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

                                   FORM 10-QSB

(Mark One)

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

                            For the quarterly period ended    September 30, 2007
                                                            --------------------


[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

                           For the transition period from _________ to _________

                                      Commission file number   000-50675
                                                             -------------------

                    EXCELLENCY INVESTMENT REALTY TRUST, INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter

          Maryland                                          20-8635424
--------------------------------------------------------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

        270 Laurel Street, 1st Floor Office, Hartford, Connecticut 06105
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (860) 246-7672
--------------------------------------------------------------------------------
                           (Issuer's telephone number)


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

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 14, 2007, the issuer
had 73,761,537 shares of common stock issued and outstanding.

Transitional Small Business Disclosure Format (Check one):      Yes [ ]   No [X]

<PAGE>

<TABLE>
<CAPTION>
                                   EXCELLENCY INVESTMENT REALTY TRUST, INC.
                                  (FORMERLY KNOWN AS GIFT LIQUIDATORS, INC.)
                                        QUARTERLY REPORT ON FORM 10-QSB
                                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007


                                                     INDEX
                                                     -----
                                                                                                      Page No.
                                                                                                      --------

<S>                                                                                                         <C>
PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements

           Condensed Consolidated Balance Sheet as of September 30, 2007 (Unaudited).......................  3

           Condensed Consolidated Statements of Operations for the Three and
                Nine Months ended September 30, 2007 and 2006 (Unaudited)..................................  4

           Condensed Consolidated Statements of Cash Flows for the Nine Months
                ended September 30, 2007 and 2006 (Unaudited)..............................................  5

           Condensed Consolidated Statement of Changes in Stockholders' Deficit
                for the Nine Months ended September 30, 2007 (Unaudited)...................................  6

           Notes to Condensed Consolidated Financial Statements (Unaudited)................................  7

Item 2.    Management's Discussion and Analysis of Financial Condition and Results
           of Operations................................................................................... 23

Item 3.    Controls and Procedures......................................................................... 38


PART II - OTHER INFORMATION

Item 1.    Legal Proceedings............................................................................... 40

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds..................................... 40

Item 3.    Defaults Upon Senior Securities................................................................. 40

Item 4.    Submission of Matters to a Vote of Security Holders............................................. 40

Item 5.    Other Information............................................................................... 40

Item 6.    Exhibits........................................................................................ 40


SIGNATURES................................................................................................. 42
</TABLE>



<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

<TABLE>
<CAPTION>
                        EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
                                       CONSOLIDATED BALANCE SHEET
                                          At September 30, 2007
<S>                                                                                          <C>
                                                 ASSETS
  Real Estate
    Land                                                                                     $    811,402
    Building and improvements                                                                   5,182,456
                                                                                             ------------
                                                                                                5,993,858
  Less: accumulated depreciation                                                                1,238,759
                                                                                             ------------
                                                                                                4,755,099

  Cash and cash equivalents                                                                       229,293
  Accounts receivable-tenants, net of allowance for doubtful
    accounts of $57,493                                                                            44,484
  Deferred financing costs, net of accumulated amortization of
    of $25,046.                                                                                   152,475
  Escrow account                                                                                   43,888
  Other assets                                                                                     21,870
                                                                                             ------------
                                                                                             $  5,247,109
                                                                                             ============


                              LIABILITIES AND STOCKHOLDERS' DEFICIT

  Motgage notes payable                                                                      $  8,040,105
  Promissory notes payable-related party                                                        2,578,581
  Security deposits                                                                               134,419
  Accounts payable and accrued expenses                                                           339,575
  Derivative at fair value                                                                      2,041,176
                                                                                             ------------
                                                                                               13,133,856
                                                                                             ------------
Commitments and contingencies

Stockholders' Deficit:

  Series A Convertible Preferred Stock, par value $0.01, 10,000 shares authorized, 10,000
    issued and outstanding.  Aggregate liquidation preference of $9,100 ($0.91 per share)             100
  Series B Preferred Stock, par value $0.01, 20,000
    shares authorized, 0 shares issued and outstanding                                                  -
  Common stock, par value $0.01, 200,000,000 shares authorized, 73,761,537 issued and
    outstanding                                                                                   737,615
  Treasury stock, at cost- 302,469 shares                                                        (334,168)
  Additional paid-in capital                                                                    1,833,939
  Accumulated deficit                                                                         (10,124,233)
                                                                                             ------------
                                                                                               (7,886,747)
                                                                                             ------------
                                                                                             $  5,247,109
                                                                                             ============
</TABLE>


See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

<TABLE>
<CAPTION>
                                  EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
                                            CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                   For the Three    For the Three    For the Nine      For the Nine
                                                                   Months Ended     Months Ended     Months Ended      Months Ended
                                                                   September 30,    September 30,    September 30,     September 30,
                                                                       2007             2006             2007              2006
                                                                       ----             ----             ----              ----
<S>                                                                <C>              <C>              <C>               <C>
Rental revenue                                                     $    397,195     $    381,132     $  1,182,795      $  1,153,596

Operating expenses:
  Property operating costs                                              242,097          260,838          760,964           740,620
  General and administrative                                            145,311          400,460          583,279           852,133
  Depreciation and amortization                                          38,323           38,811          114,969           114,513
  Management fee-related party                                                -                -                -            31,019
                                                                   ------------     ------------     ------------      ------------

Total operating expenses                                                425,731          700,109        1,459,212         1,738,285

Operating loss                                                          (28,536)        (318,977)        (276,417)         (584,689)

Nonoperating expenses and income:
  Interest expense                                                     (158,459)        (166,695)        (476,575)         (458,846)
  Other income                                                            1,018           22,471           23,718            61,386
  Realized loss froms sales of trading securities                         2,962         (305,915)        (165,786)         (315,943)
  Loss on derivative liability                                         (540,000)         (30,000)        (720,000)                -
  Net unrealized loss on trading securities                                   -         (211,019)               -           (30,219)
                                                                   ------------     ------------     ------------      ------------

Total nonoperating expenses                                            (694,479)        (691,158)      (1,338,643)         (743,622)
                                                                   ------------     ------------     ------------      ------------

  Net loss                                                         $   (723,015)    $ (1,010,135)    $ (1,615,060)     $ (1,328,311)
                                                                   ============     ============     ============      ============


Loss per share -- basic and diluted                                $      (0.01)    $      (8.52)    $      (0.02)     $     (11.21)
                                                                   ============     ============     ============      ============

Weighted average common shares outstanding basic and diluted         73,761,537          118,537       57,903,314           118,537
                                                                   ============     ============     ============      ============
</TABLE>


See accompanying notes to consolidated financial statements.


                                       4
<PAGE>

<TABLE>
<CAPTION>
                                  EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
                                         (FORMERLY KNOWN AS GIFT LIQUIDATORS, INC.)
                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007


CASH FLOWS FROM OPERATING ACTIVITIES                                                                2007              2006
                                                                                                    ----              ----
<S>                                                                                             <C>                <C>
   Net loss                                                                                     $(1,615,060)       (1,328,311)
   Adjustments to reconcile net loss to net cash
     provided (used) in operating activities:
     Loss on sale of securities                                                                     165,786           315,943
     Loss on derivative liability                                                                   720,000                 -
     Depreciation and amortization                                                                  125,703           114,515
     Provision for doubtful accounts                                                                 55,147            45,902
     Net unrealized loss on trading securities                                                            -            30,219
     Net purchases of trading securities                                                                             (483,206)

   Changes in Operating Assets and Liabilities:
     Accounts receivable-tenants                                                                    (85,674)          (19,064)
     Other receivables                                                                                    -           152,621
     Escrow                                                                                          50,274            59,463
     Other assets                                                                                    36,573            15,682
     Security deposits                                                                               26,173            11,903
     Accounts payable and accrued expenses                                                          209,182           207,806
                                                                                                -----------       -----------
          Net cash used in operating activities                                                    (311,895)         (876,527)

   CASH FLOWS FROM INVESTING ACTIVITIES

     Net purchases of trading securities                                                           (114,172)
     Purchase of Fixed Assets                                                                             -            (7,200)
                                                                                                -----------       -----------

          Net cash used in investing activities                                                    (114,172)           (7,200)

   CASH FLOWS FROM FINANCING ACTIVITIES

     Repayments to officer/director                                                                (330,249)         (325,000)
     Proceeds from officer/director                                                                       -            15,691
     Repayment of mortgage notes payable                                                            (84,884)          (71,501)
                                                                                                -----------       -----------
          Net Cash Used in Financing Activities                                                    (415,133)         (380,810)

   Decrease in Cash                                                                                (841,200)       (1,264,537)
   Cash- Beginning of Year                                                                        1,070,493         2,905,529
                                                                                                -----------       -----------
   Cash-End of Year                                                                             $   229,293       $ 1,640,992
                                                                                                ===========       ===========

   Cash paid during the period for interest                                                     $   476,575       $   311,567
                                                                                                ===========       ===========
   Non-Cash Transactions

   Contributions of capital for waived liquidated damages related to deriative liability        $         -       $ 1,174,000
                                                                                                ===========       ===========
   Common stock issued in consideration for waived liquidated damages                           $         -       $   540,000
                                                                                                ===========       ===========
</TABLE>


See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                     EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
                                            (FORMERLY KNOWN AS GIFT LIQUIDATORS, INC.)
                                    CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                                           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007


                                        Preferred Stock-Series A       Preferred Stock-Series C                Common Stock
                                          Shares          Amount          Shares          Amount         Shares          Amount
                                          ------          ------          ------          ------         ------          ------
<S>                                   <C>             <C>             <C>             <C>            <C>             <C>
Balance at  January 1, 2005                      -    $          -               -    $          -   $        500    $      1,000

Recapitalization                            11,000             110               -               -        118,037             185

Net loss
                                      ------------    ------------    ------------    ------------   ------------    ------------
Balance ar December 31, 2005                11,000             110               -               -        118,537           1,185

Preferred stock issued                           -               -          43,500         720,000              -
Conversion of preferred stock                                              (43,500)       (720,000)    73,500,000         735,000
Purchase of treasury stock                       -               -               -               -              -               -
Proceeds from sale of treasury stock             -               -               -               -              -               -
Contributed capital                                              -                               -                              -
Net loss                                                         -                               -                              -
                                      ------------    ------------    ------------    ------------   ------------    ------------
Balance at December 31, 2006                11,000    $        110               -    $          -     73,618,537    $    736,185
                                      ============    ============    ============    ============   ============    ============

Balance at January 1, 2006                  11,000    $        110                                     73,618,537    $    736,185

Conversion of preferred stock               (1,000)            (10)              -               -        143,000           1,430
Net loss                                         -               -               -               -              -               -
Cumulative adjustment
                                      ------------    ------------    ------------    ------------   ------------    ------------
Balance at September 30, 2007               10,000    $        100               -    $          -   $ 73,761,537    $    737,615
                                      ============    ============    ============    ============   ============    ============

<CAPTION>

                                         Additional
                                          Paid-in       Accumulated   Treasury Stock
                                          Capital         Deficit     Shares at Cost        Total
                                          -------         -------     --------------        -----
<S>                                    <C>             <C>             <C>              <C>
Balance at  January 1, 2005            $          -    $  1,128,602    $          -     $  1,129,602

Recapitalization                                  -      (5,203,100)              -       (5,202,805)

Net loss                                                 (1,660,639)              -       (1,660,639)
                                       ------------    ------------    ------------    ------------
Balance ar December 31, 2005                      -      (5,735,137)              -       (5,733,842)

Preferred stock issued                                                            -          720,000
Conversion of preferred stock               285,000                        (300,000)               -
Purchase of treasury stock                        -               -         (61,420)         (61,420)
Proceeds from sale of treasury stock         16,359               -          27,252           43,611
Contributed capital                       1,534,000               -                        1,534,000
Net loss                                          -      (2,395,036)                      (2,395,036)
                                       ------------    ------------    ------------     ------------
Balance at December 31, 2006           $  1,835,359    $ (8,130,173)   $   (334,168)    $ (5,892,687)
                                       ============    ============    ============     ============

Balance at January 1, 2006             $  1,835,359    $ (8,130,173)   $   (334,168)    $ (5,892,687)

Conversion of preferred stock                (1,420)              -               -                -
Net loss                                          -      (1,615,060)              -       (1,615,060)
Cumulative adjustment                                      (379,000)                        (379,000)
                                       ------------    ------------    ------------     ------------
Balance at September 30, 2007          $  1,833,939    $(10,124,233)   $   (334,168)    $ (7,886,746)
                                       ============    ============    ============     ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                       6
<PAGE>


            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)


NOTE 1 - NATURE OF OPERATIONS, ORGANIZATION AND FINANCIAL STATEMENT PRESENTATION

Company Background
------------------

Excellency Investment Realty Trust, Inc.
----------------------------------------

Excellency Investment Realty Trust, Inc. ("the Company") and its predecessor
companies were originally incorporated in 1963 as Dorsett Educational Systems,
Inc.

Eternal Enterprise, Inc.
------------------------

Eternal Enterprise, Inc. ("Eternal") was incorporated in the State of
Connecticut on June 18, 1997. Eternal is in the business of acquiring,
developing, holding for investment, operating and selling residential real
estate properties in the United States. Eternal owns the following residential
apartment buildings (collectively, the "Properties"):

     o    154-160A Collins Street, Hartford, CT
     o    21 Evergreen Avenue, Hartford, CT
     o    243 & 255 Laurel Street, Hartford, CT;
     o    252 Laurel Street, Hartford CT
     o    270 Laurel Street, Hartford, CT
     o    360 Laurel Street, Hartford, CT
     o    117-145 S. Marshall Street, Hartford, CT, and
     o    56 Webster Street, Hartford, CT.

Prior to the Reverse Merger, described below, David Mladen, the Company's
majority stockholder and sole officer and director, was also the majority
stockholder and the sole officer and director of Eternal. The other stockholders
of Eternal were (i) Mr. Mladen's daughter, (ii) Mr. Mladen's son-in-law, (iii)
Mr. Mladen's son, and (iv) Mr. Mladen's daughter-in-law (collectively, with Mr.
Mladen, the "Pre-Acquisition Eternal Stockholders"). On September 29, 2005, Mr.
Mladen acquired approximately 51.3% of the Company's voting power, with the
specific intention of causing the Company to acquire Eternal.

In October 2005, the Company formed eight limited partnerships as wholly-owned
Delaware subsidiaries of the Company (the "Limited Partnerships"), as follows:

     o    Excellency Investment Realty Trust I, L.P.
     o    Excellency Investment Realty Trust II, L.P.
     o    Excellency Investment Realty Trust III, L.P.
     o    Excellency Investment Realty Trust IV, L.P.
     o    Excellency Investment Realty Trust V, L.P.
     o    Excellency Investment Realty Trust VI, L.P.
     o    Excellency Investment Realty Trust VII, L.P. and
     o    Excellency Investment Realty Trust VIII, L.P.

                                       7
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2007
                                   (unaudited)

NOTE 1 - NATURE OF OPERATIONS, ORGANIZATION AND FINANCIAL STATEMENT PRESENTATION
(Continued)

Merger
------

On November 4, 2005, the Pre-Acquisition Eternal Stockholders exchanged, in the
aggregate, 100% of the issued and outstanding shares of Common Stock of Eternal
for (i) limited partnership interests representing 20% of the total partnership
interests in each of the Limited Partnerships, and (ii) unsecured promissory
notes payable to the Pre-Acquisition Eternal Stockholders in the aggregate
principal amount of $2,610,006 (the "LP Notes") (the "Reverse Merger"). As a
result, Eternal is now 100% owned, in the aggregate, by the Limited
Partnerships. In consideration of the Company's ownership of 80% of the total
partnership interests of each of the Limited Partnerships that now own 100% of
Eternal, the Company agreed to assume the LP Notes.

The partnership interests of the Limited Partnerships were exchanged for shares
of common stock of Eternal based upon the ratio by which the value of each
Property bears to the aggregate value of all of the Properties.

Pursuant to the Partnership Agreements of the Limited Partnerships (the
"Partnership Agreements"), among other things, the Company (i) is the general
partner of each of the Limited Partnerships, and (ii) has the right to compel
the limited partners (i.e., the Pre-Acquisition Eternal Stockholders) to
exchange 100% of their limited partnership interests for shares of Common Stock
of the Company. In the event the Company, as general partner of the Limited
Partnerships, compels the limited partners to exchange their limited partnership
interests for shares of Common Stock of the Company, certain family members of
Mr. Mladen, the Company's majority stockholder and sole officer and director,
would become shareholders of the Company.

Because (i) the Pre-Acquisition Eternal Stockholders obtained a majority of the
shares of common stock of the combined entity after the combination, (ii) the
Pre-Acquisition Eternal Stockholders obtained the ability to elect and appoint a
voting majority of the governing board of the combined entity, and (iii)
Eternal's officer and director replaced the Company's officers and directors of
the combined entity, the transaction was treated as a reverse merger with
Eternal as the accounting acquirer of the Company. The accompanying consolidated
financial statements of the Company reflect the historical results of operations
of Eternal, and the consolidated results of operations subsequent to the
acquisition date of November 4, 2005. Eternal, as the accounting acquirer, did
not record goodwill or any other intangible asset as a result of this Reverse
Merger.

As of December 29, 2005, the Company entered into a Purchase and Sale Agreement
with Goran Mladen, the son of the Company's majority stockholder and sole
officer and director (the "Purchase Agreement"), pursuant to which the Company
purchased all of the limited partnership interests of the Limited Partnerships
owned by Goran Mladen, for an aggregate purchase price of $479,096. As a result,
the Company now owns approximately 81% of the partnership interests of each of
the Limited Partnerships.

                                       8
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 1 - NATURE OF OPERATIONS, ORGANIZATION AND FINANCIAL STATEMENT PRESENTATION
(Continued)

Reincorporation by Merger in Maryland
-------------------------------------

On May 10, 2006, the Company formed a new wholly-owned subsidiary, Excellency
Investment Realty Trust, Inc., in the State of Maryland (the "Maryland
Subsidiary"). The Articles of Incorporation of the Maryland Subsidiary
authorized 25,000,000 shares of capital stock, of which 24,000,000 shares were
authorized as common stock, $0.01 par value per share, and 1,000,000 were
authorized as preferred stock, $0.01 par value per share.

On July 17, 2006, the Maryland Subsidiary filed Articles of Amendment and
Restatement to its Articles of Incorporation, to, among other things: (a)
increase its number of authorized shares of capital stock to 201,000,000, of
which 200,000,000 shares are authorized as common stock and 1,000,000 as
preferred stock; and (b) increase the number of shares of common stock into
which each share of Series A convertible preferred stock is convertible to one
hundred forty-three (143).

On September 20, 2006, the Company reincorporated in the State of Maryland by
virtue of its merger with and into the Maryland Subsidiary (the "Reincorporation
by Merger"). The Reincorporation by Merger was consummated pursuant to an
Agreement and Plan of Merger by and between the Company and the Maryland
Subsidiary, dated July 19, 2006.

As a result of the Reincorporation by Merger, among other things:

     o    The surviving company and successor filer is known as Excellency
          Investment Realty Trust, Inc.;
     o    Each share of the Company's issued and outstanding common stock and
          preferred stock was converted into one share of the Maryland
          Subsidiary's common stock and preferred stock, respectively;
     o    The title to all of the Company's property automatically vested in the
          Maryland Subsidiary;
     o    The Maryland Subsidiary assumed all of the Company's liabilities;
     o    Corporate actions of the surviving entity are now governed by the
          Maryland Corporations and Associations Law and by the Maryland
          Subsidiary's Articles of Amendment and Restatement of Articles of
          Incorporation and Bylaws;
     o    David Mladen, the Company's sole officer and director, continued to
          serve as the sole officer and director of the surviving entity;
     o    The trading symbol for the surviving entity's common stock, which is
          quoted on the over-the-counter bulletin board of the National
          Association of Securities Dealers, was changed to "EIVR"; and

                                       9
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 1 - NATURE OF OPERATIONS, ORGANIZATION AND FINANCIAL STATEMENT PRESENTATION
(Continued)

     o    The total number of shares of stock which the surviving entity is
          authorized to issue increased to 201,000,000 shares, of which
          200,000,000 shares are common stock, $0.01 par value per share and
          1,000,000 are preferred stock, par value $0.01.

While the Reincorporation by Merger resulted in changes to the Company's name
and state of incorporation, as well as the other changes listed above, it did
not result in any material changes to its business, management, assets,
liabilities or net worth.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation
---------------------------

The accompanying unaudited condensed consolidated financial statements include
the accounts of Excellency Investment Realty Trust, Inc., its controlled
subsidiaries comprised of certain Limited Partnerships (see Note 1), and Eternal
Enterprise, Inc. (wholly owned in the aggregate by the Limited Partnerships)
(hereinafter collectively referred to as the "Company"). As noted above, the
historical financial statements as presented reflect the operations of Eternal
as a result of the Reverse Merger. The Company records minority interest for the
non-owned portions of consolidated subsidiaries, however, these subsidiaries
have not generated any income to warrant the recording of such minority
interests through September 30, 2007. All significant inter-company transactions
and accounts have been eliminated in these condensed consolidated financial
statements.

Interim Financial Statements
----------------------------

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the rules and regulations of the Securities and
Exchange Commission (the "SEC") for interim financial reporting. Certain
information and footnote disclosures normally included in the Company's annual
financial statements have been condensed or omitted. In the Company's opinion,
the unaudited interim financial statements and accompanying notes reflect all
adjustments consisting of normal and recurring adjustments that are necessary
for a fair presentation of its financial position and operating results for the
interim periods ended September 30, 2007 and 2006. The results of operations for
such periods are not necessarily indicative of the results that may be expected
for the full year or any future period.

These unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2006.

Financial Statement Presentation
--------------------------------

Because the Company is engaged in the rental and sale of real estate, the
operating cycle may extend beyond one year. Accordingly, following the usual
practice of the real estate industry, the accompanying condensed consolidated
balance sheet is unclassified.

                                       10
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Going Concern
-------------

The Company has suffered recurring losses from operations. During the nine
months ended September 30, 2007, the Company had a net loss of $1,615,060;
negative cash flow from operations of $311,895 and has a net stockholders'
deficit of $10,124,233, all of which raise substantial doubt about the Company's
ability to continue as a going concern. Management plans to raise capital
through a combination of debt and equity financings and to manage cash flows
carefully. However, the Company has no assurance that sufficient cash flow will
be generated in the future to meet its operating requirements. As a result of
the above, the accompanying condensed consolidated financial statements have
been prepared assuming that the Company will continue as a going concern. The
condensed consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

Use of Estimates
----------------

The preparation of the Company's condensed consolidated financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates, judgments and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and
the reported amount of revenues and expenses during the reporting period. Actual
results may differ from these estimates under different assumptions or
conditions.

Real Estate
-----------

Real estate is stated at cost. The Company's real estate has been pledged as
security for various mortgage notes payable.

Depreciation
------------

Buildings are depreciated using the straight line method over an estimated
useful life of 40 years. Building improvements are depreciated using the
straight line method over their estimated service lives, as determined by
management, generally between 5 and 15 years. Depreciation expense for the three
and nine months ended September 30, 2007 and 2006 was $34,745, $35,233,
$104,235, and $103,779, respectively.

If impairment indicators are present, we compare the expected future
undiscounted cash flows for the long-lived asset against the carrying amount of
that asset. If the sum of the estimated undiscounted cash flows is less than the
carrying amount of the asset, an impairment loss would be recorded for the
difference between the estimated fair value and the carrying amount of the
asset.

The Company has not identified any impairment indicators and consequently has
not recognized any impairment losses.

                                       11
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents
-------------------------

All highly liquid investments with original maturities of three months or less
are considered to be cash equivalents. The Company maintains its cash accounts
with various financial institutions located in Hartford, Connecticut.

Cash balances are insured by the Federal Deposit Insurance Corporation up to
$100,000. As of September 30, 2007, the uninsured portion of cash balances held
at such financial institutions was $130,498.

Accounts Receivable - Tenants
-----------------------------

Tenant receivables are reported net of an allowance for doubtful accounts.
Management's estimate of the allowance is based on historical collection
experience and a review of the current status of specific tenant accounts
receivable. The Company fully reserves for moved-out balances. After a six month
period, the Company charges-off the moved out balances for the previous six
months against accounts receivable.

Investments in Trading Securities
---------------------------------

The Company accounts for its investments in trading securities in accordance
with Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Management determines the
appropriate classification of its investments in marketable securities at the
time of purchase. Securities that are bought and held principally for the
purpose of selling them in the near term are classified as trading securities.
Debt securities for which the Company does not have the intent or ability to
hold to maturity and equity securities not classified as trading securities are
classified as available-for-sale. The cost of investments sold is determined on
the specific identification or the first-in, first-out method. Trading
securities are reported at fair value with unrealized gains and losses
recognized in earnings (see Note 5), and available-for-sale securities are also
reported at fair value but unrealized gains and losses are shown in the caption
"unrealized gains (losses) on shares available-for-sale" included in
stockholders' equity. Management determines fair value of its investments based
on quoted market prices at each balance sheet date. At September 30, 2007, there
were no investments classified as trading securities.

Fair Value of Financial Instruments
-----------------------------------

The carrying value of the Company's financial instruments, including cash and
cash equivalents, accounts receivable, investments in trading securities,
accounts payable and accrued expenses and registration rights liability at
September 30, 2007, approximate their fair value because of their relatively
short maturities.


The carrying value of long-term debt consisting of notes payable - related party
and mortgage notes payable approximates their fair values based upon current
rates at which the Company could borrow funds with similar remaining maturities.

Concentrations of Credit Risk
-----------------------------

The Company's real estate is located in the same geographic area of Hartford,
CT. If this area experiences significant changes in its economy, this may have
an adverse effect on the Company's operations.

                                       12
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Derivative Financial Instruments
--------------------------------

Effective in the first quarter of 2007 the Company adopted FASB Staff Position
No. EITF 00-19-2 "Accounting for Registration Payment Arrangements" issued on
December 21, 2006 ("FSP 00-19-2"). FSP 00-19-2 specifies that the contingent
obligation to make future payments or otherwise transfer consideration under a
registration payment, whether issued as a separate agreement or included as a
provision of a financial instrument or other agreement, should be separately
recognized and measured in accordance with FASB Statement No. 5, "Accounting for
Contingencies." FSP 00-19-2 further clarifies that a financial instrument, such
as a warrant, subject to a registration payment arrangement should be accounted
for in accordance with other applicable generally accepted accounting principles
without regard to the contingent obligation to transfer consideration pursuant
to the registration payment arrangement. For registration payment arrangements
and financial instruments subject to those arrangements that were entered into
prior to the issuance of EITF 00-19-2, this guidance is effective for financial
statements issued for fiscal years beginning after December 15, 2006 and interim
periods within those fiscal years.

Deferred Financing Costs
------------------------

Deferred financing costs include fees and costs to obtain the Company's
mortgages and other notes payable. These costs are amortized over the terms of
the respective loans. Amortization expense for the three and nine months ended
September 30, 2007 and 2006 was $3,578, $3,578, $10,734, and $10,734,
respectively.

Revenue Recognition
-------------------

Leases entered into between tenants and the Company for the rental of apartment
units are generally year to year and are renewable upon consent of both parties
on an annual or monthly basis. The Company also offers shorter term leases.
Rental income is earned on a straight-line basis over the terms of the lease.
Advance receipts of rental income are deferred and classified as liabilities.

Loss Per Common Share
---------------------

Loss per common share (basic and diluted) is calculated based on the weighted
average number of common shares outstanding during the period. The common stock
equivalents for the Company's preferred stock and treasury shares were not
included in the computation of diluted loss per share because to do so would
have been anti-dilutive.

For the three and nine months ended September 30, 2007 and 2006, respectively,
1,571,570 and 55,000 of common stock equivalents were not included in the
calculation of diluted loss per share as their effect would be anti-dilutive.

                                       13
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes
------------

The Company accounts for income taxes following the asset and liability method
in accordance with SFAS No. 109, "Accounting for Income Taxes." Under such
method, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. The Company's income tax returns are prepared on the cash basis of
accounting. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years that the asset is
expected to be recovered or the liability settled. The types of deferred tax
assets are book versus tax depreciation and net operating losses.

In assessing the need for a valuation allowance, the Company estimates future
taxable income, considering the feasibility of ongoing tax planning strategies
and the realizability of tax loss carryforwards. Valuation allowances related to
deferred tax assets can be impacted by changes to tax laws, changes to statutory
tax rates and future taxable income levels. In the event the Company was to
determine that it would not be able to realize all or a portion of its deferred
tax assets in the future, it would increase the recorded valuation allowance
through a charge to income in the period in which the determination is made.
Conversely, if the Company were to determine that it would be able to realize
its deferred tax assets in the future in excess of the net carrying amount, it
would decrease the recorded valuation allowance through an increase to income in
the period in which that determination is made.

Adoption of New Accounting Policies
-----------------------------------

Effective January 1, 2007, the Company adopted Financial Accounting Standards
Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN
48") -- an interpretation of FASB Statement No. 109, "Accounting for Income
Taxes." The Interpretation addresses the determination of whether tax benefits
claimed or expected to be claimed on a tax return should be recorded in the
financial statements. Under FIN 48, the Company may recognize the tax benefit
from an uncertain tax position only if it is more likely than not that the tax
position will be sustained on examination by the taxing authorities, based on
the technical merits of the position. The tax benefits recognized in the
financial statements from such a position should be measured based on the
largest benefit that has a greater than fifty percent likelihood of being
realized upon ultimate settlement. FIN 48 also provides guidance on
de-recognition, classification, interest and penalties on income taxes,
accounting in interim periods and requires increased disclosures. At the date of
adoption, and as of September 30, 2007, the Company does not have a liability
for unrecognized tax benefits.

The Company files income tax returns in the U.S. federal jurisdiction and the
state of Connecticut. The Company is subject to U.S. federal or state income tax
examinations by tax authorities for years after 2002. During the periods open to
examination, the Company has net operating loss and tax credit carry forwards
for U.S. federal and state tax purposes that have attributes from closed
periods. Since these net operating losses and tax credit carry forwards may be
utilized in future periods, they remain subject to examination. The Company's
policy is to record interest and penalties on uncertain tax provisions as income
tax expense. As of September 30, 2007, the Company has no accrued interest or
penalties related to uncertain tax positions. The Company believes that it has
not taken any uncertain tax positions that would impact its condensed
consolidated financial statements as of September 30, 2007. Also as of the date
of adoption, and as of September 30, 2007, the Company does not have a liability
for unrecognized tax benefits.

                                       14
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

Effective in the first quarter of 2007 the Company adopted FASB Staff Position
No EITF 00-19-2 "Accounting for Registration Payment Arrangements" issued on
December 21, 2006 ("FSP 00-19-2"). FSP 00-19-2 specifies that the contingent
obligation to make future payments or otherwise transfer consideration under a
registration payment, whether issued as a separate agreement or included as a
provision of a financial instrument or other agreement, should be separately
recognized and measured in accordance with FASB Statement No. 5, "Accounting for
Contingencies." For registration payment arrangements and financial instruments
subject to those arrangements that were entered into prior to the issuance of
EITF 00-19-2, this guidance is effective for financial statements issued for
fiscal years beginning after December 15, 2006 and interim periods within those
fiscal years.

The Company has recorded the effect of applying FSP 00-19-2 to its derivative
liability using the cumulative-effect transition method, which resulted in an
increase in registration rights liability of $379,000, and with an offsetting
cumulative-effect entry to accumulated deficit (see Note 7). The cumulative
adjustment was not recorded in the condensed consolidated statement of
operations and prior periods were not adjusted.

Recent Accounting Pronouncements and Interpretations
----------------------------------------------------

FASB Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements," issued in September 2006, establishes a formal framework for
measuring fair value under GAAP. It defines and codifies the many definitions of
fair value included among various other authoritative literature, clarifies and,
in some instances, expands on the guidance for implementing fair value
measurements, and increases the level of disclosure required for fair value
measurements. Although SFAS No. 157 applies to and amends the provisions of
existing FASB and AICPA pronouncements, it does not, of itself, require any new
fair value measurements, nor does it establish valuation standards. SFAS No. 157
applies to all other accounting pronouncements requiring or permitting fair
value measurements, except for; SFAS No. 123 (R), share-based payment and
related pronouncements, the practicability exceptions to fair value
determinations allowed by various other authoritative pronouncements, and AICPA
Statements of Position 97-2 and 98-9 that deal with software revenue
recognition. This statement is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years. The Company is evaluating the impact of SFAS 157 on its
consolidated financial statements.

In February 2007, the FASB Issued SFAS No. 159, "Establishing the Fair Value
Option for Financial Assets and Liabilities" ("SFAS No. 159"). SFAS No. 159 was
to permit all entities to choose to elect, at specified election dates, to
measure eligible financial instruments at fair value. An entity shall report
unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date, and recognize upfront
costs and fees related to those items in earnings as incurred and not deferred.
SFAS No. 159 applies to fiscal years beginning after November 15, 2007, with
early adoption permitted for an entity that has also elected to apply the
provisions of SFAS No. 157, "Fair Value Measurements." An entity is prohibited
from retrospectively applying SFAS No. 159, unless it chooses early adoption.
SFAS No. 159 also applies to eligible items existing at November 15, 2007 (or
early adoption date). The Company is evaluating the impact the adoption of SFAS
No. 159 will have on the Company's consolidated financial statements.

                                       15
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 3 - NOTES PAYABLE

Promissory Notes Payable - Related Party
----------------------------------------

As of November 4, 2005 (the "Loan Date"), the Pre-Acquisition Eternal
Stockholders of Eternal Enterprise, Inc., which are comprised of David Mladen,
the Company's majority shareholder and sole officer and director, and Mr.
Mladen's son, daughter-in-law, daughter, and son-in-law, exchanged, in the
aggregate, 100% of the issued and outstanding shares of common stock of Eternal,
for (i) limited partnership interests representing 20% of the total partnership
interests in each of the Limited Partnerships, and (ii) unsecured promissory
notes payable to the Pre-Acquisition Eternal Stockholders in the aggregate
principal amount of $2,610,006 (the "LP Notes"). In consideration for the
Company's ownership of 80% of the total partnership interests of each of the
Limited Partnerships, the Company agreed to assume the LP Notes.

The interest rate on the LP Notes is 7% per annum. The entire balance of
principal and interest of the LP Notes is due and payable on November 4, 2010.
The LP Notes may be prepaid without penalty. All payments shall be applied first
toward the payment of interest and the balance towards the reduction of
principal.

For the nine months ended September 30, 2007, the Company paid Mr. Mladen a
total of $31,425 of principal, and $64,076 interest due under his portion of the
LP Notes. As of September 30, 2007, the aggregate principal amount of the LP
Notes was $2,578,581.

Equity Line
-----------

On August 29, 2006, the Company entered into an Investment Agreement with
Dutchess Private Equities Fund, L.P. (the "Investor"), pursuant to which the
Investor committed to purchase up to $25,000,000 of the Company's common stock
over the course of thirty six (36) months. The amount that the Company shall be
entitled to request from each purchase ("Puts") shall be equal to, at the
Company's election, either (i) $250,000, or (ii) 200% of the average daily
volume (U.S. market only) of the common stock for the 10 trading days prior to
the applicable put notice date, multiplied by the average of the 3 daily closing
bid prices immediately preceding the put date. The put date shall be the date
that the Investor receives a put notice of a draw down by the Company. The
purchase price shall be set at 93% of the lowest closing Best Bid price of the
common stock during the pricing period. The pricing period shall be the 5
consecutive trading days immediately after the put notice date. There are put
restrictions applied on days between the put date and the closing date with
respect to that particular Put. During this time, the Company shall not be
entitled to deliver another put notice. Further, the Company shall reserve the
right to withdraw that portion of the Put that is below 90% of the lowest
closing bid prices for the 10-trading day period immediately preceding each put
notice. See note 8.

                                       16
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 3 - NOTES PAYABLE -Continued

The Investor is not obligated to purchase any shares of common stock of the
Company, unless each of the following conditions are satisfied at the time of
purchase:

     o    a registration statement shall have been declared effective and shall
          remain effective and available for the resale of all the shares of
          common stock of the Company to be purchased by the Investor;

     o    the common stock of the Company shall be listed, and shall not have
          been suspended from trading for a period of two (2) consecutive
          trading days, and the Company shall not have been notified of any
          pending or threatened proceeding or other action to suspend the
          trading of its common stock;

     o    the Company must have complied with its obligations and must not
          otherwise be in breach of or in default under the Investment
          Agreement, or other related transaction documents;

     o   no injunction shall have been issued and remain in force, or action
         commenced by a governmental authority, which has not been stayed or
         abandoned, prohibiting the purchase or the issuance of the shares of
         the Company's common stock to be purchased; and

     o   the issuance of the shares of common stock of the Company will not
         violate any shareholder approval requirements of the principal market
         or exchange on which the common stock is traded.

To date, the Company has not delivered any Puts to Dutchess pursuant to the
Investment Agreement, and has no intention to do so in the foreseeable future.

In connection with the Investment Agreement, the Company paid the Investor a due
diligence fee of $15,000.


                                       17
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 3 - NOTES PAYABLE (Continued)

Mortgage Notes Payable
----------------------

On December 27, 2005, the Company borrowed an aggregate of $8,224,000 from
Astoria Federal Mortgage Corp. ("Astoria"), in connection with the refinancing
of the Properties, evidenced by eight notes payable (the "Mortgage Notes"). The
initial interest rate on the Mortgage Notes, of 5.625%, will remain in effect
for eighty four (84) months. Thereafter, the Mortgage Notes bear interest at a
rate equal to the five (5) year "Fixed Rate Advance" as determined by the
Federal Home Bank of New York, plus two and one half percent (2.5%), rounded to
the nearest one-eighth of one percent (0.125%) and the interest rate will be
adjusted every sixty (60) months. The loans are repayable in monthly
installments of principal and interest (which total $47,343), due on the first
day of each month, commencing February 1, 2006. The principal and interest
payments are based on a 360 month amortization. The Mortgage Notes mature on
January 1, 2018, at which time the entire unpaid principal balance, plus accrued
interest thereon, shall be due.

The Mortgage Notes are collateralized by each respective Property. David Mladen,
the Company's majority stockholder and sole officer and director, has guaranteed
up to 5% of the outstanding balance of the principal with interest for the life
of the loan. The Company incurred approximately $178,000 of deferred financing
costs related to these loans, which is being amortized over the life of the
mortgage notes payable (twelve years). Amortization expense was $10,734 for the
nine months ended on each of September 30, 2007 and 2006.

Future annual maturities of the mortgage notes payable as of September 30, 2007
were as follows:

  Fiscal Year         Amount
--------------------------------

      2007      $   29,098
      2008         120,561
      2009         127,521
      2010         134,881
      2011         142,667
   Thereafter    7,485,377
                ----------
                $8,040,105
================================

NOTE 4 - ESCROW ACCOUNT

As of September 30, 2007, the Company maintained an escrow account with Astoria
Federal Mortgage Corp. in the amount of $43,888 for the payment of real estate
taxes.

                                       18
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 5 - INVESTMENTS IN TRADING SECURITIES

Between July, 2006 and September, 2006, the Company purchased an aggregate of
4,969 shares of its common stock in the open market, through a brokerage account
held in the name of Excellency Investment Realty Trust I, L.P., a limited
partnership which is owned (i) 81% by the Company, and (ii) 19%, collectively,
by David Mladen, the Company's majority shareholder and sole officer and
director, and his son, daughter-in-law, daughter, and son-in-law. For accounting
purposes, these purchases were treated as treasury stock of which 2,500 of the
purchased shares were resold in the open market. The purchase price of these
shares was between $8.16 and $24.44, and the selling price per share was between
$11.66 and $24.26, or an average aggregate sales price of $17.44. The difference
between the purchased price and the sales price of $16,359 was recorded as
additional paid in capital in the accompanying condensed consolidated financial
statements. The Company paid $34,168 or $13.83 share for these 2,469 shares of
stock, and has recorded the acquisition of these shares as treasury stock shares
at cost in the accompanying consolidated financial statements. As of September
30, 2007, 2,469 shares of the Company's common stock are held in the Company's
brokerage account. The Company plans to hold and not sell the treasury stock.

As of September 30, 2007, the Company had no Investments In Trading Securities.
For the nine months ended September 30, 2007, the Company recognized a loss on
the sale of trading securities totaling $165,786.

NOTE 6 - RELATED PARTY TRANSACTIONS

Property Management
-------------------

Until June 30, 2006, the Company's properties were managed by White Knight
Management, LLC ("White Knight"), a related party owned (i) 99% by Goran Mladen,
the son of David Mladen, the Company's majority shareholder and sole officer and
director, and (ii) 0.2% by Gorica Mladen, David Mladen's daughter. The
Properties were managed pursuant to an oral agreement between White Knight and
the Company, according to which White Knight collected the rents for all eight
of the Company's properties and paid the Company's operating expenses. In
consideration for such services, White Knight was entitled to retain a
management fee of approximately 4% of the rent revenues of the Company.
Management fees were $31,019 for the nine months ended September 30, 2006.

As of June 30, 2006, White Knight retained amounts of rent in excess of expenses
paid (including management fee) on behalf of the Company totaling $32,182. The
Company has written off such amounts due from White Knight as the Company has
determined the amounts were not collectible.

The Company discontinued its arrangement with White Knight effective July 1,
2006. All of the Company's properties are now managed by the Company.

Goran Mladen and Gorica Mladen are employees of Eternal Enterprise, Inc., a
company which is owned 100%, in the aggregate, by limited partnerships that are
81% owned by the Company.

                                       19
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)


NOTE 6 - RELATED PARTY TRANSACTIONS -Continued

Rent-Free Apartments
--------------------

The Company provided rent-free apartments to David Mladen, its majority
shareholder and sole officer and director, and one of Mr. Mladen's family
members. As a result, the Company has recorded compensation expense to Mr.
Mladen for the nine months ended September 30, 2007 in the aggregate amount of
$6,000.

NOTE 7 - STOCKHOLDERS' DEFICIT

Liquidated Damages
------------------

In connection with David Mladen's purchase of 11,000 shares of the Company's
Series A Preferred Stock (the "Series A Preferred Stock"), the Company entered
into a Registration Rights Agreement with Mr. Mladen (the "Registration Rights
Agreement"), pursuant to which the Company agreed to prepare and, on or prior to
the sixtieth (60th) day following the date of such purchase, file with the
Securities and Exchange Commission ("SEC") a Resale Registration Statement on
Form SB-2 (the "Resale Registration Statement"), to register all of the shares
of the Company's Common Stock underlying the Series A Preferred Stock (the
"Conversion Shares"). Further, pursuant to the Registration Rights Agreement,
the Company is required to use best efforts to (a) have the SEC declare the
Resale Registration Statement effective within ninety (90) days after filing the
Resale Registration Statement with the SEC (or one hundred and twenty (120) days
in the event any comments on the Registration Statement are received from the
SEC), and (b) maintain the effectiveness of the Resale Registration Statement
until all such common shares have been sold or may be sold without volume
restrictions pursuant to Rule 144(k) of the Securities Act of 1933, as amended.

If the Company (i) fails to file the Resale Registration Statement, or (ii)
fails to have the Registration Statement declared effective within the required
period, or (iii) if effectiveness is not maintained, the Registration Rights
Agreement requires the Company to make payments to Mr. Mladen in an aggregate
amount equal to two percent (2%) per month of $9,000,000 (assuming the sale of
$9,000,000 of the aggregate fair market value of the Conversion Shares)
("Outstanding Principal Amount"), multiplied by the number of months (prorated
for partial months) until the failure is cured.

As of June 30, 2006, the Resale Registration Statement had not been filed. At
that time, Mr. Mladen agreed to waive $1,174,000 of liquidated damages due to
him, and such amount was accounted for as a contribution of capital as of that
date.

On October 24, 2006, the Resale Registration Statement had still not been filed.
At that time, Mr. Mladen agreed to waive an additional $720,000 in liquidated
damages, for the period between July 1, 2006 and October 31, 2006, in
consideration for 43,500 shares of the Company's Series C Preferred Stock. As of
September 30, 2007, $720,000 of these liquidated damages have been issued as
preferred stock and subsequently converted to common stock.

On November 29, 2006, the Company filed the Resale Registration Statement. On
February 2, 2007, the Resale Registration Statement was withdrawn by the Company
(see Note 8). Subsequently, Mr. Mladen agreed to waive any additional liquidated
damages due to him through March 31, 2007. For the six months ended September
30, 2007, an additional $720,000 of liquidated damages was accrued. As of
September 30, 2007, the Company has paid to Mr. Mladen approximately $267,910 as
payment towards reducing the liability. See note 8.

                                       20
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 7 - STOCKHOLDERS' DEFICIT-Continued

Prior to January 1, 2007, the Company accounted for liquidated damages in
accordance with View C of EITF 05-4 "Effect of Liquidated Damages Clause on a
Freestanding Financial Instrument Subject to EITF 00-19" ("EITF 05-4").

For the year ended December 31, 2006, the Company recorded a loss on derivative
instrument of $917,000. As of December 31, 2006, the liability amounted to
$1,241,000 and is included on the balance sheet as a derivative liability.

The Company elected to record the effects of applying FSP 00-19-2 using the
cumulative-effect transition method, which resulted in eliminating the Company's
derivative liability at the beginning of the first quarter of fiscal 2007,
creating a registration rights liability estimated at nine months of liquidated
damages at $180,000 per month, with the offsetting cumulative-effect entry to
opening accumulated deficit. The cumulative adjustment was not recorded in the
statements of operations and previous periods were not adjusted. The impact on
previously reported accounts as of December 31, 2006, adjusted effective January
1, 2007, is as follows:

                                                 FSP 00-19-2
                                December 31,   cumulative-effect    January 1,
                                    2006          adjustment          2007
                                    ----          ----------          ----
Derivative liability            $ 1,241,000      $(1,241,000)     $         -
Registration rights liability   $         -      $ 1,620,000      $ 1,620,000
Accumulated deficit             $(8,130,173)     $  (379,000)     $(8,509,173)
Total stockholders' equity      $(5,892,687)     $  (379,000)     $(6,271,687)

The tax effect of the identified adjustments is not significant since the
Company has a full valuation allowance for deferred tax assets.

During the second quarter of 2007, the Company determined that it would need an
additional thirty days to satisfy its registration requirements under the
Registration Rights Agreement. Consequently, the Registration Rights Liability
was increased to $1,800,000. However, prior to June 30, 2007, the Company paid
Mr. Mladen an aggregate of $31,814 as payment towards reducing the Registration
Rights Liability. As a result, the Registration Rights Liability was $1,769,086
as of June 30, 2007.

During the third quarter of 2007, the Company determined that it would need an
additional three months to satisfy its registration requirements under the
Registration Rights Agreement. Consequently, the Registration Rights Liability
was increased to $2,309,086. However, prior to September 30,2007, the Company
has paid Mr. Mladen an aggregate of $267,910 as payment towards reducing the
Registration Rights Liability. As a result, the Registration Rights Liability
was $2,041,176 as of September 30, 2007.


                                       21
<PAGE>

            EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2007
                                   (unaudited)

NOTE 7 - STOCKHOLDERS' DEFICIT-Continued

As of May 25, 2007, Excellency Investment Realty Trust, Inc. (the "Company")
issued 30,000,000 shares of its common stock, $0.01 par value per share (the
"Shares"), for an intended business purpose the Company determined not to
pursue. The Shares were issued in the Company's own name, without any
consideration having been paid for such Shares, and have been recorded as
treasury stock.

NOTE 8 - CONTINGENCIES

SEC Filings
-----------

Under a 2005 rule change, OTC Bulletin Board ("OTCBB") issuers that are cited
for filing delinquency three times in a 24-month period and those removed for
failure to file two times in a 24-month period will be ineligible for quotation
by an NASD member. Following removal under this new rule, an issuer's securities
would again become eligible for quotation on the OTCBB when the issuer has filed
periodic reports for one year in a timely manner.

The Company was late with two of its periodic filings with the SEC during 2006.
Accordingly, the Company may be ineligible for quotation by an NASD member if it
is delinquent one more time in its periodic filings with the SEC during the
applicable 24-month period.

On November 29, 2006, the Company filed a Registration Statement on Form SB-2
(the "Resale Registration Statement") with the SEC to register (i) 5,000,000
shares of common stock issuable to Dutchess Private Equities Fund, LP
("Dutchess") in connection with an Investment Agreement between the Company and
Dutchess, and (ii) 1,573,000 shares of common stock issuable upon conversion of
shares of the Company's Series A convertible preferred stock held by David
Mladen, the Company's sole officer, director and majority shareholder. On
February 2, 2007, the Company filed a request to withdraw the Registration
Statement with the SEC.


                                       22
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS.

     The financial and business analysis below provides information which we
believe is relevant to an assessment and understanding of our financial
condition and results of operations. You should read the following discussion of
our financial condition and results of operations in conjunction with the Notes
to the Financial Statements in Item 1 of this Quarterly Report on Form 10-QSB,
and our Annual Report on Form 10-KSB for the year ended December 31, 2006, as
amended (the "Annual Report"). In addition to historical information, this
discussion contains statements that may be deemed to be "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
words "believes," "estimates," "expects," and "anticipates" and other similar
expressions that are predictions of, or indicate future events and trends, and
which do not relate solely to historical matters identify forward-looking
statements. Such forward-looking statements are subject to risks and
uncertainties, which could cause actual results, performance, or achievements of
ours to differ materially from anticipated future results, performance or
achievements expressed or implied by such forward-looking statements. Factors
that might cause such differences include, but are not limited to, the
following:

     o    Anticipated capital expenditures for replacements and building
          improvements all reflect our best estimates and are subject to
          uncertainties arising from changing economic conditions (such as the
          cost of labor and construction materials), competition and local
          government regulation;

     o    Sources of capital or labor and materials required for maintenance,
          repair, capital expenditure or development are more expensive than
          anticipated;

     o    Occupancy levels and market rents may be adversely affected by
          national and local economic and market conditions including, without
          limitation, new construction of multifamily housing, slow employment
          growth, availability of low interest mortgages for single-family home
          buyers and the potential for geopolitical instability, all of which
          are beyond our control;

     o    Our inability to derive sufficient revenues from our operations, or
          obtain financing when needed, would have a material adverse effect on
          our company, requiring us to curtail or cease operations; and

     o    Additional factors as discussed in Item 1 of our Annual Report, under
          the heading of "Risk Factors."

     Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. We undertake no obligation
to publicly release any revisions to these forward-looking statements, which may
be made to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.

                                       23
<PAGE>

OVERVIEW

     On September 4, 1963, we were incorporated in the State of Oklahoma as
Dorsett Educational Systems, Inc. On December 20, 2002, we changed our name to
Gift Liquidators, Inc. Since that time, prior to the sale of all of our gift and
novelty inventory in September 2005, our core business involved the wholesale
distribution of a diverse line of gift and novelty products acquired in
closeouts from gift developers and distributors.

     As of September 28, 2005 (the "Closing Date"), we entered into a Preferred
Stock Purchase Agreement with David Mladen, pursuant to which Mr. Mladen
purchased 11,000 shares of our Series A Convertible Preferred Stock, $0.01 par
value per share ("Series A Preferred Stock"), for an aggregate purchase price of
$10,000 (the "Preferred Stock Purchase Transaction"). As of the Closing Date,
each share of our Series A Preferred Stock was convertible into 5 shares of our
common stock, $0.01 par value per share ("Common Stock"), subject to adjustment
for stock dividends, stock splits, reclassifications, and similar events.

     In addition, as of the Closing Date, two of our former stockholders, one of
whom was an officer and director of ours, sold an aggregate of 33,761 shares of
our Common Stock to Mr. Mladen, which amount represented 28.6% of our issued and
outstanding Common Stock (the "Common Stock Purchase Transaction," and, together
with the Preferred Stock Purchase Transaction, the "Stock Purchase
Transactions").

     Further, as of the Closing Date, our existing officers and directors
resigned, and Mr. Mladen was appointed as our sole officer and director.

     As a result of the Stock Purchase Transactions, Mr. Mladen controlled
approximately 51.3% of our voting power. By virtue of (a) the percentage of our
Common Stock Mr. Mladen acquired, (b) the number of shares of Common Stock Mr.
Mladen would receive upon conversion of the shares of our Series A Preferred
Stock he purchased, (c) the resignation of all of our officers and directors,
and (d) the appointment of Mr. Mladen as our sole officer and director, there
was deemed to have been a "change in control" of our Company as of the Closing
Date.

     At the time of the Stock Purchase Transactions, Mr. Mladen was also the
majority stockholder and the sole officer and director of Eternal Enterprise,
Inc., a Connecticut Corporation ("Eternal"), which owned the following
residential real estate properties (collectively, the "Properties") in Hartford,
Connecticut:

          o    154-160A Collins Street, Hartford, CT;
          o    21 Evergreen Avenue, Hartford, CT;
          o    243 & 255 Laurel Street, Hartford, CT;
          o    252 Laurel Street, Hartford CT;
          o    270 Laurel Street, Hartford, CT;
          o    360 Laurel Street, Hartford, CT;
          o    117-145 S. Marshall Street, Hartford, CT; and
          o    56 Webster Street, Hartford, CT.

     Mr. Mladen entered into the Stock Purchase Transactions with the specific
intention of taking control of our Company, and, subsequently, combining it with
Eternal.

                                       24
<PAGE>

     In connection with the Stock Purchase Transactions, and the corresponding
decision by Mr. Mladen to have our Company exit the gift liquidation business,
effective as of the Closing Date, we:

          o    Entered into an Asset Sale Agreement with Laid Back Enterprises,
Inc. ("Laid Back"), a company owned and controlled by two of our former officer
and directors, pursuant to which Laid Back purchased all of our non-cash assets,
including all of our inventory in exchange for the cancellation of our
indebtedness to Laid Back in the aggregate amount of $50,485;

          o    Terminated our Administrative Services Agreement with Laid Back,
dated December 20, 2002, pursuant to which we had been receiving certain
personnel, sales, marketing, accounting and other administrative services from
Laid Back; and

          o    Terminated our Tax Sharing Agreement with Laid Back, dated
December 20, 2002, pursuant to which we had been sharing certain tax
responsibilities with Laid Back.

     Between October 26, 2005 and October 31, 2005, we formed eight limited
partnerships as wholly-owned Delaware subsidiaries of ours (the "Limited
Partnerships"). At the time of formation, we owned 100% of the partnership
interests of each of the Limited Partnerships.

     As of November 4, 2005, the pre-acquisition stockholders of Eternal, which
consisted of David Mladen and certain of his family members (the
"Pre-Acquisition Eternal Stockholders"), exchanged, in the aggregate, 100% of
the issued and outstanding shares of common stock of Eternal, for (i) limited
partnership interests representing 20% of the total partnership interests of
each of the Limited Partnerships, and (b) promissory notes in the aggregate
principal amount of $2,610,006 (the "LP Notes") (the "Eternal Acquisition"). The
partnership interests of the Limited Partnerships were exchanged for shares of
common stock of Eternal based upon the ratio which the value of each Property
bears to the aggregate value of all of the Properties. As a result of the
Eternal Acquisition, the shares of common stock of Eternal are now 100% owned,
in the aggregate, by the Limited Partnerships. In consideration for our
ownership of 80% of the total partnership interests of each of the Limited
Partnerships, we agreed to assume the LP Notes.

     Pursuant to the Partnership Agreements of the Limited Partnerships (the
"Partnership Agreements"), among other things, we (i) are the general partner of
each of the Limited Partnerships; and (ii) have the right to compel the limited
partners (i.e., the Pre-Acquisition Eternal Stockholders) to exchange 100% of
their limited partnership interests for shares of our Common Stock.

     Since, at the effective time of the Eternal Acquisition (and the Preferred
Stock Purchase Transaction and the Common Stock Purchase Transaction,
consummated in anticipation thereof): (i) the Pre-Acquisition Eternal
Stockholders obtained a majority of the shares of common stock of the combined
entity after the combination, (ii) Pre-Acquisition Eternal Stockholders obtained
the ability to elect and appoint a voting majority of the governing board of the
combined entity, and (iii) Eternal's officers and directors replaced ours as
officers and directors of the combined entity, the Eternal Acquisition was
treated as a reverse merger with Eternal as the accounting acquirer for
financial reporting purposes.

     Following the Stock Purchase Transactions and the Eternal Acquisition, the
business of Eternal, which is now 100% owned, in the aggregate, by the Limited
Partnerships, became our primary business.

     We intend to qualify as a real estate investment trust, or REIT, under the
Internal Revenue Code of 1986, as amended. Therefore, in fiscal 2006 our
management determined to change our domicile to the State of Maryland, to take
advantage of Maryland's detailed and comprehensive REIT laws.

                                       25
<PAGE>

     On September 20, 2006, we reincorporated in the State of Maryland by virtue
of our merger with and into Excellency Investment Realty Trust, Inc., our
Maryland subsidiary (the "Maryland Subsidiary"), which had been organized for
that purpose (the "Reincorporation by Merger"). As a result of the
Reincorporation by Merger, among other things:

          o    The surviving company and successor filer is known as Excellency
Investment Realty Trust, Inc.;

          o    Each share of our issued and outstanding Common Stock and
preferred stock was converted into one share of the Maryland Subsidiary's common
stock and preferred stock, respectively;

          o    The title to all of our property automatically vested in the
Maryland Subsidiary;

          o    The Maryland Subsidiary assumed all of our liabilities;

          o    Corporate actions of the surviving entity are now governed by the
Maryland Corporations and Associations Law and by the Maryland Subsidiary's
Articles of Amendment and Restatement of Articles of Incorporation and Bylaws;

          o    David Mladen, our sole officer and director, continued to serve
as the sole officer and director of the surviving entity;

          o    The trading symbol for the surviving entity's common stock, which
is quoted on the over-the-counter bulletin board of the National Association of
Securities Dealers, was changed to "EIVR"; and

          o    The total number of shares of stock which the surviving entity is
authorized to issue has increased to 201,000,000 shares, of which 200,000,000
shares are common stock, $0.01 par value per share and 1,000,000 are preferred
stock, par value $0.01.

     While the Reincorporation by Merger resulted in changes to our name and
state of incorporation, as well as the other changes listed above, it did not
result in any material changes to our business, management, assets, liabilities
or net worth.

TRENDS AND UNCERTAINTIES

     We are not aware of any material trends or uncertainties, favorable or
unfavorable, other than national economic conditions affecting real estate
generally, that may be reasonably anticipated to have a material impact on
either capital resources or the revenues or income to be derived from the
acquisition and operation of the Properties, other than those identified below.

Increasing Demand For Rental Apartments
---------------------------------------

     Based on certain demographic trends, in particular, the growth of the "Echo
Boomer" generation, we believe we are well-positioned to continue achieving our
objectives. While there is no guarantee that individuals making up this group
will choose renting versus ownership, we believe the increase in this age group
will have a positive demand for the number of rental households. Echo Boomers
are now entering into the age group having the greatest propensity to rent. The
number of individuals between the ages of 18-39 is expected to grow
significantly over the next 20 years.

                                       26
<PAGE>

Strong Demand Due To Interest Rate Environment
----------------------------------------------

     The 40-year historic lows reached on mortgage interest rates in recent
years provided some individuals with the opportunity to purchase homes at
similar costs to renting, particularly when utilizing short-term variable
mortgages. However, with the more recent increases in interest rates, this
attractive alternative may have faded for some and the apartment sector is in a
position to reap the benefits. If a higher interest rate environment continues,
then the number of individuals purchasing homes will typically decline. As
rental apartments directly compete with the single-family home and condominium
sectors of the economy, the demand for new and existing rental apartment
communities may rise when demand for purchasing homes falls. We believe this
will be beneficial for apartment owners as it should translate into greater
demand, higher occupancy rates, fewer concessions needed to attract renters, and
therefore increased profitability of our apartment communities.

Increased Income And Distributions Due To Healthy U.S. Economy
--------------------------------------------------------------

     Generally, healthy employment in a particular market area enables apartment
owners to increase rents charged to tenants. As employment across locations in
which we own apartment buildings continues to improve and stabilize, apartment
owners in these locations should be able to increase rents ahead of expenses
which should increase the revenue we receive from our apartment buildings. As a
result, the amount of cash available for distribution to our stockholders should
increase. However, our actual results of operations and, accordingly, cash
available for distribution, will be affected by a number of factors, including
the revenue we receive from our communities, our operating expenses, our debt
obligations, interest expense, the ability of our residents to meet their
obligations, and unanticipated expenditures.

MORTGAGE NOTES PAYABLE

     As a result of the Eternal Acquisition, we are the owner of eight
Properties, all in the metropolitan Hartford, Connecticut area.

     As of December 27, 2005, we borrowed an aggregate of $8,224,000 from
Astoria Federal Mortgage Corp., in connection with the refinancing of the
Properties, evidenced by eight notes payable (the "Mortgage Notes"). The
Mortgage Notes bear interest at a rate equal to the five (5) year "Fixed Rate
Advance" as determined by the Federal Home Bank of New York, plus 2.500%,
rounded to the nearest one-eighth of one percent (0.125%). The initial interest
rate on the Mortgage Notes, of 5.625%, will remain in effect for 84 months.
Thereafter, the interest rate will be adjusted every sixty (60) months. The
loans are repayable in monthly installments of principal and interest, due on
the first day of each month, commencing February 1, 2006. The principal and
interest payments will be based on a 360 month amortization. The Mortgage Notes
mature on January 1, 2018, at which time the entire unpaid principal balance,
plus accrued interest thereon, shall be payable. The Mortgage Notes are secured
against each respective Property. David Mladen, our majority stockholder, and
sole officer and director, has guaranteed up to 5% of the outstanding balance of
the principal with interest for the life of the loan.

                                       27
<PAGE>

     The following sets forth certain material terms of each of the Mortgage
Notes as of September 30, 2007:

       -------------------------------------------------------------------------
                                                                       Monthly
                                                      Mortgage        Principal
                                                     Note Amount        and
                                                        (as of        Interest
                                                    September 30,     Payment
       Location of Property                             2007)
       -------------------------------------------------------------------------
       154-160A Collins Street, Hartford, CT       $  1,274,842    $     7,507
       -------------------------------------------------------------------------
       21 Evergreen Avenue, Hartford, CT           $    688,258    $     4,053
       -------------------------------------------------------------------------
       243 & 255 Laurel Street, Hartford, CT       $  1,102,777    $     6,493
       -------------------------------------------------------------------------
       252 Laurel Street, Hartford CT              $    570,942    $     3,362
       -------------------------------------------------------------------------
       270 Laurel Street, Hartford, CT             $  1,955,278    $    11,513
       -------------------------------------------------------------------------
       360 Laurel Street, Hartford, CT             $    578,762    $     3,408
       -------------------------------------------------------------------------
       117-145 S. Marshall Street, Hartford, CT    $  1,399,980    $     8,243
       -------------------------------------------------------------------------
       56 Webster Street, Hartford, CT             $    469,266    $     2,763
       ------------------------------------------===============================
             Total:                                $  8,040,105    $    47,342
       ------------------------------------------===============================

PROMISSORY NOTES PAYABLE - RELATED PARTY

     As of November 4, 2005 (the "Loan Date"), the Pre-Acquisition Eternal
Stockholders of Eternal Enterprise, Inc., which were comprised of David Mladen,
our majority shareholder and sole officer and director, and Mr. Mladen's son,
daughter-in-law, daughter, and son-in-law, exchanged, in the aggregate, 100% of
the issued and outstanding shares of common stock of Eternal, for (i) limited
partnership interests representing 20% of the total partnership interests in
each of the Limited Partnerships, and (ii) unsecured promissory notes payable to
the Pre-Acquisition Eternal Stockholders in the aggregate principal amount of
$2,610,006 (the "LP Notes"). In consideration for our ownership of 80% of the
total partnership interests of each of the Limited Partnerships, we agreed to
assume the LP Notes.

     The interest rate on the LP Notes is 7% per annum. The entire balance of
principal and interest of the LP Notes is due and payable on November 4, 2010.
The LP Notes may be prepaid without penalty. All payments shall be applied first
toward the payment of interest and the balance towards the reduction of
principal.

     For the nine months ended September 30, 2007, we paid Mr. Mladen a total of
$31,425 of principal, and $64,076 of interest due under his portion of the LP
Notes. As a result, an aggregate of $2,578,581 of principal was due under the LP
Notes as of September 30, 2007.

EQUITY LINE OF CREDIT

     On August 29, 2006, we entered into an Investment Agreement with Dutchess
Private Equities Fund, L.P. ("Dutchess"), pursuant to which Dutchess committed
to purchase up to $25,000,000 of our Common Stock over the course of thirty six
(36) months. The amount that we will be entitled to request from each purchase
("Puts") shall be equal to, at our election, either (i) $250,000, or (ii) 200%
of the average daily volume (U.S. market only) of the Common Stock for the 10
trading days prior to the applicable put notice date, multiplied by the average
of the 3 daily closing bid prices immediately preceding the put date. The put
date shall be the date that Dutchess receives a put notice of a draw down by us.
The purchase price shall be set at 93% of the lowest closing Best Bid price of
the Common Stock during the pricing period. The pricing period shall be the 5
consecutive trading days immediately after the put notice date. There are put
restrictions applied on days between the put date and the closing date with

                                       28
<PAGE>

respect to that particular Put. During this time, we shall not be entitled to
deliver another put notice. Further, we shall reserve the right to withdraw that
portion of the Put that is below 90% of the lowest closing bid prices for the
10-trading day period immediately preceding each put notice.

     Dutchess is not obligated to purchase any shares of our Common Stock unless
each of the following conditions are satisfied at the time of purchase:

          o    A registration statement shall have been declared effective and
shall remain effective and available for the resale of all the shares of our
Common Stock to be purchased by Dutchess;

          o    Our Common Stock shall be listed, and shall not have been
suspended from trading for a period of two (2) consecutive trading days, and we
shall not have been notified of any pending or threatened proceeding or other
action to suspend the trading of our Common Stock;

          o    We must have complied with our obligations and must not otherwise
be in breach of or in default under the Investment Agreement, or other related
transaction documents;

          o    No injunction shall have been issued and remain in force, or
action commenced by a governmental authority, which has not been stayed or
abandoned, prohibiting the purchase or the issuance of the shares of our Common
Stock to be purchased; and

          o    The issuance of the shares of our Common Stock will not violate
any shareholder approval requirements of the principal market or exchange on
which our Common Stock is traded.

     As of the date hereof, we have not delivered any Puts to Dutchess pursuant
to the Investment Agreement, and we have no intention to do so in the
foreseeable future.

LIQUIDATED DAMAGES

     In connection with David Mladen's purchase of 11,000 shares of our Series A
Preferred Stock (the "Preferred Stock") on September 29, 2005, we entered into a
Registration Rights Agreement with Mr. Mladen (the "Registration Rights
Agreement"), pursuant to which we agreed to prepare, and, on or prior to the
sixtieth (60th) day following the date of such purchase, file with the
Securities and Exchange Commission a resale Registration Statement on Form SB-2
(the "Resale Registration Statement"), to register all of the shares of our
Common Stock underlying the Preferred Stock. Further, pursuant to the
Registration Rights Agreement, we are required to use best efforts to (a) have
the SEC declare the Resale Registration Statement effective within ninety (90)
days after filing the Resale Registration Statement with the SEC (or one hundred
and twenty (120) days if we receive any comments on the Registration Statement
from the SEC), and (b) maintain the effectiveness of the Resale Registration
Statement until all such common shares have been sold or may be sold without
volume restrictions pursuant to Rule 144(k) of the Securities Act of 1933, as
amended.

     If we (i) fail to file the Resale Registration Statement, or (ii) fail to
have the Registration Statement declared effective within required period, or
(iii) if effectiveness is not maintained, the Registration Rights Agreement
requires us to make payments to Mr. Mladen in an aggregate amount equal to two
percent (2%) per month of $9,000,000 (assuming the sale of $9,000,000 of the
aggregate fair market value of the Conversion Shares), multiplied by the number
of months (prorated for partial months) until the failure is cured.

                                       29
<PAGE>

     We were not able to file the Resale Registration Statement on or prior to
the required filing date and, as a result, began incurring liquidated damages
equal to $180,000 per month (the "Liquidated Damages").

     As of June 30, 2006, we had still failed to file the Resale Registration
Statement. At that time, Mr. Mladen agreed to waive approximately $1,174,000 of
Liquidated Damages due to him pursuant to the Registration Rights Agreement.
Such amount was accounted for in our financial statements as a contribution of
capital.

     On October 18, 2006, we issued 43,500 shares of our Series C convertible
preferred stock to Mr. Mladen, in consideration for his agreement to waive an
additional $720,000 of Liquidated Damages due to him for the period between July
1, 2006 and October 31, 2006.

     The Resale Registration Statement was filed on November 29, 2006, however,
on February 2, 2007, we requested its withdrawal. Subsequently, Mr. Mladen
agreed to waive any additional Liquidated Damages due to him through March 31,
2007.

     Through December 31, 2006, we accounted for the Registration Rights
Agreement as a separate freestanding instrument and accounted for the Liquidated
Damages provision as a derivative liability subject to SFAS 133 and EITF 00-19.
Accordingly, the liability was recorded at estimated fair value based on an
estimate of the probability and costs of cash penalties being incurred and was
revalued at each balance sheet date, with changes in value recorded in other
income. As of December 31, 2006, the liability amounted to approximately
$1,241,000 and was included on the balance sheet as a derivative liability. For
the year ended December 31, 2006, we recorded a loss on derivative instrument of
$917,000.

     As of January 1, 2007, we adopted View C of EITF 05-4, "Effect of
Liquidated Damages Clause on a Freestanding Financial Instrument Subject to EITF
00-19." Subsequently, we elected to record the effects of adopting FSP 00-19-2
using the cumulative-effect transition method, which resulted in eliminating our
derivative liability at the beginning of the first quarter of fiscal 2007, and
recording the offsetting cumulative-effect entry to the opening accumulated
deficit in accordance with GAAP guidance. Based upon our estimation that we
could have the Resale Registration Statement filed and effective by December 31,
2007, a registration rights liability valued in accordance with SFAS No. 5 was
estimated at $1,620,000 (the "Registration Rights Liability"). The cumulative
adjustment was not recorded in the statements of operations and previous periods
were not adjusted. The impact on previously reported accounts as of December 31,
2006, adjusted effective January 1, 2007, were as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                                         FSP 00-19-2
                                                                      cumulative-effect
                                              December 31, 2006           adjustment      January 1, 2007
-------------------------------------------------------------------------------------------------------------
<S>                                           <C>                    <C>                  <C>
Derivative liability                          $     1,241,000        $     (1,241,000)    $            -
-------------------------------------------------------------------------------------------------------------
Registration rights liability                 $             -        $      1,620,000     $    1,620,000
-------------------------------------------------------------------------------------------------------------
Accumulated deficit                           $    (8,130,173)       $       (379,000)    $   (8,509,173)
-------------------------------------------------------------------------------------------------------------
Total stockholders' equity                    $    (5,892,687)       $       (379,000)    $   (6,271,687)
-------------------------------------------------------------------------------------------------------------
</TABLE>

     The tax effect of the identified adjustments is not significant since we
have a full valuation allowance for deferred tax assets.

                                       30
<PAGE>

     During the second quarter of 2007, we determined that we would need an
additional thirty days to satisfy our registration requirements under the
Registration Rights Agreement. Consequently, the Registration Rights Liability
was increased to $1,800,000. However, prior to June 30, 2007, we paid Mr. Mladen
an aggregate of $31,814 as payment towards reducing the Registration Rights
Liability. As a result, the Registration Rights Liability was $1,769,086 as of
June 30, 2007.

     During the third quarter of 2007, we determined that we would need an
additional three months to satisfy our registration requirements under the
Registration Rights Agreement. Consequently, the Registration Rights Liability
was increased to $2,309,086. However, prior to September 30, 2007, we paid Mr.
Mladen an aggregate of $267,910 as payment towards reducing the Registration
Rights Liability. As a result, the Registration Rights Liability was $2,041,176
as of September 30, 2007.

TREASURY SHARES

As of May 25, 2007, we issued 30,000,000 shares of our Common Stock (the
"Shares") for an intended business purpose we determined not to pursue. The
Shares were issued in our own name, without any consideration having been paid
for such Shares, and have been recorded as treasury stock.

We are in process of rescinding this issuance. Upon such rescission, (i) the
Shares will be returned to our number of authorized and unissued shares, and
(ii) we will have 43,761,537 shares of Common Stock issued and outstanding.

PROPERTY INFORMATION

     As of September 30, 2007, we owned interests in eight properties. Details
on the properties are as follows:

<TABLE>
<CAPTION>
     ----------------------------------------------------------------------------------------
                                          Number and           Rent Range       Vacancies
     Location                           Type of Units
     ----------------------------------------------------------------------------------------
<S>  <C>                            <C>                         <C>                  <C>
     154-160A Collins Street        41 units:                                        3
     Hartford, CT                   3 three-bedroom             $750
                                    1 one-and a-half-bedroom    $650
                                    37 one-bedroom              $600
     ----------------------------------------------------------------------------------------
     21 Evergreen Avenue            24 units:                                        0
     Hartford, CT                   18 one-bedroom              $625 - $650
                                    6 studios                   $500 - $550
     ----------------------------------------------------------------------------------------
     243 & 255 Laurel Street        34 units:                                        2
     Hartford, CT                   4 two-bedroom               $725 - $775
                                    30 one-bedroom              $600 - $625
     ----------------------------------------------------------------------------------------
     252 Laurel Street              21 units:                                        1
     Hartford, CT                   2 two-bedroom               $750
                                    16 one-bedroom              $625
                                    3 studios                   $450 - $475
     ----------------------------------------------------------------------------------------
     270 Laurel Street              77 units:                                        3
     Hartford, CT                   1 two-bedroom               $825
                                    3 one-bedroom               $650
                                    73 studios                  $500 - $550
     ----------------------------------------------------------------------------------------
     360 Laurel Street              18 units:                                        4
     Hartford, CT                   3 two-bedroom               $650 - $700
                                    15 one-bedroom              $600 - $625
     ----------------------------------------------------------------------------------------
     117-145 S. Marshall Street     42 units:                                        3
     Hartford, CT                   36 two bedroom              $700 - $725
                                    6 one-bedroom               $600 - $625
     ----------------------------------------------------------------------------------------
     56 Webster Street              16 units:                                        2
     Hartford, CT                   10 one-bedroom              $500
                                    6 studios                   $400
     ----------------------------------------------------------------------------------------
</TABLE>

                                       31
<PAGE>

RESULTS OF OPERATIONS

COMPARISON OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2007 TO
THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2006

     The following summarizes changes in our operations for the three-month
period ended September 30, 2007 and 2006. Our net loss for the three-month
period ended September 30, 2007, was $723,015, as compared to a net loss of
$1,010,135 in the same period in the prior year. The primary reasons for the
decrease in our net loss from the same period in the prior year were reductions
in our general and administrative expenses, our gain from the sale of trading
securities compared to a realized loss from sale of trading securities in the
same period in the prior year, and the fact that, unlike in the prior year, we
did not incur an unrealized loss on trading securities, partially offset by an
increase in our loss on derivative liability.

RENTAL REVENUE

     Revenues increased $16,063, or approximately 4.2%, to $397,195 from
$381,132, in the three-month period ended September 30, 2007, as compared to the
three-month period ended September 30, 2006. This increase was primarily related
to higher rents and occupancy rates at our Properties.

PROPERTY OPERATING COSTS

     Property operating costs decreased $18,741, or approximately 7.2%, to
$242,097 from $260,838, in the three-month period ended September 30, 2007, as
compared to the same period in the prior year. This decrease was primarily
related to reduced utility costs.

GENERAL AND ADMINISTRATIVE

     General and administrative expense decreased $255,149, or approximately
63.7%, to $145,311 from $400,460, in the three-month period ended September 30,
2007, as compared to the three-month period ended September 30, 2006. This
decrease was due to decreased professional fees incurred in connection with
regulatory filings.

DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expense in the three-month period ended
September 30, 2007 was $38,323, as compared to $38,811 in the third quarter of
fiscal 2006.

INTEREST EXPENSE

     Interest expense decreased $8,236, or approximately 4.9%, to $158,459 from
$166,695, in the third quarter of the current year, as compared to the
three-month period ended September 30, 2006.

REALIZED LOSS FROM SALES OF TRADING SECURITIES

     In the three-month period ended September 30, 2007, we gained $2,962 from
sales of trading securities compared to a loss of $305,915 in the same period of
fiscal 2006. We have discontinued the practice of trading equity securities of
publicly traded companies.

                                       32
<PAGE>

LOSS ON DERIVATIVE LIABILITY

     For the three-month period ended September 30, 2007, we incurred a loss on
derivative liability in the amount of $540,000 resulting from our failure to
satisfy certain registration requirements of ours, as further described in the
"Liquidated Damages" section above. Since the registration rights holder waived
the majority of Liquidated Damages due to him for the three-month period ended
September 30, 2006, we incurred a loss on derivative liability of only $30,000
for that period.

NET UNREALIZED LOSS ON TRADING SECURITIES

     A primary investment strategy we used in fiscal 2006 consisted of the
short-selling of equity securities of publicly traded companies, which results
in obligations to purchase securities at a later date. We determined that the
short selling of securities was not a prudent investment strategy and
discontinued this practice. As a result, we did not have a net unrealized loss
on trading securities in the three-month period ended September 30, 2007,
compared to a net unrealized loss on trading securities of $211,019 in the
three-month period ended September 30, 2006.

COMPARISON OF OPERATIONS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2007 TO
THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2006

     The following summarizes changes in our operations for the nine-month
period ended September 30, 2007 and 2006. Our net loss for the nine-month period
ended September 30, 2007, was $1,615,060, as compared to a net loss of
$1,328,311 in the same period in the prior year. The primary reasons for the
increase in our net loss from the same period in the prior year was our loss on
derivative liability and an increase in property operating costs, partially
offset by reductions in our general and administrative expenses and realized
loss from sale of trading securities, and the fact that, unlike in the prior
year, we did not incur an unrealized loss on trading securities.

RENTAL REVENUE

     Revenues increased $29,199, or approximately 2.5%, to $1,182,795 from
$1,153,596, in the nine-month period ended September 30, 2007, as compared to
the nine-month period ended September 30, 2006. This increase was primarily
related to higher rents and occupancy rates at our Properties.

PROPERTY OPERATING COSTS

     Property operating costs increased $20,344, or approximately 2.7%, to
$760,964 from $740,620, in the nine-month period ended September 30, 2007, as
compared to the same period in the prior year. This increase was primarily
related to an increase in utility costs.

GENERAL AND ADMINISTRATIVE

     General and administrative expense decreased $268,279, or approximately
31.6%, to $583,279 from $852,133, in the nine-month period ended September 30,
2007, as compared to the nine-month period ended September 30, 2006. This
decrease was due to decreased professional fees incurred in connection with
regulatory filings.

DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expense in the nine-month period ended
September 30, 2007 was $114,969, as compared to $114,513 in the first nine
months of fiscal 2006.

                                       33
<PAGE>

MANAGEMENT FEE - RELATED PARTY

     Until June 30, 2006, our Properties were managed by White Knight
Management, LLC ("White Knight"), a related party owned (a) 99% by Goran Mladen,
the son of David Mladen, our majority shareholder and sole officer and director,
and (b) 1% by Gorica Mladen, David Mladen's daughter. The Properties were
managed pursuant to an oral agreement we had with White Knight, according to
which White Knight collected the rents for all eight of our properties and paid
our operating expenses. In consideration for such services, White Knight was
entitled to retain a management fee of approximately 4% of our rent revenues.
Effective as of July 1, 2006, we discontinued our arrangement with White Knight
and assumed responsibility for the management of our Properties. As a result,
there were no property management fees for the nine-month period ended September
30, 2007, compared to $31,019 of property management fees paid to a related
party in the same period in the prior year.

INTEREST EXPENSE

     Interest expense increased $17,729, or approximately 3.9%, to $476,575 from
$458,846, in the first nine months of the current year, as compared to the
nine-month period ended September 30, 2006. The reason for this increase was
primarily related to increased interest on the promissory notes under our
mortgage notes payable.

REALIZED LOSS FROM SALES OF TRADING SECURITIES

     In the nine-month period ended September 30, 2007, we lost $165,786 from
sales of trading securities. In the same period in the prior year we lost
$315,943 from sales of trading securities. We have discontinued the practice of
trading equity securities of publicly traded companies.

LOSS ON DERIVATIVE LIABILITY

     For the nine-month period ended September 30, 2007, we incurred a loss on
derivative liability in the amount of $720,000 resulting from our failure to
satisfy certain registration requirements of ours, as further described in the
"Liquidated Damages" section above. For the nine-month period ended September
30, 2006, we did not incur a loss on derivative liability.

NET UNREALIZED LOSS ON TRADING SECURITIES

     A primary investment strategy we used in fiscal 2006 consisted of the
short-selling of equity securities of publicly traded companies, which results
in obligations to purchase securities at a later date. We determined that the
short selling of securities was not a prudent investment strategy and
discontinued this practice. As a result, we did not have a net unrealized loss
on trading securities in the nine-month period ended September 30, 2007,
compared to a net unrealized loss on trading securities of $30,219 in the
nine-month period ended September 30, 2006.

LIQUIDITY AND CAPITAL RESOURCES

     We have suffered recurring losses from operations and have a net
stockholders' deficit of $10,124,233 as of September 30, 2007. Our cash and cash
equivalents balance at September 30, 2007 was $229,293, which represents a
decrease of $841,200 as compared to our cash and cash equivalents balance of
$1,070,493 at December 31, 2006. We expect that the rental income we receive
from tenants of our Properties will be our primary source of funds going
forward. In order to acquire additional apartment properties, and, if necessary,
to fund our operations, we may determine to take out additional loans from

                                       34
<PAGE>

financial institutions or raise funds from one or a combination of debt
offerings and equity offerings. Management plans to manage cash flows carefully.
However, we have no assurance that sufficient cash flow will be generated in the
future to meet our operating requirements. This raises substantial doubt about
our ability to continue as a going concern.

USES OF CAPITAL

Net Cash Used In Operations
---------------------------

     During the nine-month period ended September 30, 2007, we used $311,895 in
operations, compared to $876,527 used in operations during the nine-month period
ended September 30, 2006. The primary reason for this increase was our loss on
derivative liability and realized loss on sale of investments, and an increase
in accounts payable and accrued expenses.

Net Cash Used In Investing Activities
-------------------------------------

     During the first nine months of fiscal 2007, we used $114,172 in investing
activities, compared to $7,200 used in investing activities in the same period
in fiscal 20006. All of the funds used in investing activities were related to
our purchases of trading securities.

Net Cash Used In Financing Activities
-------------------------------------

     During the nine-month period ended September 30, 2007, we used $415,133 in
financing activities, compared to $380,810 provided from financing activities
during the corresponding period in the prior year. The primary reason for this
difference was the receipt of proceeds from margin loans repaid in the first
nine months of fiscal 2006.

CRITICAL ACCOUNTING POLICIES

Use of Estimates
----------------

     The preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates, judgments and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results may differ from these estimates under different assumptions or
conditions.

Derivative Financial Instruments
--------------------------------

     Effective in the first quarter of 2007, we adopted FASB Staff Position No.
EITF 00-19-2 "Accounting for Registration Payment Arrangements" issued on
December 21, 2006 ("FSP 00-19-2"). FSP 00-19-2 specifies that the contingent
obligation to make future payments or otherwise transfer consideration under a
registration payment arrangement, whether issued as a separate agreement or
included as a provision of a financial instrument or other agreement, should be
separately recognized and measured in accordance with FASB Statement No. 5,
"Accounting for Contingencies". FSP 00-19-2 further clarifies that a financial
instrument, such as convertible preferred stock, subject to a registration
payment arrangement should be accounted for in accordance with other applicable
generally accepted accounting principles without regard to the contingent
obligation to transfer consideration pursuant to the registration payment
arrangement. For registration payment arrangements and financial instruments

                                       35
<PAGE>

subject to those arrangements and financial instruments subject to those
arrangements that were entered into prior to the issuance of EITF 00-19-2, this
guidance is effective for financial statements issued for fiscal years beginning
after December 15, 2006 and interim periods within those fiscal years.

Income Taxes
------------

     We account for income taxes following the asset and liability method in
accordance with SFAS No. 109, "Accounting for Income Taxes." Under such method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Our income tax returns are prepared on the cash basis of accounting.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years that the asset is expected to
be recovered or the liability settled. The types of deferred tax assets are book
versus tax depreciation and net operating losses.

     In assessing the need for a valuation allowance, we estimate future taxable
income, considering the feasibility of ongoing tax planning strategies and the
realizability of tax loss carryforwards. Valuation allowances related to
deferred tax assets can be impacted by changes to tax laws, changes to statutory
tax rates and future taxable income levels. In the event we were to determine
that we would not be able to realize all or a portion of its deferred tax assets
in the future, it would increase the recorded valuation allowance through a
charge to income in the period in which the determination is made. Conversely,
if we were to determine that we would be able to realize its deferred tax assets
in the future in excess of the net carrying amount, it would decrease the
recorded valuation allowance through an increase to income in the period in
which that determination is made.

ADOPTION OF NEW ACCOUNTING POLICIES

     See Note 2 to our condensed unaudited consolidated financial statements in
Part 1, Item 1 to this Quarterly Report on Form 10-QSB for adoption of new
accounting policies.


                                       36
<PAGE>

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

     Our contractual obligations, as of June 30, 2007, were as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                             Payments Due By Period
-------------------------------------------------------------------------------------------------------
                                                Less than                                    More than
Contractual obligations           Total          1 year         1-3 years     3-5 years       5 years
-------------------------------------------------------------------------------------------------------
<S>                             <C>            <C>             <C>                          <C>
  Mortgage Notes Payable        $ 8,040,105    $    29,098     $  382,963             --    $ 7,628,044
-------------------------------------------------------------------------------------------------------
  Promissory Notes              $ 2,578,581             --             --    $ 2,578,581             --
    Payable - Related
    Party
-------------------------------------------------------------------------------------------------------
Total                           $10,618,686    $    29,098     $  382,963    $ 2,578,581    $ 7,628,044
-------------------------------------------------------------------------------------------------------
</TABLE>

RECENT ACCOUNTING PRONOUNCEMENTS AND INTERPRETATIONS

     FASB Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value
Measurements, issued in September 2006, establishes a formal framework for
measuring fair value under GAAP. It defines and codifies the many definitions of
fair value included among various other authoritative literature, clarifies and,
in some instances, expands on the guidance for implementing fair value
measurements, and increases the level of disclosure required for fair value
measurements. Although SFAS No. 157 applies to and amends the provisions of
existing FASB and AICPA pronouncements, it does not, of itself, require any new
fair value measurements, nor does it establish valuation standards. SFAS No. 157
applies to all other accounting pronouncements requiring or permitting fair
value measurements, except for; SFAS No. 123 (R), share-based payment and
related pronouncements, the practicability exceptions to fair value
determinations allowed by various other authoritative pronouncements, and AICPA
Statements of Position 97-2 and 98-9 that deal with software revenue
recognition. This statement is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years. We are evaluating the impact of SFAS 157 on our consolidated
financial statements.

     In February 2007, the FASB Issued SFAS No. 159, "Establishing the Fair
Value Option for Financial Assets and Liabilities ("SFAS No. 159"). SFAS No. 159
was to permit all entities to choose to elect, at specified election dates, to
measure eligible financial instruments at fair value. An entity shall report
unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date, and recognize upfront
costs and fees related to those items in earnings as incurred and not deferred.
SFAS No. 159 applies to fiscal years beginning after November 15, 2007, with
early adoption permitted for an entity that has also elected to apply the
provisions of SFAS No. 157, "Fair Value Measurements." An entity is prohibited
from retrospectively applying SFAS No. 159, unless it chooses early adoption.
SFAS No. 159 also applies to eligible items existing at November 15, 2007 (or
early adoption date). We are evaluating the impact the adoption of SFAS No. 159
will have on our consolidated financial statements.

OFF BALANCE SHEET ARRANGEMENTS

     We have no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.

                                       37
<PAGE>

ITEM 3.   CONTROLS AND PROCEDURES

     The term "disclosure controls and procedures" is defined in Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange Act. This
term refers to the controls and procedures of a company that are designed to
ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified by the Securities and
Exchange Commission. The Sarbanes-Oxley Act also requires documentation of
internal control procedures, remediation as needed, and periodic testing of the
controls. These requirements are expected to apply to smaller public companies
such as ours, beginning in 2007.

     David Mladen and Daniel Norensberg, our principal executive officer and
principal financial officer, respectively, evaluated the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
report. Based upon that evaluation, Mr. Mladen and Mr. Norensberg discovered a
lack of effectiveness in our disclosure controls and procedures over financial
reporting.

     Previously, our management established a remediation plan to address the
material weaknesses identified in our disclosure controls and procedures. These
remediation efforts were designed to address the material weaknesses identified
by management and to improve and strengthen our overall control environment. Our
remediation plan is to:

          o    Establish procedures to improve its review of related party
transactions and processing of non-accounting documentation;

          o    Keep our books and records and bank accounts separate from
related parties;

          o    Hire certain staff members including a Chief Financial Officer,
or person performing similar functions, to help develop and implement controls
to ensure timely and accurate completion of accounting and reporting tasks;

          o    Document and improve controls over routine and systematic
transactions;

          o    Aggressively seek candidates for independent directorships; and

          o    Develop controls related to the initiation and processing of
non-routine and non-systematic transactions including those resulting from the
adoption and implementation of new accounting pronouncements.

     In an attempt to remediate the material weaknesses management identified in
our disclosure controls and procedures, to date we have:

          o    Terminated our relationship with White Knight Management, LLC, a
related party which, prior to July 1, 2006, managed our Properties;

          o    Begun to put processes in place to keep our books and records and
bank accounts separate from related parties;

          o    Appointed Daniel Norensberg as Chief Financial Officer of the
Company;

          o    Increased the number of hours our Bookkeeper works for us;

                                       38
<PAGE>

          o    Appointed two additional directors to our board of directors; and

          o    Worked with our outside corporate counsel and our outside
accountants in an attempt to improve documentation of transactions.

     Our management does not expect that disclosure controls or internal
controls over financial reporting will prevent all errors, even as the
aforementioned remediation measures are implemented and further improved to
address all deficiencies. The design of any system of controls is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions.

     Except as previously indicated, there were no changes to our internal
control over financial reporting during our last fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.


                                       39
<PAGE>

                           PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.

     During the three-month period ended September 30, 2007, and subsequent
period through the date hereof, we were not a party to any pending legal
proceedings. To the knowledge of management, no federal, state or local
governmental agency is presently contemplating any proceeding against us. No
director, executive officer or affiliate of ours, or owner of record of more
than 5% of our Common Stock is a party adverse to us, or has a material interest
adverse to us in any legal proceeding.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

     In the three-month period ended September 30, 2007, and subsequent period
through the date hereof, we did not issue any unregistered securities.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     During the three-month period ended September 30, 2007, and subsequent
period through the date hereof, we did not default upon any senior securities.


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

     No matters were submitted to a vote of our security holders during the
three-month period ended September 30, 2007, or subsequent period through the
date hereof, except that:


ITEM 5. OTHER INFORMATION.

     There was no information we were required to disclose in a report on Form
8-K during the three-month period ended September 30, 2007, or subsequent period
through the date hereof, that we did not report.


ITEM 6.  EXHIBITS.

Exhibit No.                         Description of Exhibit
-----------                         ----------------------

   3.1         Articles of Amendment and Restatement of Articles of
               Incorporation of Excellency Investment Realty Trust, Inc. (filed
               as Exhibit 3.1 to our Quarterly Report on Form 10 QSB for the
               quarter ended June 30, 2006, filed on August 21, 2006, and
               incorporated herein by reference)

   3.2         Bylaws of Excellency Investment Realty Trust, Inc. (filed as
               Exhibit 3.2 to our Quarterly Report on Form 10-QSB for the
               quarter ended June 30, 2006, filed on August 21, 2006, and
               incorporated herein by reference)

                                      40
<PAGE>

Exhibit No.                        Description of Exhibit
-----------                        ----------------------

   4.3         Articles Supplementary to the Articles of Amendment and
               Restatement of Articles of Incorporation of Excellency
               Investment Realty Trust, Inc., filed October 11, 2006 (filed as
               Exhibit 4.1 to our Current Report on Form 8-K filed on October
               11, 2006, and incorporated herein by reference)

  10.1         Registration Rights Agreement, between Gift Liquidators, Inc.
               and David Mladen, dated September 29, 2005 (filed as Exhibit
               10.2 to our Current Report on Form 8-K, dated September 29, 2005
               and incorporated herein by reference)

  10.5         Form of Limited Partnership Agreement (filed as Exhibit 10.2 to
               our amended Current Report on 10.5 Form 8-K/A, dated November 4,
               2005 and incorporated herein by reference)

  10.6         Investment Agreement, dated as of August 29, 2006, by and
               between Gift Liquidators, Inc. and Dutchess Private Equities
               Fund, L.P. (filed as Exhibit 10.1 to our Current Report on Form
               8-K, filed August 31, 2006 and incorporated herein by reference)

  10.7         Registration Rights Agreement, dated as of August 29, 2006, by
               and between Gift Liquidators, Inc. and Dutchess Private Equities
               Fund, L.P. (filed as Exhibit 10.2 to our Current Report on Form
               8-K, filed August 31, 2006 and incorporated herein by reference)

  31.1         Certification of principal executive officer pursuant to Section
               13a-14(a) -- filed herewith

  31.2         Certification of principal financial and accounting officer
               pursuant to Section 13a-14(a) -- filed herewith

  32.1         Certification of principal executive officer pursuant to Section
               1350 -- filed herewith

  32.2         Certification of principal financial and accounting officer
               pursuant to Section 1350 -- filed herewith



                                       41
<PAGE>

                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



                                EXCELLENCY INVESTMENT REALTY TRUST, INC.


 Dated: November 19, 2007       By: /s/ David Mladen
                                    --------------------------------------------
                                    David Mladen
                                    President and Chief Executive Officer
                                    (principal executive officer)



 Dated: November 19, 2007       By: /s/ Daniel Norensberg
                                    --------------------------------------------
                                    Daniel Norensberg
                                    Chief Financial Officer
                                    (principal financial and accounting officer)



                                       42