
      if that position is more likely than not of being sustained on audit, based
      on
      the technical merits of the position. The provisions of FIN 48 are effective
      for
      the Company on January 1, 2007, with the cumulative effect of the change in
      accounting principle, if any, recorded as an adjustment to opening retained
      earnings.








22




**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**





In
      September 2006, the FASB issued SFAS 157, Fair Value Measurements, which defines
      fair value, establishes a framework for measuring fair value in generally
      accepted accounting principles, and expands disclosures about fair value
      measurements. SFAS 157 applies under other accounting pronouncements that
      require or permit fair value measurements, where fair value is the relevant
      measurement attribute. The standard does not require any new fair value
      measurements. SFAS 157 is effective for financial statements issued for fiscal
      year beginning after November 15, 2007, and interim periods within those fiscal
      years.





In
      September 2006, the SEC issued SAB No. 108, which provides guidance on the
      process of quantifying financial statement misstatements. In SAB No. 108, the
      SEC staff establishes an approach that requires quantification of financial
      statement errors, under both the iron-curtain and the roll-over methods, based
      on the effects of the error on each of the Company’s financial statements and
      the related financial statement disclosures. SAB No.108 is generally effective
      for annual financial statements in the first fiscal year ending after November
      15, 2006. The transition provisions of SAB No. 108 permits existing public
      companies to record the cumulative effect in the first year ending after
      November 15, 2006 by recording correcting adjustments to the carrying values
      of
      assets and liabilities as of the beginning of that year with the offsetting
      adjustment recorded to the opening balance of retained earnings.





The
      Company’s management does not anticipate that the adoption of these standards
      will have a material impact on these consolidated financial
      statements.








**3.**
            **SHORT-TERM
                INVESTMENTS**





On
      October 22, 2006, the Company invested in Bank of Communication Growth Fund
      (PRC) at a cost of $1,279,181 (RMB 10,000,000). The investment was sold on
      July
      13, 2007 for $2,646,432 (RMB 20,031,000). On August 31, 2007, the Company
      invested in Bank of Communication Money Market Fund at a cost of $3,458,550
      (RMB
      26,000,000).





The
      Company’s policy in accounting for funds in which it invests is that they should
      be carried at fair market value as short-term investments available for sale.
      Unrealized gains and losses from these funds performances are booked to other
      comprehensive income. The Company believes that such funds provide the necessary
      liquidity for the Company in the event that the Company needs employ such
      capital for its normal business operations. These funds carry different risk
      and
      reward characteristics that are different than a classification such as cash;
      therefore, the Company deems it necessary for these funds to be separately
      disclosed.








**4.**
            **ACCOUNTS
                RECEIVABLE**




*9/30/2007*
            
            *12/31/2006*Total
                Accounts Receivable
            
            $
            2,470,111
            
            $
            1,475,340*Less*:
                Allowance for Bad Debts
            
            
            (7,671
            )
            
            (7,377
            )$
            2,462,440
            
            $
            1,467,963





All
      of
      the above accounts receivable are due within one year of aging.




23





**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**





An
      analysis of the allowance for doubtful accounts for the nine months ended
      September 30, 2007 and the year ended December 31, 2006 is as
      follows:





*6/30/2007*
            
            *12/31/2006*Balance
                at beginning of year
            
            $
            7,377
            
            $
            4,284Addition
                of bad debt expense
            
            
            294
            
            
            3,093Balance
                at end of year
            
            $
            7,671
            
            $
            7,377





Accounts
      Receivable are normally paid in three payments pursuant to industry standard.
      However, it is company policy not to charge interest to customers within the
      payment schedule. Delinquency is defined by company policy when an account
      is
      past due for six months. At that point, collection proceedings will
      commence.





An
      allowance for doubtful account is made when collection proves unsuccessful.
      Doubtful debt is written off when the account is over three years old or when
      the debtor is dead or bankrupt.








**5.**
            **TRAVEL
                ADVANCES TO DIRECTORS**





Travel
      advances were made to Directors to enable their execution of operational duties
      in marketing and sales promotion. The following table provides an analysis
      of
      the outstanding accounts.





*9/30/2007*
            
            *12/31/2006*Bo
                Liu
            
            $
            4,129
            
            $
            2,794Weishan
                Sun
            
            
            14,798
            
            
            3,008Qichao
                Zhao
            
            
            382
            
            
            655Deli
                Liang
            
            
            1,330
            
            
            -David
                Wang
            
            
            66,754
            
            
            -$
            87,693
            
            $
            6,457






**6.**
            **INVENTORIES**





*9/30/2007*
            
            *12/31/2006*Finished
                goods
            
            $
            352,219
            
            $
            200,852Raw
                materials
            
            
            241,234
            
            
            175,856$
            593,453
            
            $
            376,708







24





**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**






**7.**
            **PROPERTY,
                PLANT AND EQUIPMENT, NET**





*9/30/2007*
            
            *12/31/2006**At
                cost:*Building
            
            $
            1,319,674
            
            $
            1,269,048Machinery
                and equipment
            
            
            988,643
            
            
            902,789Molds,
                Dies, & Castings
            
            
            2,881,239
            
            
            2,679,885Computer
                software
            
            
            1,668,086
            
            
            1,407,099Office
                equipment and motor vehicles
            
            
            78,262
            
            
            56,029$
            6,935,904
            
            $
            6,314,850*Less*:
                accumulated depreciation
            
            
            (2,229,168
            )
            
            (1,599,700
            )$
            4,706,736
            
            $
            4,715,150





Depreciation
      expense included in the cost of sales for the nine months ended September 30,
      2007 and 2006 was $629,468 and $89,279 respectively; and included in the general
      and administrative expenses for the nine month ended 2007 and 2006 were $82,362
      and $106,537 respectively.





**8.**
            **INTANGIBLES**




*9/30/2007*
            
            *12/31/2006*Land
                use rights, at cost
            
            $
            1,234,797
            
            $
            1,187,425*Less:*accumulated amortization
            
            
            (50,356
            )
            
            (29,475
            )$
            1,184,439
            
            $
            1,157,950








Patent
      of
      the Pneumatic Tube System has been registered with the PRC government under
      Serial No. 264-2004 2005 with a registration fee of $347 (RMB 2,800) which
      was
      expensed in 2003. This amount was immaterial for capitalization.





The
      company acquired the rights to use a parcel of land totaling 26,522 square
      meters, for a consideration of US$1,149,788 (RMB 9,282,700), located at Daqing
      Hi-Tech Industry Development Zone, Daqing, Heilongjiang in the People’s Republic
      of China, 163316 for a term of 46 years from September 16, 2005 to June 13,
      2052. The land has been used to build the Company’s facility.





Amortization
      expense included in the general and administrative expenses for the nine months
      ended 2007 and 2006 was $20,881 and $12,284, respectively.





25


**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**






**9.**
            **SHORT
                TERM BANK LOANS**





The
      Company was granted a loan of $383,754 (RMB 3,000,000) on April 28, 2006 for
      a
      term from April 28, 2006 to November 30, 2007 at an interest rate of 5.76%
      per
      annum to be secured by a mortgage of the Company’s real property being the
      office facility as registered under property permit reference number
      NA216750.





The
      loan
      agreement stipulated a repayment of $191,877 (RMB 1,500,000) on December 21,
      2006; therefore, the loan balance outstanding at September 30, 2007 amounted
      to
      $199,532 (RMB 1,500,000). There is an increase of $7,655 of loan amount due
      to
      foreign currency translation.








**10.**
            **WARRANTY
                LIABILITIES**





An
      analysis of the warranty liabilities for the nine months ended September 30,
      2007 and the year ended December 31, 2006 is as follows: -





*9/30/2007*
            
            *12/31/2006*Balance
                at beginning of period
            
            $
            22,811
            
            $
            -*Add:*Accruals
                for current & pre-existing warranties issued during
                period
            
            
            43,687
            
            
            22,811*Less:*Settlements made during period
            
            
            (23,378
            )
            
            -Foreign
                Currency Effect
            
            
            1,337
            
            
            -Balance
                at end of period
            
            $
            44,458
            
            $
            22,811








**11.**
            **TAXES
                PAYABLE**





*9/30/2007*
            
            *12/31/2006*Value-added
                tax
            
            $
            187,635
            
            $
            103,632City
                development tax
            
            
            12,919
            
            
            7,254Income
                tax
            
            
            534,644
            
            
            249,844$
            735,198
            
            $
            360,730




26




**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**







**12.**
            **CAPITALIZATION**





As
      a
      result of the reverse-merger on June 6, 2007 involving an exchange of shares
      and
      issuance of shares to investors and other parties involved in the deal, total
      capitalization of the Company by common stock and Preferred A & B stock with
      related additional paid-in capital at September 30, 2007 and December 31, 2006
      are depicted in the following table:





Name
                of shareholder
            
            Number
                of shares
            
            Stock
                Capital
            
            Additional
              Paid-In
                CapitalPreferred
                A StockIssued
                to Rise Elite upon share exchange
            
            
            210,886
            
            $
            211
            
            
            (211
            )Issued
                to Kuhns Brothers and Designees
            
            
            17,645
            
            
            18
            
            
            (18
            )228,531
            
            
            229
            
            $
            (229
            )Preferred
                B StockIssued
                to Private Investors
            
            
            165,432
            
            $
            165
            
            $
            6,699,835Less:
                Cost of Issue
            
            
            
            
            
            
            
            
            (1,722,867
            )165,432
            
            
            165
            
            
            4,976,968Common
                StockIssued
                to Vision re: debenture
            
            
            12,734,689
            
            $
            12,735
            
            $
            186,467Issued
                to original shareholders before reverse-merger
            
            
            6,472,766
            
            
            6,473
            
            
            (6,473
            )Conversion
                of Sunway Original Capital before Revere Merger to Additional Paid
                in
                Capital
            
            
            
            
            
            
            
            
            4,223,63519,207,455
            
            
            19,208
            
            
            4,403,629Grand
                Total at September 30, 2007
            
            
            
            
            
            19,602
            
            
            9,380,368





The
      Series A and Series B convertible preferred stock and the warrants as described
      below are assumed to be non-convertible or exercisable within 60 days of the
      issuance of such preferred stock and warrants.





Pursuant
      to Series B Convertible Preferred Stock Purchase Agreement on June 5, 2007,
      the
      Company agreed to issue warrants to each Series B preferred stock investor
      to
      purchase shares of common stock.





Series
                of Warrant
            Number
                of shares
            Exercise
                Price
            Expiry
                DateSeries
                A
            4,962,963
            $
                1.76
            6
                /5 /2012Series
                B
            2,481,481
            2.30
            6
                /5 /2012Series
                J
            4,496,644
            1.49
            6
                /5 /2008Series
                C
            4,496,644
            1.94
            6
                /5 /2012Series
                D
            2,248,322
            2.53
            6
                /5 /2012Series
                E
            496,296
            1.62
            6
                /5 /2012




27


**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**





The
      Company has recorded all of the net proceeds raised in its private placement
      offering of convertible preferred stock and warrants to the par value of the
      preferred stock and the remainder to additional paid attributable to preferred
      stock. The Company has determined such accounting allocation of the proceeds
      based on valuation of the warrants provide by the placement agent. The placement
      agent used both the Black-Scholes and the Intrinsic valuation model to assign
      a
      value to the warrants. Their valuations indicated that the warrants had minimal
      to zero value. The Company’s stock is currently illiquid and there is little to
      no volume in the market to support a valuation model.





The
      Company also did not place any value on the conversion feature of the preferred
      stock because the market lacked liquidity for any holder of such preferred
      stock
      to be able to convert those securities for a risk free profit.





The
      Series B Preferred have liquidation rights senior to common stock and Series
      A
      Preferred. In the event of a liquidation of the Company, holders of Series
      B
      Preferred are entitled to receive a distribution equal to $40.50 per share
      of
      Series B before holders of common stock and Series A preferred receive any
      distribution. Currently, neither the Series A nor Series B Convertible Preferred
      Stock are dividend paying. These stock will participate based on their
      respective as-if conversion rates if the company declares any dividends. These
      stock are designed to automatically convert to common stock upon the company’s
      successful amendment to its articles of incorporation.





The
      Series E Warrants were issued to Kuhns Brothers as part of their compensation
      as
      Placement Agent of the private placement for the Company.








**13.**
            **INCOME
                TAXES**





The
      following table accounts for the differences between the actual tax provision
      (15%) and the amounts obtained by applying the relevant applicable corporation
      income tax rate (33%) to income before tax for the nine months ended September
      30: -





*2007*
            
            *2006*Income
                before tax
            
            $
            6,782,026
            
            $
            3,624,052Tax
                at the domestic income tax rate
            
            $
            2,238,068
            
            $
            1,195,937Effect
                of tax exemption granted
            
            
            (1,213,435
            )
            
            (652,329
            )Current
                income tax expense
            
            $
            1,024,633
            
            $
            543,608





28


**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**






**14.**
            **STATUTORY
                RESERVE COMMITMENTS**





Certain
      provisions under existing PRC laws require enterprises operating in China to
      reserve up to 50% of its capital for future reinvestment and development. The
      PRC government retains exclusive right to enforce compliance with these
      provisions, and these provisions may change at any time. Accordingly, with
      these
      provisions, the Company has appropriated reserves from capital. In addition,
      the
      Company had the following unfunded commitments as at September 30:
      -





*9/30/2007*
            
            *12/31/2006*Common
                Stock Capital of Daqing Sunway Technology Co., Ltd before
                reverse-merger
            
            $
            4,223,635
            
            $
            4,223,635-
                50% ceiling limit
            
            
            2,111,818
            
            
            2,111,818*Less*:
                Reserves provided
            
            
            (1,126,638
            )
            
            (1,124,073
            )Unfunded
                Commitments
            
            $
            985,180
            
            $
            987,745











29





**NATIONAL
      REALTY AND MORTGAGE, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**AND
      THE YEAR ENDED DECEMBER 31, 2006**


**(Stated
      in US Dollars)**








**15.**
            **SALES
                BY PRODUCT TYPE**





The
      Company has contracted with customers usually in two product types: one is
      workstation type A, and the other one is workstation type B. The two different
      types of workstations perform the same function but there exterior and their
      safety features bare minor differences. The Company track sales and cost sales
      of product type in order to making decisions on investments in raw materials
      and
      molding, in addition to determining whether a product has become
      obsolete.





***2007***
            
            *Workstation*
            
            *Workstation**Type
                A*
            
            *Type
                B*
            
            *Total*Turnover
            
            $
            3,415,536
            
            $
            6,309,317
            
            $
            9,724,853Cost
                of sales
            
            
            977,743
            
            
            1,800,232
            
            
            2,777,975Segment
                result
            
            $
            2,437,793
            
            $
            4,509,085
            
            $
            6,946,878





***2006***
            
            *Workstation*
            
            *Workstation**Type
                A*
            
            *Type
                B*
            
            *Total*Turnover
            
            $
            4,246,350
            
            
            2,130,314
            
            
            6,376,664Cost
                of sales
            
            
            1,184,776
            
            
            589,228
            
            
            1,774,004Segment
                result
            
            $
            3,061,574
            
            
            1,541,086
            
            
            4,602,660








The
      company’s operations are located in the PRC. The majority of sales revenue is
      derived from customers in the PRC; accordingly, no analysis of the Group's
      sales
      and assets by geographical market are presented.




30





**Item
      2.****Management’s
      Discussion and Analysis**





**Management’s
        Discussion and Analysis**
 
 The
        following discussion and analysis of the consolidated financial condition
        and
        results of operations should be read in conjunction with the consolidated
        financial statements and related notes of Sunway, appearing elsewhere in
        this
        report. This discussion and analysis contains forward-looking statements
        that
        involve risks, uncertainties and assumptions. Actual results may differ
        materially from those anticipated in these forward-looking
        statements.
 
 As
        a
        result of the reverse merger, financing and related transactions described
        in our current report on Form 8-K/A filed with the SEC on June 27, 2007,
        the
        Company ceased to be a shell company and became a holding company for entities
        that, through contractual relationships, control the business of Daqing Sunway
        Technology Co., Ltd. (“Sunway”), a company organized under the laws of the PRC
        that designs, manufactures and sells logistic transport systems and medicine
        dispensing systems and equipment that are principally used by hospitals and
        other medical facilities in the PRC. Because Sunway’s operations are the only
        significant operations of the Company and its affiliates, this discussion
        and
        analysis focuses on the business results of Sunway, comparing its results
        in the
        third quarter of 2007 with the third quarter of 2006, and its results in
        during nine-month
        period ended September 30, 2007 to the nine-month period ended September
        30,
        2006 .
        We
        expect to sell our new core product—a medicine dispensation and packaging system
        also designed for use in hospitals and pharmacies—in the fourth
        quarter.
 
 **Results
        of Operations**
 
 **Three-month
        periods ended September 30, 2007 and September 30, 2006**
 **Overview**
 
 As
        the
        following table shows, Sunway’s results for net sales, gross profit, operating
        income and net income in the third quarter of 2007 were all significantly
        higher
        than in the third quarter of 2006. Higher output caused a slight increase
        in
        gross margin, from 70.20% to 73.48%. At the same time, higher Recognized
        gain on
        sale of investment caused net profit margin increased from 51.88% to
        74.05%.
 
 Three
                  Months Ended September 30,2007
              
              2006
              
              Change
              
              Change
                  rateNet
                  Sales
              
              $
              4,065,642
              
              $
              2,193,432
              
              $
              1,872,210
              
              
              85.36
              %Cost
                  of sales
              
              $
              1,078,360
              
              $
              653,727
              
              $
              424,633
              
              
              64.96
              %Gross
                  Profit
              
              $
              2,987,282
              
              $
              1,539,705
              
              $
              1,447,577
              
              
              94.02
              %Gross
                  Margin
              
              
              73.48
              %
              
              70.20
              
              
              
              
              
              3.28Operating
                  Income
              
              $
              2,212,835
              
              $
              1,334,825
              
              $
              878,010
              
              
              65.78
              %Net
                  Income
              
              $
              3,010,786
              
              $
              1,137,991
              
              $
              1,872,795
              
              
              164.57
              %Net
                  profit margin
              
              
              74.05
              %
              
              51.88
              
              
              
              
              
              22.17
 
 **Net
        sales**
 Net
        sales
        in the third quarter of 2007, which resulted entirely from sales of pneumatic
        material transport system workstations, were $4,065,642, an increase of 85.36%
        as compared with net sales of $2,193,432 in the third quarter of 2006. In
        the
        third quarter of 2007, we sold 882 workstations, an increase of 81.86% as
        compared with 485 workstations sold in the third quarter of 2006. Management
        believes that our current efforts to build new sales networks could lead
        to
        continued increased sales of workstations.
 
 31
 The
        following table presents information about our sales for the periods
        indicated:
 
 Three
                  Months Ended September 30,2007
              
              2006
              
              ChangeNet
                  sales
              
              $
              4,065,642
              
              $
              2,193,432
              
              
              85.36
              %
 
 **Gross
        Profit**
 Gross
        profit increased 94.02% to $2,987,282for the third quarter of 2007, as compared
        to $1,539,705 for the third quarter of 2006. Gross profit margin rise by
        3.28%,
        mainly due to The growth of production volume cause to fixed cost to
        lower..
 
 The
        table
        below presents information about our gross profit for the periods
        indicated:
  Three
                  Months EndedSeptember30,2007
              
              2006US$
              
              Gross
                  profit margin
              
              US$
              
              Gross
                  profit marginGross
                  Profit
              
              $
              2,987,282
              
              $
              73.48
              %
              $
              1,539,705
              
              
              70.20
              %
 
 **Income
        from Operations**
 Operating
        income increased 65.78% to $2,212,835 for the third quarter of 2007, as compared
        with $1,334,825 for the third quarter of 2006. This increase was due primarily
        to the increase in net sales described above. As a percentage of net sales,
        operating income was approximately 54.43% for the third quarter of 2007,
        representing a 6.43% decrease from 60.86% for the third quarter of 2006.
        The
        decrease in this percentage was due to our current efforts to build new sales
        networks and medicine dispensation and packaging system are testing at three
        hospitals could lead to operating expenses increases.
 
 **Cost
        of Sales**
 Cost
        of
        sales increased to $1,078,360 for the third quarter of 2007, representing
        a
        64.96% increase as compared with $653,727 for the third quarter of 2006.
        This
        increase is due primarily to the
        sales
        and average prices increases.
 
 The
        table
        below presents information about our cost of sales for the periods
        indicated:
 
 Three
                  Months Ended September 30,2007
              
              2006
              
              ChangeCost
                  of sales
              
              $
              1,078,360
              
              $
              653,727
              
              
              64.96
              %
 
 **Operating
        Expenses**
 Operating
        expenses were $774,447 for the third quarter of 2007, a increases of 897.50%
        as
        compared to $204,880 for the third quarter of 2006. Selling
        expenses increased $153,688 or 897.50% to $170,812 for the three months ended
        September 30, 2007 from $17,124 for the same period in 2006. This
        increase was mainly due to the fact that we paid fees of $153,890 for the
        exhibition of our products in the third quarter of 2007, compared with
        exhibition fees of $8,023 for the third quarter of 2006. General
        and administrative expenses increased $415,879 or 221.50% to $603,635 for
        the
        three months ended September 30, 2007 from $187,756 for the same period of
        2006 **.** The
        increase of general and administrative expenses was primarily attributable
        to
        increased compensation for managerial personnel and increased traveling and
        lodging and listing expenses associated with increased field sales efforts. Management
        therefore believes that operating expenses will not continue to decrease
        in the
        near term.
 
 32
 The
        table
        below presents information about our operating expenses for the periods
        indicated:
 
 Three
                  Months Ended September 30,2007
              
              2006
              
              changeSelling
                  expenses
              
              $
              170,812
              
              $
              17,124
              
              
              897.50
              %General
                  & Administrative Expenses
              
              $
              603,635
              
              $
              187,756
              
              
              221.50
              %Total
                  operating expenses
              
              $
              774,447
              
              $
              204,880
              
              
              278.00
              %
 
 
 **Net
        Income**
 Net
        income was 3,010,786 for the third quarter of 2007, an increase of 164.57%
        from
        $1,137,991 for the third quarter of 2006. This increase is attributable to
        the
        increase in sales of our workstation products described above and Recognized
        gain on sale of investment. Our net profit margin increased from 51.88% as
        of
        the third quarter of 2006 to 74.05% for the third quarter 2007, due to the
        fast
        growth of workstation sales and Recognized gain on sale of
        investment.
 
 **Plan
        For the fourthly Quarter**
 In
        the
        fourthly quarter, we intend to keep our focus on producing pneumatic tube
        material transport systems and in addition improve our marketing and sales
        efforts using funds we raised in September 2007. Also in the fourthly quarter,
        we plan to begin commercial sales of our newly developed medicine dispensation
        and packaging system. We currently have more than 10 orders for the new systems
        from our existing pneumatic transport system customers.
 
 **Nine-month
        periods ended September 30, 2007 and September 30, 2006**
 
 In
        the
        nine-month period ended September 30, 2007, company net sales, gross profit,
        operating income and net income all rose substantially as compared with the
        same
        period in the preceding year. These increases are due in large part to increased
        sales of Sunway’s pneumatic tube transport systems. Cost of sales also increased
        during these periods, somewhat outpacing the increase in sales. The increase
        in
        cost of sales is due largely to increased depreciation expenses related to
        Sunway’s investment in 2006 in new molds and production lines used in the
        manufacture of its newly designed medicine packaging and dispensing equipment.
        The company expects cost of sales to level off or decline once sales of the
        new
        equipment begin in the fourthly quarter of 2007.
 
 The
        following table summarizes the results of our operations during the nine-month
        periods ended September 30, 2007 and September 30, 2006, and provides
        information regarding the dollar and percentage increase or (decrease) from
        the
        nine-month period ended September 30, 2007 to the nine-month period ended
        September 30, 2006.
 
 33
  Nine
                  Months Ended September 30,2007
              
              2006
              
              Change
              
              Change
                  rateNet
                  Sales
              
              $
              9,724,853
              
              $
              6,376,663
              
              $
              3,348,190
              
              
              52.51
              %Cost
                  of sales
              
              $
              2,777,975
              
              $
              1,774,004
              
              $
              1,003,971
              
              
              56.59
              %Gross
                  Profit
              
              $
              6,946,878
              
              $
              4,602,659
              
              $
              2,344,219
              
              
              50.93
              %Gross
                  Margin
              
              $
              71.43
              %
              $
              72.18
              %
              $
              
              
              
              -0.75Operating
                  Income
              
              $
              5,458,624
              
              $
              3,714,531
              
              $
              1,744,093
              
              
              46.95
              %Net
                  Income
              
              $
              5,757,392
              
              $
              3,080,443
              
              $
              2,676,949
              
              
              86.90
              %Net
                  profit margin
              
              
              59.20
              
              
              48.31
              %
              
              
              
              
              10.896
 
 **Net
        sales**
 Net
        revenue for the nine months ended September 30, 2007, which resulted entirely
        from sales of pneumatic material transport system workstations, were $9,724,853,
        an increase of 52.51% as compared with the net sales of $6,376,663 in the
        same
        period ended on September 30, 2006. In the same period, we sold 2,118
        workstations, an increase of 52.92% as compared with 1,385 workstations sold
        in
        the same period ended on September 30, 2006.
 
 The
        following table presents information about our sales for the periods
        indicated:
 
 Nine
                  Months Ended September 30,2007
              
              2006
              
              ChangeNet
                  sales
              
              $
              9,724,853
              
              
              6,376,663
              
              
              52.51
              %
 
 **Gross
        Profit**
 Gross
        profit increased 50.93% to $6,946,878 for the nine months ended September
        30,
        2007, as compared to $4,602,659 for the  nine
        months period ended September 30, 2006. Gross profit margin fell slightly
        by
        0.75 percentage point, mainly due to our efforts to develop new molds and
        new
        production line, which raised depreciation costs and therefore raised the
        cost
        of sales; at the same time, with using some expensive raw materials instead
        of
        old raw material in order to increase product quality and perfect workstation
        surface, raw material cost increased clearly.
 
 The
        table
        below presents information about our gross profit for the periods
        indicated:
 
 Nine
                  Months Ended September 30,2007
              
              2006US$
              
              Gross
                  profit margin
              
              US$
              
              Gross
                  profit margin
 Gross
                  Profit
              
              $
              6,946,878
              
              
              71.43
              %
              $
              4,602,659
              
              
              72.18
              %
 
 **Income
        from Operations**
 Operating
        income increased 46.95% to $5,458,624 for  the
        nine
        months ended September 30, 2007, as compared with $3,714,531 for the nine
        months
        period ended September 30,2006. The increase was primarily a result of the
        higher revenue during the nine months period ended on September 30, 2007
        as
        compared to 2006.
 
 **Cost
        of Sales**
 Cost
        of
        sales increased to $2,777,975 for the nine months ended September 30, 2007,
        representing 56.59% increase as compared with $1,774,004 for the same period
        of
        2006. This increase is due primarily to on August 2006, we purchased several
        new
        molds used in transport system production line, and on November 2006 we also
        purchased new production line using for dispensation and packaging system,
        both
        of which increased the depreciation cost from the time of purchase
        forward.
 
 34
 The
        table
        below presents information about our cost of sales for the periods
        indicated:
 
 Nine
                  Months Ended September 30,2007
              
              2006
              
              ChangeCost
                  of sales
              
              $
              2,777,975
              
              $
              1,774,004
              
              
              56.59
              %
 
 **Operating
        Expenses**
 Operating
        expenses were $1,488,254 for the nine months ended September 30, 2007, an
        increase of 67.57% as compared to $888,128 for the same period of 2006. This
        increase was composed by two reasons: (1) decrease in selling expenses; and
        (2)
        increase in general and administration expenses. In the nine months period
        ended
        September 30, 2007, we decreased exhibition fees for promoting our products,
        which totaled $184,815, compared with $206,650 for the same period of 2006.
        Also, in the nine months period ended September 30, 2007. We increased salary
        and benefits of management. Reflecting this change, costs related to salary
        and
        benefits increased 478% in the nine months period ended September 30, 2007,
        compared with the same period of 2006, and our inter listing consultant expenses
        for the reverse merger and private placement were increased from $11,433
        as of
        the nine months period ended September 30, 2006 to $97,758 as of the same
        period
        of 2007.
 
 The
        table
        below presents information about our operating expenses for the periods
        indicated:
 
 Nine
                  Months Ended September 30,2007
              
              2006
              
              changeSelling
                  expenses
              
              $
              219,401
              
              $
              227,185
              
              $
              -3.43
              %General
                  & Administrative Expenses
              
              $
              1,268,853
              
              $
              660,943
              
              $
              91.98
              %Total
                  operating expenses
              
              $
              1,488,254
              
              $
              888,128
              
              $
              67.57
              %
 
 **Net
        Income**
 Net
        income was $5,757,392 for the nine months ended September 30, 2007, an increase
        of 86.90% from $3,080,443 for the same period of 2006. This increase is
        attributable to the increase in sales of our workstation products. Our net
        profit margin rise 10.89 percentage points from 48.31% as of the nine months
        ended September 30, 2006 to 59.20 as of the same period of 2007, due to the
        increase of cost of sales and Gain on investments described above.
 
 **Cash
        and Cash Equivalents**
 Cash
        and
        Cash Equivalents increased to $7,148.550 as of September 30, 2007, as compared
        to $1,749,048 as of December 31, 2006. This increase was mainly due to our
        reverse merger and private placement on June 6, 2007, which resulted in an
        increase of $4,476,328 in net cash.
 
 **Accounts
        Receivable**
 Accounts
        Receivable increased 67.75% to $2,462,440 as of September 30, 2007, compared
        with $1,467,963 as of December 31, 2006. This increase in accounts receivable
        was primarily attributable to a substantial increase in workstation sales
        in the
        nine months ended September 30, 2007. We will focus corporate resources on
        enhancing the cooperation of our marketing and sales department with our
        financial department in order to reduce the deferral of payments by our
        customers and reduce our accounts receivable.
 
 35
 **Inventory**
 Inventory
        consists of raw materials and finished goods as of September 30, 2007, the
        recorded value of our inventory has increased 57.54% to $593,453 from $376,708
        as of December 31, 2006. This increase is mainly due to an increase in finished
        goods from $200,852 as of December 31, 2006 to $352,219 as of September 30,
        2007, an increase of 75.36%. In addition direct raw materials increased from
        $175,856 as of December 31, 2006 to $241,234 as of September 30, 2007, an
        increase of 37.18%, which was due to increased sales.
 
 The
        table
        below presents information about our inventory for the periods
        indicated:
 
 Item
              
              September
                  30, 2007
              
              December
                  31, 2006
              
              changeRaw
                  material
              
              $
              241,234
              
              $
              175,856
              
              
              37.18
              %Finished
                  goods
              
              $
              352,219
              
              $
              200,852
              
              
              75.36
              %Total
              
              $
              593,453
              
              $
              376,708
              
              
              57.54
              %
 
 **Accounts
        payable**
 Accounts
        payable amounted to $328,552 as of September 30, 2007, an increase of 473.50%
        from $57,289 as of December 31, 2006. This increase is mainly due to Volume
        of
        production increase cause to purchase of raw materials increase.
  **Liquidity
          and Capital Resources**
 
 General
 financial
          statements periods presented in this report.
  Nine
                    Months Ended September 30,2007
                
                2006
                
                ChangeNet
                    cash provided by (used in) operating activities
                
                $
                1,852,655
                
                $
                220,431
                
                $
                1,632,224Net
                    cash provided by (used in) investing activities
                
                $
                -1,826,576
                
                $
                -482,487
                
                $
                -1,344,089Net
                    cash provided by (used in) financing activities
                
                $
                5,176,335
                
                $
                378,941
                
                $
                4,797,394Net
                    cash flow (outflow)
                
                $
                5,202,415
                
                $
                116,885
                
                $
                5,085,530
 
 **Operating
          Activities**
 
 Net
          cash
          provided by operating activities was $1,852,655 for the nine months ended
          September 30, 2007, which is an increase of $1,632,224 from $220,431 for
          the
          same period of 2006. The increase of the cash provided by operating activities
          was primarily a result of the increase in accounts and other payables and
          net
          income and depreciation in nine months period ended September 30, 2007,
          as
          compared to the same period of 2006. In the nine months ended September
          30,
          2007, the accounts receivable and other receivable increased by 178,346,
          while
          the accounts payable and other payables decreased by 1,123,751, while The
          inventories and advances to suppliers increased by 664,991, which resulted
          in
          the decrease of 280,414 of net cash used in operations in nine months period
          ended September 30, 2007, as compared to the same period of 2006.
 
 36
 **Investing
          Activities**
 
 Our
          main
          uses of cash for investment activities are payments for the fixed assets
          and
          Investor Relation, and Sale or Purchase of investment fund and equipment.Net
          cash provided by investing activities for the nine months ended September
          30,
          2007 was $(1,826,576), which is a decrease of $1,344,089 from net cash
          provided
          by investing activities of $(482,487) for the same period of 2006. The
          increase
          was primarily due to the increase in restricted fixed assets and Investor
          Relation expenses in 2007, as compared to 2006.
 
 **Financing
          Activities**
 
 Net
          cash
          used in financing activities for the nine months ended September 30, 2007
          was
          $5,176,335, which is an increase of $4,797,394 from $378,941 net cash used
          in
          financing activities during the same period of 2006. The increase of the
          cash
          used in financing activities was primarily a result of the increase of
          additional paid-in capital, resulting from the private placement.
 
 **Obligations
          under Material Contracts**
 
 We
          do not
          have any material contractual obligations as of September 30, 2007.
 **Critical
        Accounting Policies**
 
 Management's
        discussion and analysis of its financial condition and results of operations
        is
        based upon Sunway’s consolidated financial statements, which have been prepared
        in accordance with United States generally accepted accounting principles.
        Sunway’s financial statements reflect the selection and application of
        accounting policies which require management to make significant estimates
        and
        judgments. Management bases its estimates on historical experience and on
        various other assumptions that are believed to be reasonable under the
        circumstances. Actual results may differ from these estimates under different
        assumptions or conditions. Sunway believes that the following reflect the
        more
        critical accounting policies that currently affect Sunway’s financial condition
        and results of operations.
 
 
 **(A)
        Method of Accounting**
 Sunway
        maintains its general ledger and journals with the accrual method accounting
        for
        financial reporting purposes. The financial statements and notes are
        representations of management. Accounting policies adopted by the Company
        conform to generally accepted accounting principles in the United States
        of
        America and have been consistently applied in the presentation of financial
        statements, which are compiled on the accrual basis of accounting.
 
 **(B)
        Use of Estimates**
 The
        preparation of the financial statements in conformity with generally accepted
        accounting principles in the United States of America requires management
        to
        make estimates and assumptions that affect the reported amounts of assets
        and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenues and expenses
        during the reporting periods. Management makes these estimates using the
        best
        information available at the time the estimates are made; however actual
        results
        could differ materially from those estimates.
 
 37
 **(C)**  **Economic
        and political risks**
 Sunway’s
        operations are conducted in the PRC. Accordingly, the Company’s business,
        financial condition and results of operations may be influenced by the
        political, economic and legal environment in the PRC, and by the general
        state
        of the PRC economy. Sunway’s results may be adversely affected by changes in the
        political and social conditions in the PRC, and by changes in governmental
        policies with respect to laws and regulations, anti-inflationary measures,
        currency conversion, remittances abroad, and rates and methods of taxation,
        among other things.
 
 **(D)
        Foreign Exchange Risk**
 While
        our
        reporting currency is the U.S. Dollar, all of our consolidated revenues and
        consolidated costs and expenses are denominated in RMB. All of our assets
        are
        denominated in RMB except for cash. As a result, we are exposed to foreign
        exchange risk as our revenues and results of operations may be affected by
        fluctuations in the exchange rate between U.S. Dollars and RMB. If the RMB
        depreciates against the U.S. Dollar, the value of our RMB revenues, earnings
        and
        assets as expressed in our U.S. Dollar financial statements will decline.
        We
        have not entered into any hedging transactions in an effort to reduce our
        exposure to foreign exchange risk.
  **(E)Intangibles**
 Intangibles
        are stated at cost less accumulated amortization is provided over the respective
        useful lives, using the straight-line method. The most important intangibles
        of
        Sunway now is the land using rights, which is amortized in 46
        years.
 
 **(F)
        Property, plant and equipment**
 Plant
        and
        equipment are carried at cost less accumulated depreciation. Depreciation
        is
        provided over their estimated useful lives, using the straight-line method.
        Estimated useful lives of the plant and equipment are as follows:
 
 Items
              
              Depreciation
                  yearsBuildings
              
              
              20Machinery
                  and equipment
              
              
              6Software
                  systems
              
              
              3Molds,
                  Dies, & Casting
              
              
              6Office
                  equipment and motor vehicles
              
              
              10
 
 The
        cost
        and related accumulated depreciation of assets sold or otherwise retired
        are
        eliminated from the accounts and any gain or loss is included in the statement
        of income. The cost of maintenance and repairs is charged to income as incurred,
        whereas significant renewals and betterments are capitalized.
 
 **(G)
        Accounting for Software Systems**
 Sunway
        adopts FASB No. 86 for accounting of software systems, in that all expenditures
        incurred from start-up to completion of feasibility are expensed; development
        costs, after the feasibility study through system completion, are capitalized,
        and are depreciated over a useful life of three years. Expenditures incurred
        after completion are expensed as repairs and maintenance.
 
 38
 
 **(H)**  **Trade
        receivables**
 Trade
        receivables are recognized and carried at the original invoice amount less
        allowance for any uncollectible amounts. An estimate for doubtful accounts
        is
        made when collection of the full amount is no longer probable. Bad debts
        are
        written off as incurred.
 
 **(I)
        Cash and cash equivalents**
 The
        Company considers all highly liquid investments purchased with original
        maturities of three months or less to be cash equivalents. The Company maintains
        bank accounts only in the PRC. The Company does not maintain any bank accounts
        in the United States of America.
 
 **(J)**  **Revenue
        recognition**
 Revenue
        represents the invoiced value of goods sold recognized upon the delivery
        of
        goods to customers. Revenue is recognized when all of the following criteria
        are
        met:
 Persuasive
        evidence of an arrangement exists;
 Delivery
        has occurred or services have been rendered, and;
 The
        seller’s price to the buyer is fixed or determinable.
 Contract
        revenues are recognized when the manufacturing and installation of the medical
        equipments is completed. Generally, the company receives total contract sum
        from
        clients in 3 installments. Deposit of 30% is received from client when the
        contract is signed. Second payment of 30% is received when the project
        commenced. The final sum of the remaining portion is received after the
        construction is completed within 4 months.
 
 **(K)**  **Income
        taxes**
 Sunway
        accounts for income tax using an asset and liability approach and allows
        for
        recognition of deferred tax benefits in future years. Under the asset and
        liability approach, deferred taxes are provided for the net tax effects of
        temporary differences between the carrying amounts of assets and liabilities
        for
        financial reporting purposes and the amounts used for income tax purposes.
        A
        valuation allowance is provided for deferred tax assets if it is more likely
        than not these items will either expire before the Company is able to realize
        their benefits, or that future realization is uncertain.
 
 Sunway
        is
        operating in the PRC, and in accordance with the relevant tax laws and
        regulations of PRC, the corporation income tax rate is 33%. However, the
        Company
        is a high technology company, and in accordance with the relevant regulations
        regarding the favorable tax treatment for high technology companies, the
        Company
        is entitled to a reduced tax rate of 15% as long as the company located and
        registered in the high and advance technology development zone.
  **Item
        3.**  **Controls
        and Procedures**
 
 At
        the
        conclusion of the quarter ended September 30, 2007, we carried out an
        evaluation, under the supervision and with the participation of our management,
        including our Chairman and Chief Executive Officer and Chief Financial Officer,
        of the effectiveness of the design and operation of our disclosure controls
        and
        procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
        Act.
        Based on this evaluation, our officers concluded that, as of September 30,
        2007,
        our disclosure controls and procedures were effective and adequately designed
        to
        ensure that the information required to be disclosed by us in the reports
        we
        submit under the Exchange Act is recorded, processed, summarized and reported
        reliably and within the time periods specified in the applicable rules and
        forms
        and that such information is accumulated and communicated to our chief executive
        officer and chief financial officer in a manner that allows for timely decisions
        regarding required disclosure.
 
 In
        the
        course of our evaluation, we did not discover any change in our internal
        control
        over financial reporting that has materially affected or is reasonably likely
        to
        materially affect our internal control over financial reporting.


39


**PART
      II**


**Item
      1. Legal Proceedings**





From
      time
      to time, the Company may become involved in various lawsuits and legal
      proceedings which arise in the ordinary course of business. However, litigation
      is subject to inherent uncertainties, and an adverse result in these or other
      matters may arise from time to time that may harm the Company’s business. The
      Company is currently not aware of nor has any knowledge of any such legal
      proceedings or claims that we believe will have, individually or in the
      aggregate, a material adverse affect on our business, financial condition or
      operating results.





**Item
      2. Unregistered sales of equity securities**





None.





**Item
      3. Defaults Upon Senior Securities**





None.





**Item
      4. Submission of matters to a vote of security holders**




None.




**Item
        5. Other Information**
 On
            November 6, 2007 David Wang resigned as Chief Financial Officer of the
            Company.  To fill the vacancy caused by Mr. Wang's resignation, the Board
            of Directors appointed Bo Liu to the position of Acting Chief Financial
            Officer.
  Item
          6.   **Exhibits.**
  The
            following exhibits are filed with this report.


**Exhibit
      List**




**No.**
            
            **Description**




31.1
            
            Certification
                of Bo Liu pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a),
                as
                adoptedpursuant
                to Section 302 of the Sarbanes-Oxley Act of
                2002.




32.1
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of theSarbanes-Oxley
                Act of 2002.





(1)
      Incorporated by reference to the exhibit of the same number to our report on
      form 8-K/A filed with the SEC on June 20, 2007.






40


**SIGNATURES**





In
      accordance with the requirements of the Securities Exchange Act of 1934, as
      amended, the registrant has caused this report to be signed on its behalf by
      the
      undersigned, thereunto duly authorized.







**NATIONAL
                REALTY AND MORTGAGE, INC.**Date:
                November 19, 2007
            *By:*
            */s/
                Bo Liu**Bo
                Liu**Chief
                Executive Officer and Acting Chief Financial
                Officer*







41