UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-KSB (Mark One) x Annual report pursuant
to Section 13 or 15(d) of the securities exchange act of 1934 for the fiscal
year ended September 30, 2007.  ̈Transition report under Section 13 or 15(d) of the securities exchange act of
1934 EL PALENQUE VIVERO, INC.(Exact name of small business issuer in its charter) Nevada
333-138927
20-5277531(State or other jurisdiction of
(Commission File Number)
(IRS Employer Identification
No.)incorporation or organization) Privada de Tabasco # 27, Colonia Maravillas, Cuernavaca, Morelos, Mexico
 62320(Address of principal executive offices) Issuers telephone
number: (305) 394-9730 Securities registered under Section 12(b) of
the Exchange Act: None. Securities registered under Section 12(g) of
the Exchange Act: None.  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. xYes ̈ No Check if there is no
disclosure of delinquent filers in response to Item 405 or Regulation S-B is not
contained in this form, and no disclosure will be contained, to the best of
registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB x Indicate by check mark whether the registrant is a shell company
(Rule 12b-2 of the Exchange Act)     x Yes ̈ No State issuers
revenues for its most recent fiscal year: $0.00 State the aggregate
market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was sold, or the
average bid and asked price of such common equity, as of a specified date within
the past 60 days.  As of December 1, 2007, there were 2,050,000 issued
and outstanding shares of our common stock, par value $0.001 per share, held by
non-affiliates.  The aggregate value of the securities held by
non-affiliates on December 1, 2007 was $0.00 as our common stock does not
presently trade. State the number of
shares outstanding of each of the issuers classes of common equity, as of the
latest practicable date.As of December 1, 2007, the issuer had 4,550,000
shares of common stock issued and outstanding. Transitional Small Business Disclosure Format (Check
one):  Yes ___; No _X_     DOCUMENTS
INCORPORATED BY REFERENCE  TABLE OF CONTENTS  PART I Item
1. Description
of Business.  3 Item
2. Description
of Property. 11 Item
3. Legal
Proceedings. 12 Item
4. Submission
of Matters to a Vote of Securities Holders. 12  PART II Item
5. Market
for Common Equity, Related Stockholder Matters. 12 And
Small Business Issuer Purchases of Equity Securities.  Item
6. Managements
Discussion and Analysis or Plan of Operation 13 Item
7. Financial
Statements. 19 Item
8. Changes
in and Disagreements with Accountants on Accounting
and Financial Disclosure. 31 Item
8A. Controls
and Procedures. 31 Item
8B Other
Information. 31  PART III Item
9. Directors,
Executive Officers, Promoters, Control Persons and Corporate
Governance; Compliance with Section 16(a) of the Exchange
Act. 31 Item
10. Executive
Compensation. 33 Item
11. Security
Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters. 35 Item
12. Certain
Relationships and Related Transactions, and Director Independence. 36 Item
13. Exhibits. 37 Item
14. Principal
Accountant Fees and Services. 38  Signatures 39      2


CAUTIONARY
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION Except for
historical information, this report contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934.  Such
forward-looking statements involve risks and uncertainties, including, among
other things, statements regarding our business strategy, future revenues and
anticipated costs and expenses.  Such forward-looking statements include,
among others, those statements including the words expect, anticipate,
intend, believe and similar language.  Our actual results may differ
significantly from those projected in the forward-looking statements.
 Factors that might cause or contribute to such differences include, but
are not limited to, those discussed in the sections Plan of Operation and
Business.  You are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date of this report.
 We undertake no obligation to publicly release any revisions to the
forward-looking statements or reflect events or circumstances taking place after
the date of this document.  PART I  ITEM 1.  DESCRIPTION OF BUSINESS.  General Information  El Palenque Vivero, Inc. (El Palenque or the Company)
was incorporated in the State of Nevada on June 21, 2006 as El Palenque Nercery,
Inc.  On June 30, 2006 the Company changed the name to El Palenque Vivero,
Inc.  We were incorporated to open and operate a plant nursery in the city
of Cuernavaca, in the state of Morelos, Mexico.  Francisco Mendez was named
as President, Treasurer, CFO, CEO and Director of the Company.  Yosbani
Mendez was named Secretary and Director of the Company.  At that time the
board of directors voted to seek capital and begin development of our business
plan.  We received our initial funding of $20,000 through the sale of
common stock to Francisco Mendez who purchased 1,000,000 shares of common stock
at $0.005 on June 30, 2006, 500,000 shares of common stock at $0.01 on August 1,
2006, and Yosbani Mendez who purchase 1,000,000 shares of common stock at $0.01
on August 1, 2006.  In October 2006 we received $37,000 from 18 individuals
who purchased 925,000 shares of our common stock at $0.04 per share.
 During December, 2006  June, 2007, we received $45,000 from 19
individuals from our public offering for 1,125,000 shares at $0.04 per share.  As of September 30, 2007 we had generated no revenues.
 We have been issued an opinion by our auditor that raises substantial
doubt about our ability to continue as a going concern based on our current
financial position.  Please refer to note 5 of our financial statements.  We have a total of 100,000,000 authorized common shares
and 100,000,000 authorized preferred shares, both with a par value of $0.001 per
share, and have 4,550,000 common shares issued and outstanding as of September
30, 2007.  We have completed a form SB-2 Registration
Statement under the Securities Act of 1933 with the U.S. Securities and Exchange
Commission registering 2,750,000 shares of our common stock in connection with
an offering of the 2,750,000 shares at a price of $0.04 per share.  Of the
shares being registered, 925,000 were registered for sale by the selling
shareholders, and 1,825,000 were registered for sale by the Company.  As of
September 30, 2007, we had partially completed the offering and raised a total
of $45,000 on the issuance of 1,125,000 shares.  We closed the offering on
June 1, 2007, and the remaining 700,000 shares went unsold by the Company.  Our principal offices are
located at Privada de Tabasco # 27, Colonia Maravillas, Cuernavaca, Morelos,
México 62320, and our telephone number is (305) 394-9730.  Francisco
Mendez, our President and director, supplies this office space on a rent free
basis. Business Development  El Palenque has no revenues and limited operations.
 We have sustained losses since inception, June 21, 2006, to September 30,
2007 of $19,591 and rely solely upon the sale of securities and loans from our
corporate officers and directors for funding.


3


El Palenque has never declared bankruptcy, been in
receivership, or involved in any kind of legal proceeding.  The Company,
its directors, officers, affiliates and promoters have not and do not have any
present intentions to enter into negotiations or discussions with
representatives or owners of any other businesses or companies regarding the
possibility of an acquisition or merger.  Business of Issuer  Principal Products  It is our intention to incorporate a Mexican company in
which we will own 100% of the shares, to be used for the purpose of leasing land
and purchasing the equipment and supplies required for the nursery.  El Palenque intends to open and operate a plant nursery
in the city of Cuernavaca, in the state of Morelos, Mexico. We intend to
accomplish this goal by leasing land for our nursery in Cuernavaca which we will
then do leasehold improvements upon and cultivate plants to offer to businesses
and the public.  We feel we have raised sufficient cash, in order to lease
land, purchase the necessary equipment, produce our products, and operate for
the next 12 months.  We do not expect to start cultivating our products
until the last 2 months of the coming year, thus, we do not expect to be
generating significant revenues from our nursery in the first year of
operations.  Our primary focus is to lease a suitable piece of land
for our nursery, construct a green house, construct irrigation and prepare the
land that will enable us to make our products available to the public, with a
goal of generating a plant base for supermarkets, contractors, hotels and the
public to generate revenues.  El Palenques nursery will produce popular herbs, ornamental and
garden plants, and will work to produce flowers and plants that are seasonal,
like poinsettias for the Christmas season.We will concentrate on
certain product categories that are conducive to the growing climate in
south-central Mexico.  The temperatures in Cuernavaca average 20oC (68oF)
from September to February and 22oC - 24oC (71oF to 75oF) from March to August
with the rainy season being from May to October and the dry season from November
to April.  Our primary marketing approach is to provide products to
established stores in the surrounding area, such as Cuernavaca, Acapulco, Taxco,
Pueblo, and Mexico City, hotels, landscapers, construction companies, and
individuals.  The development of large vacation centers and tourist spots
has required the production of a wide variety of plants and flowers, as well as
plants for the art of landscape gardening.  We will be able to offer personalized services, quality
plants and fast service.  We will be able to guarantee a large portion of
plants and herbs as organic.  Additionally, with the climate of Cuernavaca
we will be able to offer most of our products year round.  Cuernavaca is
known as la ciudad de la eterna primavera (the city of eternal spring).  The types of plants we plan to grow include:  Short-term Plants · These are plants that will grow in a
period of 1-4 months. · These consist of the edible organic
herbs, plants such as roses, orchids, passion flowers, gardenia, tulips etc. · Seasonal plants such as
poinsettias.  Mid-term Plants · These are plants that are grown in a
period of 5-12 months. · Types of plants are decorative
malanga (a tuber similar to a sweet potato), decorative yucca, iris, and
bougainvillea.  Long-term Plants · These are plants that are grown in a
period of one year or more.


4


· Ficus, palms and oleanders. · Fruit trees including orange,
mandarin, avocado, grapefruit, guava, cacao and lime.  We plan to establish water and fertilizer recycling
systems to minimize the costs of these elements and maximize water conservation.  Selecting the Nursery Site  Site selection and layout are very important to the
success of a nursery.  Our choice will directly affect our success in
growing and selling plants as a poor choice could lead to greater cost, reduced
plant quality, increased product losses and reduced profit.  There are at least six factors that we will consider when
evaluating our potential nursery site:  1. Quantity and quality of irrigation
water 2. Access to transportation and
markets 3. Topography and soil type 4. Access to, and type of,
utilities 5. Favorable climactic conditions 6. Access to steady labor supply  The history of the site is extremely important and
specific questions we will address are:  1. If crop land, what crop was
grown? 2. If non-crop land, what was the land
used for previously? 3. Has the land been contaminated by
pesticide or other toxins? 4. If so, what reclamation efforts were
made? 5. Are there underground structures on
the property (utility lines, storage tanks, irrigation lines or drainage
tile)? 6. If so, where are they located and
what are their sizes? 7. Does the land drain poorly or
flood?  Another consideration is the soil type and
characteristics.  General characteristics for a good nursery soil include a
tillable, well-drained soil with high water-holding capacity.  The land
should have less than 5% slope to insure good air flow and surface drainage.
 While a majority of our production will be container based, the type of
soil is still important for our limited field production.  Of all the needs of plant production, the availability of
ample, high-quality water is most important.   Potential water sources
include lakes and ponds, streams, wells, and municipal water supplies.
 Each must be tested and it is very important for us to determine the water
source and limitations prior to leasing the property.  We will also give thought to long-term development of the
property.  In general this would include issues that provide the least
movement of plants and people and basic issues like location for loading trucks,
turning radius of equipment, width of equipment and weight restrictions on
access roads.  Production Systems  The three main types of nursery production systems are
field, container and pot-in-pot.  Selection of a production system is not
exclusive, and at this time we estimate our production will consist of 85%
container and 15% field production.  Field production has three major advantages.  First,
it is often less demanding that container production in terms of water and
fertilizer requirements.  In addition, the labor required is less intensive
during production than container production.  There are several
disadvantages associated with field production which include,  but are not
limited to the harvesting or digging of the field-grown products is limited to
specific windows during the year, typically fall and spring and is very labor
intensive.  Field production also offers a challenge in space allocation
due to random


5


harvesting or random plant death.  In contrast, as
plants are harvested for shipment in container production, the container block
can be re-sorted, moved or tightened-up.  A recent innovation in field nursery production is the
use of in-ground fabric containers, sometimes called root control bags or field
grow bags.  In theory, they combine the best qualities of container and
field production.  The advantages of field grow bags are numerous: they
enhance rooting; fewer roots are lost at transplanting (80% of the roots are
left intact); harvesting is easier; they save labor and time; and no special
machinery is needed at harvest.  Container production makes possible almost year-round
harvesting and availability of plants.  Containers are usually watered
with drip or trickle irrigation systems which use 60% to 70% less water than
overhead systems which are typically used in field production.  There are
high-density capabilities and the ability to use land unsuited to field
production.  Containers provide handling convenience and increased
flexibility for plant spacing not offered by field production.  Handling
advantages also translate into handling efficiencies when stacking or loading
trucks.  The use of container production also means we could customize the
growing media.  The potential to modify chemical and physical properties in
a container is much greater than for field soil.  Container production also
allows for growing transplant sensitive plants.  While container
production has many advantages, the system is not without challenges.  The
disadvantages include:  small containers need frequent water, nutrients are
rapidly depleted, plants may require winter protection, plants become easily
root-bound, trees are knocked over by wind and containers can be costly.
 Container grown plants cannot be held as long as field plants.
 Unsold field plants can simply stay in the soil; however container plants
will likely require moving up to a larger container which adds to the cost of
the final product.  To produce annual bedding plants, we will either buy or
germinate seeds to produce small plants, called "plugs," or purchase plugs from
specialized plug producers. The plugs will then be transplanted to bedding
packs, gallon hanging baskets and containers of various sizes. The growth cycle
of color plants is typically less than one year, with many color plants having a
growing season as short as eight to 16 weeks, allowing approximately three to
four inventory turns per year. As with ornamental plants, we will apply
controlled watering and fertilizing in order to ensure high quality.  Distribution Methods  Our services will be offered to the public via word of
mouth, newspaper advertising, and direct sales to supermarkets, stores,
landscapers, construction companies, and individuals.  Status of Publicly Announced New Products or
Services  We currently have no new publicly announced products or
services.  Competitive Business Conditions and Strategy; El
Palenque Viveros Position in the Industry  We intend to establish El Palenque Vivero as a
competitive company in an already existing market.  There is currently a
need for our services, as there is a high demand for quality organic edible
herbs, ornamental plants and outdoor plants and trees.  Having our nursery
in this location provides us with ideal year-round climate for growing our
products as well as the area having good access to a steady water supply.
 Additionally, Cuernavaca is situated in the middle of Mexico, being close
to the heart of the country, Mexico City.  Cuernavaca is a small city with
wealth and is a preferred location for people to live away from the city, plus
it is close to the highest consumption areas of the country, being 72 km from
Mexico City, 260 km from Acapulco and 110 km from Pueblo.  The Company believes that because we will be able to
provide quality organic products, have modern amenities, and be located in a
highly populated part of Mexico with excellent year-round climate, that we will
have a distinct advantage over other nurseries located in other parts of the
country.  To date, we have not entered into any negotiations with
any supermarkets, stores, landscapers, or construction companies to sell our
products.  Additionally, we have not started to look for a suitable piece
of land.  Sources and Availability of Raw Materials and Names of
Principal Suppliers


6


The land that the Company will lease for the nursery will
be sourced from listings in newspapers, via word of mouth, from canvassing the
neighborhood looking for a suitable location or from a real estate agent.
 Because of the recent (and current) construction boom in Cuernavaca for
both residential and commercial properties, we will be looking for our land in
agricultural zones that surround the city.  Also, there are many sources of soil, seedlings, seeds,
fertilizers, and other planting supplies in Mexico and the market place for
these products are highly competitive.   The success of our business
plan relies heavily on acquiring the land and making the necessary improvements
for irrigation, and having quality organic supplies of soil. This will be
achieved by taking time to find the right piece of land with access to all
available amenities, such as electricity, water and telephone and signing a
long-term lease.  We will be able to have access to good quality organic
soils at very reasonable prices, as there are many suppliers surrounding
Cuernavaca.   At the close of this offering, our president, Francisco
Mendez, will determine where he will lease the land, purchase the necessary
equipment, soil and supplies by comparing prices between the different
suppliers.  We will also need to hire two (2) day-time employees, one
(1) office manager, and one (1) night time security guard at the time the
Company leases its land and has secured the necessary business permits.
 The day-time employees will be responsible for the land renovations as
well as the day to day operations of the business, the office manager will be
responsible for sourcing materials, keeping track of inventory levels and
maintaining detailed accounting reports.  To date, we have not entered into any formal or
preliminary negotiations with any nursery suppliers or equipment vendors,
realtor, property leasing agent, or potential employees.  We will begin to
source land, purchase the necessary equipment and supplies, and find employees
to carry out the implementation phase of our business plan at the time we have
sufficient funding to proceed.  Dependence on one or a few major customers  Our business plan is dependent upon finding a suitable
piece of land to lease, so as to produce the best possible products.  We
intend to market our services to both local residents and businesses. Since
landscaping, herbs for cooking and ornamental plants are in high demand by many
individuals and businesses in our area we do not anticipate having difficulties
finding clients.  We also, do not anticipate being dependent on a few major
customers for our products.  Patents, Trademarks, Licenses, Agreements or
Contracts  There is no aspect of our business plan that requires a
patent, trademark, or product license, and we have not entered into any vendor
agreements or contracts that give rise to any obligations or concessions.  Governmental Controls, Approval and Licensing
Requirements Before El Palenque is able to
lease land to start the nursery business, we will incorporate a wholly owned
Mexican corporation.  This corporation will be required to obtain a
Licencia de Formento Hortila y Ornamental. This permit is issued by the
Ministry of Agriculture provided that, upon inspection, the land has met a
certain set of standards in relation to its ability to be used as a plant
nursery.  These standards are to determine that the land is zoned for
agriculture and is able to sustain the requirements of a nursery.  We will also be required to have our Mexican corporation
enroll all their employees in the Mexican Social Security system.  We will
be responsible for submitting these payments to the government on behalf of the
employees.  Research and Development Activities and Costs  We have spent no time on specialized research and
development activities, and have no plans to undertake any research or
development in the future.  Compliance with Environmental Laws


7


There are no special environmental laws for owning and
operating a nursery in Mexico.  However, certain procedures mandated by the
Ministry of the Environment in relation to the disposal and use of fertilizers
and/or chemicals must be adhered to or you may lose your business licenses for
failure to comply.  Number of Employees  At this time we have no employees.   The
officers and directors are donating their time to thedevelopment of the Company and intend to do
whatever work is necessary in order to bring us to the point of being able to
implement our business plan. During the implementation phase of our business plan, El
Palenque will hire two (2) day-time employees, one (1) day-time office manager,
and one (1) night-time security guard.  At this time the officers and
directors of the Company will continue to donate their time to the development
of the Company in order to bring it to the point of generating revenues.  Bankruptcy or Similar Proceedings  There has been no bankruptcy, receivership or similar
proceeding.  Reorganizations, Purchases or Sales of Assets  There have been no material reclassifications, mergers,
consolidations, or purchase or sale of a significant amount of assets not in the
ordinary course of business.  Risks associated with EL PALENQUE VIVERO,
INC. Our Officers and Directors currently devote
only part time services to the company and are also involved in other business
activities.  The companys needs could exceed the amount of time or level
of experience they may have.  This could result in their inability to
properly manage company affairs, resulting in our remaining a start-up company
with no revenues or profits.  Francisco Mendez, the President and Director of the
Company, currently devotes approximately 12 hours per week to company matters.
 Yosbani Mendez, our Secretary and Director, currently devotes
approximately 8 hours per week to company matters.  The responsibility of
developing the companys business and fulfilling the reporting requirements of a
public company all fall upon Mr. Francisco Mendez and Mr. Yosbani Mendez.
 We have not formulated a plan to resolve any possible conflict of interest
with their other business activities.  In the event they are unable to
fulfill any aspect of their duties to the Company we may experience a shortfall
or complete lack of sales resulting in little or no profits and eventual closure
of the business.  We are a start-up company with a lack of operating
history and profitability.  El Palenque has incurred losses since inception
and we expect those losses to continue in the future.  As a result, we may
have to suspend or cease operations.  We were incorporated on June 21, 2006,and we have not started our proposed business
operations or realized any revenues.  We have no operating history upon
which an evaluation of our future success or failure can be made.  As a
result, it is possible that we may not generate revenues in the future.  We
have incurred a net loss of $19,591 since inception to September 30, 2007, and
in order to generate revenue we are dependent on:  · Our ability to finance and build our
plant nursery. · Our ability to find customers who
will purchase our products in order to generate revenues.  Based upon current plans, we expect to incur operating
losses in future periods.  This will happen because the maximum possible
revenues we can generate from the business will not be sufficient enough to
cover the expenses associated with operating the company.  As such, we may
not be able to generate enough future revenues to cover our expenses, which
could cause us to suspend or cease operations.


8


Because El Palenque is a small company, and does
not have much capital, if we are unable to raise additional funds to meet our
needs we may have to scale back operations.  Because we are a small company with limited financial
resources, we are limited in our ability to successfully implement our business
plan, and we may not be able build our nursery and sell our products as we would
like.  In that case, we would have to raise more capital in order for the
business to be successful.  If we cannot build our nursery and sell enough products,
then we would be unable to generate the revenues required in order to maintain
our business.  If our officers and directors resign or die without
having found replacements, our operations will be suspended or cease altogether.  We have twoofficers
and directors and we are entirely dependent upon them in order to conduct our
operations.  If they should resign or die, there will be no one to run El
Palenque, and the company has no Key Man insurance.  If such an event were
to take place and we were unable to find other persons to run us, our operations
would be suspended or cease entirely.  Our production of plants may be adversely affected
by a number of agricultural factors beyond our control.  Our production of plants may be adversely affected by a
number of agricultural risks, including disease, pests, freezing conditions,
snow, drought or other inclement weather, and improper use of pesticides or
herbicides. These factors could cause production difficulties which could damage
or reduce our inventory, resulting in sales, profit and operating cash flow
declines, which could be material.  Increases in water prices or insufficient
availability of water could adversely affect our plant production, resulting in
reduced sales and profitability.  Plant production depends upon the availability of water.
Our nurseries receive their water from a variety of sources, including on-site
wells, creeks, reservoirs and holding ponds, municipal water districts and
irrigation water supplied to local districts. The loss or reduction of access to
water at our nursery could have a material adverse effect on our business,
results from operations and operating cash flows. In addition, increases in our
costs for water could adversely impact our profitability and operating cash
flows.  We may experience fluctuations in available water supplies and
serious reductions in our supplies of surface water in the event of prolonged
droughts. If such reductions occur, those nurseries would have to rely on backup
water supplies which are more costly than surface water supplies.  We face risks associated with fungus or disease.
 Quarantines of our products or other actions by regulatory authorities
could have a material adverse effect on our business and results of operations.  Fungus-like pathogens, recently identified by scientists,
such as Sudden Oak Death (SOD) also known as Phytophthora ramorum ("P. ramorum")
have in recent years caused quarantines on certain plant species.  P.
ramorum can also infect the leaves and branches of other plants referred to as
SOD host plants.  Currently, approximately 90 plant species grown by
commercial nurseries have been identified as SOD hosts.  If in the future
we test positive for SOD or other fungi or disease, our products could be
subject to quarantine by regulatory authorities. If this were to occur, we could
experience a significant loss of sales and may be required to destroy inventory,
which could have a material adverse effect on our business, results from
operations, and operating cash flows.  Because our business is highly seasonal, our
revenues, cash flows from operations and operating results may fluctuate on a
seasonal and quarterly basis.  The nursery business is highly seasonal. The seasonal
nature of our operations may result in a significant increase in our working
capital during the growing and selling cycles. As a result, operating activities
during the first and fourth quarters will use significant amounts of cash, and
in contrast, operating activities for the second and third quarters


9


will generate substantial cash as we ship inventory and
collect accounts receivable. We expect to experience significant variability in
net sales, operating cash flows and net income on a quarterly basis. One
significant factor contributing to this variability is weather, particularly on
weekends during the peak gardening season in the second quarter. Unfavorable
weather conditions during the peak gardening season could have a material
adverse effect on our net sales, cash flows from operations and operating
income.  Other factors that may contribute to this variability
include:  1. shifts in demand for live plant
products; 2. changes in product
mix, service levels and pricing by us and our competitors; 3. period-to-period changes in
holidays; 4. the economic stability of our
customers.  We will face intense competition, and our inability
to compete effectively for any reason could adversely affect our
business.  We will compete primarily on the basis of product mix,
consistency of product quality, product availability, customer service and
price. We will face competition from other local companies and from one or two
national companies. Competition may also increase considerably in the future.
Our competitors may have greater market share, less debt, greater pricing
flexibility or superior marketing or financial resources. Increased competition
could result in lower profit margins, substantial pricing pressure, reduced
market share and lower operating cash flows. Price competition, together with
other forms of competition, could have a material adverse effect on our
business, financial position, results of operations and operating cash
flows.  Our nursery facility will operate entirely on
leased land.  Our nursery facility will operate entirely on leased
land. If the lease is expiring and we are unable to negotiate an extension under
favorable terms we would be required to relocate our nursery.  We would
incur substantial costs in connection with the establishment of these new
production facilities.  We may not be successful in establishing suitable
replacement production facilities. If we are unsuccessful in these efforts, our
net sales, cash flows and operating income could be materially adversely
affected. In addition, when we vacate the property we may incur remediation
costs. Interruptions or delays in the transitioning from the property could
adversely impact our nursery operations and increase our costs. Our failure to
effectively manage the relocation or the incurrence of relocation costs could
result in a decrease in revenue or other adverse effects in our business and
results of operations.  We will be subject to various environmental laws
and regulations that govern, and impose liability, for our activities and
operations.  If we do not comply with these laws and regulations, our
business will be adversely affected.  While we intend to grow all of our plants organically, we
will still be subject to federal, state and local laws and regulations that
govern, and impose liability for our activities and operations which may have
adverse environmental effects, such as discharges to air and water, as well as
handling and disposal practices for hazardous substances and other wastes.
 Some of our operations and activities, such as water runoff from our
nursery and the use of certain fertilizers, may be subject to regulation.
Regulatory agencies may regulate or prohibit the use of products, procedures or
operations, thereby affecting our operations and profitability. In addition, we
must comply with a broad range of environmental laws and regulations. Additional
or more stringent environmental laws and regulations may be enacted in the
future and such changes could have a material adverse effect on our
business.  Price increases of certain raw materials could
adversely affect our business.  We could be vulnerable to price increases for raw
materials. We do not currently have any contracts with raw material suppliers.
Increases in the cost of raw materials essential to our operations including,
but not limited to, seed, plastic, and fertilizer, would increase our costs of
production.  Significant increases in the price or a scarcity of raw
materials essential to plant propagation could have a material adverse effect on
our business. We may not be able to pass such price increases on to our
customers in the form of higher prices for our products, which could materially
adversely affect our results of operations and operating cash flows.


10


Our independent auditors have issued an audit
opinion for El Palenque Vivero which includes a statement describing our going
concern status.  Our financial status creates a doubt whether we will
continue as a going concern.  As described in Note 5 of our accompanying financial
statements, our limited development stage and our lack of any guaranteed sources
of future capital create substantial doubt as to our ability to continue as a
going concern.  If our business plan does not work, we could remain as a
start-up company with limited material operations, revenues, or profits.  Financial Industry
Regulatory Authority (FINRA) sales practice requirements may limit a
stockholders ability to buy and sell our stock.  FINRA has adopted rules that require that in recommending
an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer.  Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customers financial status, tax status, investment objectives and
other information.  Under interpretations of these rules, FINRA believes
that there is a high probability that speculative low priced securities will not
be suitable for at least some customers.  FINRA requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may have the effect of reducing the level of liquidity of our
common stock.  Further, many brokers charge higher transactional fees for
penny stock transactions.  As a result, fewer broker-dealers may be willing
to make a market in our common stock, reducing a stockholders ability to resell
shares of our common stock.  We will incur ongoing costs and expenses for SEC
reporting and compliance, without revenue we may not be able to remain in
compliance, making it difficult for investors to sell their shares, if at
all.  Our common stock is quoted on the OTC Electronic Bulletin
Board, under the symbol ELQV.  To be eligible for quotation on the OTCBB,
issuers must remain current in their filings with the SEC. Market Makers are not
permitted to begin quotation of a security whose issuer does not meet this
filing requirement. Securities already quoted on the OTCBB that become
delinquent in their required filings will be removed following a 30 or 60 day
grace period if they do not make their required filing during that time.
 In order for us to remain in compliance we will require future revenues to
cover the cost of these filings, which could comprise a substantial portion of
our available cash resources.  If we are unable to generate sufficient
revenues to remain in compliance it may be difficult for you to resell any
shares you may purchase, if at all.  Reports to Security Holders  El Palenque will voluntarily make available an annual
report including audited financials on Form 10-K or Form 10-KSB to security
holders.  We will file the necessary reports with the SEC pursuant to the
Exchange Act,  including but not limited to, the report on Form 8-K, annual
reports on Form 10-K or 10-KSB, and quarterly reports on Form 10-Q or
10-QSB.  The public may read and copy any materials filed with the
SEC at the SECs Public Reference Room at 100 F Street NE, Washington, DC 20549.
 The public may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet
site that contains reports, proxy and information statements, and other
electronic information regarding El Palenque and filed with the SEC at
http://www.sec.gov.  ITEM 2.  DESCRIPTION OF PROPERTY.  Since inception, the Company uses the home
office premises of Francisco Mendez, the President of the Company, on a rent
free basis.  The premises are located at Privada de Tabasco # 27, Colonia
Maravillas, Cuernavaca, Morelos, México  62320.  The Company intends
to use these premises until we are able to lease the property for the nursery at
which time we will utilize an onsite office. The mailing address for the Company
is 8567 Coral Way, Suite 198, Miami, FL 33155.


11


We currently have no investment policies as
they pertain to real estate, real estate interests or real estate mortgages.  ITEM 3.  LEGAL PROCEEDINGS.  We are not a party to any
pending or, our knowledge, threatened legal proceedings. ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF
SECURITIES HOLDERS.  No matter was submitted during
the fourth quarter of the fiscal year ended September 30, 2007, to a vote of
security holders, through the solicitation of proxies or otherwise. PART II  ITEM 5.  MARKET FOR COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASES OF EQUITY SECURITIES  Market
Information Our common stock is quoted on
the OTC Bulletin Board under the symbol ELQV.OB.  However, our common
stock has not been traded since our inception.  Accordingly, there is no
present market for our securities. Any quotations on the OTC
Bulletin Board would reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions. As of December 1, 2007, there
were 39 record holders of our common stock. Status of our public offering  On December 11, 2006, our Form SB-2 registration
statement (SEC file no. 333-138927) was declared effective by the SEC. From
December,2006 to June 2007, we partially completed our public
offering by selling 1,125,000 shares of common stock to 18 persons in
consideration of $45,000.  We closed our offering on June 1st,
2007. Since completing our public offering, until September 30,
2007, we have used the proceeds as follows:  Land Lease $
            - Employee Salaries - Permits - Land Improvements - Nursery Supplies - Truck - Office & Equipment - Utilities - Insurance - Professional Fees - Cash on Hand 45,000  Total Use
of Net Proceeds $
 45,000  Since inception we have used the proceeds raised from our
officers and directors and from our private offering.  As of September 30,
2007, we have cash of $84,009, and as such have not spent any of the proceeds
from our recent public offering.  Common Stock


12


The holders of Common Stock currently (i) have equal
ratable rights to dividends from funds legally available therefore, when, as and
if declared by the Board of Directors of the Company; (ii) are entitled to share
ratably in all of the assets of the Company available for distribution to
holders of Common Stock upon liquidation, dissolution or winding up of the
affairs of the Company; (iii) do not have preemptive, subscription or conversion
rights and there are no redemption or sinking fund provisions or rights
applicable thereto; and (iv) are entitled to one non-cumulative vote per share
on all matters on which stockholders may vote. All shares of Common Stock now
outstanding are fully paid for and non-assessable and all shares of Common Stock
which are the subject of this Offering, when issued, will be fully paid for and
non-assessable. Reference is made to the Company's Articles of Incorporation,
By-Laws and the applicable statutes of the State of Nevada for a more complete
description of the rights and liabilities of holders of the Company's
securities.  Preferred Stock  While our Certificate of Incorporation authorizes the
issuance of 100,000,000 shares of preferred stock, $0.001 par value per share,
no preferred shares have been issued nor are contemplated to be issued in the
near future.  Non-cumulative Voting  The holders of shares of Common Stock of the Company do
not have cumulative voting rights, which means that the holders of more than 50%
of such outstanding shares, voting for the election of directors, can elect all
of the directors to be elected, if they so choose, and, in such event, the
holders of the remaining shares will not be able to elect any of the Company's
directors. As of December 1, 2007, the 2 officers and directors own 55% of the
outstanding shares.  Dividends  We have never declared any cash
dividends with respect to our common stock.  Future payment of dividends is
within the discretion of our board of directors and will depend on our earnings,
capital requirements, financial condition and other relevant factors.
 Although there are no material restrictions limiting, or that are likely
to limit, our ability to pay dividends on our common stock, we presently intend
to retain future earnings, if any, for use in our business and have no present
intention to pay cash dividends on our common stock. There are no restrictions in our
articles of incorporation or bylaws that prevent us from declaring dividends.
 The Nevada Revised Statutes, however, do prohibit us from declaring
dividends where, after giving effect to the distribution of the dividend: 1. We would not
be able to pay our debts as they become due in the usual course of business;
or 2. Our total assets would be less than
the sum of our total liabilities plus the amount that would be needed to satisfy
the rights of shareholders who have preferential rights superior to those
receiving the distribution.  Equity Compensation Plan Information  We have no authorized equity compensation plans and no
outstanding options, warrants or similar rights.  Recent Sales of Unregistered Securities  None.  Purchases of Equity Securities by the Issuer and
Affiliated Purchasers  We did not purchase any of our shares of common stock or
other securities during the year ended September 30, 2007.  ITEM 6.  PLAN OF OPERATION.


13


Results of Operations  We are a
development stage corporation.  We have generated no revenues from our
business operations since inception and have incurred $19,591 in expenses
through September 30, 2007. The following table provides
selected financial data about our company for the fiscal year ended September
30, 2007 and 2006, respectively. Balance
Sheet Data September
30, 2007 September 30, 2006 Cash and
cash equivalents $ 84,009 $ 13,440 Total
assets $ 84,009 $ 18,869 Total
liabilities $ 1,600 $ 1,500 Shareholders
equity $ 82,409 $ 17,369  Our cash in the bank at
September 30, 2007 was $84,009.  Net cash provided by financing activities
since inception (June 21, 2006) through September 30, 2007 was $102,000,
 raised from the sale of our common stock. Our auditors have issued an
opinion that there is a substantial doubt that we can continue as an on-going
business for the next 12 months, please refer to note 5 of our financial
statements. Plan of Operation The following plan of operation should be read in
conjunction with our financial statements and the notes thereto included
elsewhere in this report.  Statements contained herein which are not
historical facts are forward-looking statements, as that term is defined by the
Private Securities Litigation Reform Act of 1995, including statements relating
to our plans, objectives, expectations and intentions.  Although we believe
that the expectations reflected in such forward-looking statements are
reasonable, forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ from those projected.  We caution
investors that any forward-looking statements made by us are not guarantees of
future performance and that actual results may differ materially from those in
the forward-looking statements.  Such risks and uncertainties include,
without limitation: established competitors who have substantially greater
financial resources and operating histories, regulatory delays or denials,
ability to compete as a start-up company in a highly competitive market, and
access to sources of capital.  El Palenque is a development stage company that has no
operations, no revenue, no financial backing and limited assets.  Our plan
is to open a plant nursery in Cuernavaca, Mexico and market our products to
local residents and businesses via advertising and word of mouth.  We will start operations by leasing approximately two (2)
hectares (approx. 5 acres) of land for our plant nursery in the city of
Cuernavaca in the state of Morelos, Mexico.  We have raised the required
amount of funds through our offerings and therefore consider the financing
sufficient to lease land for our nursery and commence with operations.  During the next 12 months of operations, we will
incorporate a subsidiary Mexican corporation, locate land to lease, make the
necessary improvements, source the required nursery supplies, and commence with
production of our products to sell to the public.  We estimate that we will not be able to generate
significant revenues from nursery sales within the 12 months of development.  Milestones to Implement our Business  Here is an outline of our next 12-month period plan.
 We have closed our offering and feel we have raised sufficient funds for
us to begin implementing our business plan.  Months 1-3:


14


· Incorporate the Mexican subsidiary
company. · Locate suitable land  Months 3-6:  · Lease the land.  Land will be
approximately 2 hectares and should be approx. $2,000 per month. · Permits  Obtain a Licencia de
Fomento Hortila y Ornamental issued by the Department of Agriculture. · Interview employees for work
beginning in months 6-10.  All employees will be required to be registered
in the Mexican governments social security system.  Months 6-10:  · Begin work to complete nursery 
employ 1 night security person, 1 administrator and 2 full-time workers. · Complete land improvements.  We
anticipate building a small office with some parking.  This office will be
used by the office administrator and for potential customers. · Construct a large water depository
tank with two pumps, one electric and one gas (the gas pump is the back-up if
the electricity goes down).  The tank will be the source for water that
will flow through the irrigation and sprinkler system to supply the plants with
the necessary moisture. · Construction of a reproduction area
that is covered with netting.  This area will use special netting as
needed; some netting will provide special ultraviolet protection, while other
netting will allow more moisture.  The netting will be customized according
to the required sun and water exposures as needed. This is the area for the
seedlings to reproduce with the netting giving protection from the direct sun
and excessive rain.  This allows the plants to grow from seedlings to when
they can be moved to the main growing area. · Construction of an irrigation and
sprinkler system.  We will have a large open water tank that will have an
electric and a gas pump, to allow access to at least one pump, so as not to be
dependent on either electric or gas power sources.  We will have a pipe
system that will supply water as needed to the large growing area.  This
irrigation system will be on a closed loop so that the water pressure is
constant.  There will be exits every 10-15 feet or as needed to allow
control of the water supply and quantity to the growing areas, as needed.
 This growing area will occupy approximately 80-90% of the land.  The
growing area will be customized to handle our 3 lines of plants; short-term,
medium-term, and long-term, as each has specific growing requirements.  Months 10-12  · First production of our products. · Growing a range of plants which are
classified by their growing times:  Short-term Plants · Plants that will grow in a period of
1-4 months. · Consisting of the edible organic
herbs, plants such as roses, orchids, passion flowers, gardenia, tulips etc. · Seasonal plants such as
poinsettias.  Mid-term Plants · Plants that are grown in a period of
5-12 months. · Types of plants include decorative
malanga (a tuber similar to a sweet potato), decorative yucca, iris, and
bougainvillea.  Long-term Plants · Plants that are grown in a period of
one year or more. · Ficus, palms and oleanders. · Fruit trees including orange,
mandarin, avocado, grapefruit, guava, cacao and lime. Limited Operating History;
Need for Additional Capital


15


There is no historical financial
information about us upon which to base an evaluation of our performance.
 We are a development stage corporation and have not generated any revenues
from business operations.  We cannot guarantee we will be successful in our
business operations.  Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources
and possible cost overruns due to price and cost increases in services and
products. We have no assurance that future
financing will be available to us on acceptable terms.  If financing is not
available on satisfactory terms, we may be unable to continue, develop or expand
our operations.  Equity financing could result in additional dilution to
existing shareholders. Currently, we have no financing
plans. Liquidity and Capital
Resources As of the date of this report,
we have yet to generate any revenues from our business operations. Since inception our main source
for cash has been the sale of our equity securities.  Upon inception, we
issued 2,500,000 shares of common stock to two directors for $20,000.  In
June 2006, we completed a private offering of 925,000 shares of common stock to
18 persons in consideration of $37,000.  This offering was made pursuant to
the exemption from registration contained in Rule 504 of Regulation D under the
Securities Act.  During December 2006 to June 2007, we issued 1,125,000
shares of common stock to 19 persons in consideration of $45,000.  These
shares were issued pursuant to our Prospectus filed as part of our registration
statement on Form SB2 and declared effective on December 11, 2006.  We
raised a total of $102,000 from the sale of our common stock. As of the date of this filing, we have yet to begin
operations and therefore have not generated any revenues.  As of September 30, 2007, our
cash and total assets were $84,009 and our total liabilities were
$1,600.  Summary of
Significant Accounting Policies  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of assets
and the liquidation of liabilities in the normal course of business.  As at
September 30, 2007, the Company has a loss from operations of $16,960, an
accumulated deficit of $19,591, and working capital of $82,409 and has earned no
revenues since inception.  The Company intends to fund operations through
equity financing arrangements, which may be insufficient to fund its capital
expenditures, working capital and other cash requirements for the year ending
September 30, 2008.  The ability of the Company to emerge from the
development stage is dependent upon, among other things, obtaining additional
financing to continue operations, and development of its business plan.  In
response to these problems, management intends to raise additional funds through
public or private placement offerings. These factors, among others, raise
substantial doubt about the Companys ability to continue as a going concern.
 The accompanying financial statements do not include any adjustments that
might result from the outcome of this uncertainty.  Use of
Estimates  The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period.  Actual results could
differ from those estimates. The Companys periodic filings with the Securities
and Exchange Commission include, where applicable, disclosures of estimates,
assumptions, uncertainties and markets that could affect the financial
statements and future operations of the Company. Cash and
Cash Equivalents  Cash and cash
equivalents include cash in banks, money market funds, and certificates of term
deposits with maturities of less than three months from inception, which are
readily convertible to known amounts of cash and


16


which, in the
opinion of management, are subject to an insignificant risk of loss in value.
 The Company had $84,009 in cash and cash equivalents at September 30, 2007
($13,440 - September 30, 2006).  Start-Up
Costs  In accordance
with the American Institute of Certified Public Accountants Statement of
Position 98-5, Reporting on the Costs of Start-up Activities, the
Company expenses all costs incurred in connection with the start-up and
organization of the Company.  Earnings
(Loss) per Share of Common Stock  The Company
has adopted Financial Accounting Standards Board (FASB) Statement Number 128,
Earnings per Share, (EPS) which requires presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation.  In the accompanying financial statements, basic
earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the
period.  Segmented
Reporting  SFAS Number
131, Disclosure About Segments of an Enterprise and Related
Information, changed the way public companies report information about
segments of their business in their quarterly reports issued to shareholders.
 It also requires entity-wide disclosures about the products and services
an entity provides, the material countries in which it holds assets and reports
revenues and its major customers.  The company presently operates only in
Mexico.  Foreign
Currency Transactions  The Companys
functional currency is the Mexican Peso.  The Companys reporting currency
is the U.S. Dollar.  All transactions initiated in Mexican Pesos are
translated to U.S. Dollars in accordance with SFAS No. 52 Foreign Currency
Translation as follows:  (i) Monetary assets and liabilities at the rate of exchange in effect
at the balance sheet date; (ii) Equity at historical rates; and (iii) Revenue and expense items at the average rate of exchange
prevailing during the period.  Adjustments
arising from such translations are deferred until realization and are included
as a separate component of stockholders equity as a component of comprehensive
income or loss.  Therefore, translation adjustments are not included in
determining net income (loss) but reported as other comprehensive income.  For foreign
currency transactions, the Company translates these amounts to the Companys
functional currency at the exchange rate effective on the invoice date.  If
the exchange rate changes between the time of purchase and the time actual
payment is made, a foreign exchange transaction gain or loss results which is
included in determining net income for the period.  No
significant realized exchange gains or losses were recorded from inception (June
21, 2006) to September 30, 2007.  Stock-Based Compensation  The Company
adopted the provisions of Statement of Financial Accounting Standards (SFAS)
No. 123(R), Share-Based Payment, which establishes accounting for
equity instruments exchanged for employee services.  Under the provisions
of SFAS 123(R), stock-based compensation cost is measured at the grant date,
based on the calculated fair value of the award, and is recognized as an expense
over the employees requisite service period (generally the vesting period of
the equity grant).  The Company accounts for share-based payments to
non-employees, in accordance with SFAS 123 (as originally issued) and Emerging
Issues Task force Issue No 96-18, Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services.


17


Comprehensive Income (Loss)  SFAS No. 130,
Reporting Comprehensive Income, establishes standards for reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements.  For the year ended September 30,
2007 and the period ended 2006, the Company had no items of other comprehensive
income.  Therefore, net loss equals comprehensive loss for the year ended
September 30, 2007 and the period ended 2006.  Revenue
Recognition  The Company
recognizes revenue from the sale of products and services in accordance with the
Securities and Exchange Commission Staff Accounting Bulletin No. 104 (SAB
104), Revenue Recognition in Financial Statements.  Revenue will
consist of plant sales income and will be recognized only when all of the
following criteria have been met:  (i) Persuasive evidence for an agreement exists; (ii) Delivery has occurred; (iii) The fee is fixed or determinable; and (iv) Revenue is reasonably assured.  Off-Balance Sheet
Arrangements  We do not have any
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 is material to investors.  Recent
Accounting Pronouncements  None of the
following new pronouncements has current application to the Company, but will be
implemented in the Companys future financial reporting when applicable.  In February
2007, FASB issued Financial Accounting Standards No. 159, The Fair Value
Option for Financial Assets and Financial LiabilitiesIncluding an amendment of
FASB Statement No. 115.  This Statement permits entities to choose to
measure many financial instruments and certain other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. This Statement is expected to expand the use of fair
value measurement, which is consistent with the Boards long-term measurement
objectives for accounting for financial instruments.  SFAS 159 is effective
as of the beginning of an entitys first fiscal year that begins after November
15, 2007.  In September
2006, FASB issued Financial Accounting Standards No. 157, Fair Value
Measurements.   This Statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
(GAAP), and expands disclosures about fair value measurements. This Statement
applies under other accounting pronouncements that require or permit fair value
measurements, the Board having previously concluded in those accounting
pronouncements that fair value is the relevant measurement attribute.
Accordingly, this Statement does not require any new fair value measurements.
However, for some entities, the application of this Statement will change
current practice.  SFAS 157 is effective in the first fiscal year that
begins after November 15, 2007.


18


ITEM 7. FINANCIAL
STATEMENTS.          EL PALENQUE VIVERO, INC. (A
Development Stage Company)  AUDITED FINANCIAL STATEMENTS  SEPTEMBER 30, 2007 and 2006


19


EL PALENQUE VIVERO, INC. (A Development Stage Company)  INDEX TO AUDITED FINANCIAL STATEMENTS  FOR THE PERIOD OF JUNE 21, 2006 (INCEPTION) TO SEPTEMBER 30,
2007   Page(s)  Report
of Independent Registered Public Accounting Firm F-3  Balance
Sheets at September 30, 2007 and 2006 F-4  Statements
of Operations for the Year Ended September 30, 2007 andfrom Inception (June
21, 2006) to September 30, 2006 and Cumulative from
Inception (June 21, 2006) to September 30, 2007 F-5  Statement
of Changes in Stockholders Equity for the Period of June
21, 2006 (Inception) to September 30, 2007 F-6  Statements
of Cash Flows for the Year Ended September 30, 2007 and from Inception (June
21, 2006) to September 30, 2006 and Cumulative from
Inception (June 21, 2006) to September 30, 2007 F-7  Notes
to Audited Financial Statements F-8
 F-12                    F-2


20


MOORE
& ASSOCIATES, CHARTERED ACCOUNTANTS
AND ADVISORS PCAOB
REGISTERED   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM   To the Board of Directors El Palenque Vivero, Inc. (A Development Stage Company)   We have audited the accompanying balance sheet of El Palenque
Vivero, Inc. (A Development Stage Company) as of September 30, 2007 and 2006,
and the related statements of operations, stockholders equity and cash flows
through September 30, 2007, and Inception on June 21, 2006 through September 30,
2007. These financial statements are the responsibility of the Companys
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.  We conducted our audits in accordance with standards of the Public
Company Accounting Oversight Board (United States).  Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for our opinion.  In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of El Palenque Vivero,
Inc. (A Development Stage Company) as of September 30, 2007 and 2006 and the
results of its operations and its cash flows through September 30, 2007, and
Inception on June 21, 2006 through September 30, 2007, in conformity with
accounting principles generally accepted in the United States of America.  The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 5
to the financial statements, as of September 30, 2007, the Company has a loss
from operations of $16,960, an accumulated deficit of $19,591 and a working
capital of $82,409 and has earned no revenues since inception, which raises
substantial doubt about its ability to continue as a going concern.
 Managements plans concerning these matters are also described in Note 5.
 The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.  /s/ Moore & Associates, Chartered  Moore & Associates Chartered Las Vegas, Nevada November 20, 2007  2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146 (702)
253-7499 Fax (702) 253-7501  F-3


21


El Palenque Vivero, Inc. (A
Development Stage Company) Balance
Sheets As at
September 30,    ASSETS2007
2006CURRENT ASSETSCash and cash equivalents
$
84,009
$
13,440Prepaid expenses

-

5,429TOTAL ASSETS
$
84,009
$
18,869LIABILITIES AND STOCKHOLDERS'
EQUITYCURRENT LIABILITIESAccounts payable and accrued liabilities
$
1,600
$
1,500TOTAL LIABILITIES

1,600

1,500STOCKHOLDERS' EQUITYCapital
Stock (Note 3)Authorized:100,000,000 preferred shares,
$0.001 par value100,000,000 common shares, $0.001
par valueIssued and outstanding shares:4,550,000 common shares (Sept. 30, 2006
- 2,500,000)

4,550

2,500Additional paid-in capital

97,450

17,500Deficit accumulated during the development
stage

(19,591)

(2,631)Total Stockholders' Equity

82,409

17,369TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
84,009
$
18,869          -The accompanying notes are an integral part
of these financial statements -  F-4


22


El Palenque Vivero, Inc. (A
Development Stage Company) Statements of Operations     Cumulative fromInceptionFrom Inception


(June 21,Year Ended


(June 21, 2006) to


2006) toSeptember 30,


September 30,


September 30,2007


2006

2007REVENUES

$
-

$
-

$
-OPERATING EXPENSESProfessional fees


15,636


2,571


18,207General and administrative


1,324


60


1,384Total Operating Expenses


16,960


2,631


19,591Other Income (Expense)


-


-


-Net Loss Applicable toCommon Shares

$
(16,960)

$
(2,631)

$
(19,591)PER SHARE DATA:Basic and diluted loss per common share$
(0.004)

$
(0.001)Weighted average number of common shares
outstanding3,856,696


1,801,980            -The accompanying notes are an integral part
of these financial statements -  F-5


23


El Palenque Vivero, Inc. (A
Development Stage Company) Statement of Changes in Stockholders Equity For the
period of June 21, 2006 (Inception) to September 30, 2007      DeficitAccumulatedAdditional

During theCommon Stock




Paid-in

DevelopmentShares

Amount

Capital

Stage


TotalInception - June 21, 2006


-

$
-

$
-

$
-

$
-Common shares issued to a
founderat $0.005 cash
per share


1,000,000


1,000


4,000


-


5,000Common shares issued to
foundersat $0.01 cash
per share


1,500,000


1,500


13,500


-


15,000Loss for the period


-


-


-


(2,631)


(2,631)Balance - September 30, 2006 (audited)
2,500,000

$
2,500

$
17,500

$
(2,631)

$
17,369Common shares issued for
cashat $0.04 per
share


2,050,000


2,050


79,950


-


82,000Loss for the year


-


-


-


(16,960)


(16,960)Balance - September 30, 2007 (audited)
4,550,000

$
4,550

$
97,450

$
(19,591)

$
82,409     -The accompanying notes are an integral part
of these financial statements -  F-6


24


El Palenque Vivero, Inc. (A
Development Stage Company) Statements of Cash Flows    Cumulative fromInceptionFrom Inception
(June 21,Year Ended


(June 21, 2006) to
2006) toSeptember 30,

September 30,
September 30,2007


2006

2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss
$
(16,960)

$
(2,631)

$
(19,591)Changes in Operating Assets and Liabilities:(Increase) decrease in prepaid expenses

5,429


(5,429)


-Increase (decrease) in accounts payable and accrued
liabilities

100


1,500


1,600Net Cash Used in Operating Activities

(11,431)


(6,560)


(17,991)CASH FLOWS FROM INVESTING ACTIVITIESNet Cash Provided by (Used in) Investing
Activities

-


-


-CASH FLOWS FROM FINANCING ACTIVITIESCommon stock issued for cash

82,000


20,000


102,000Net Cash Provided by Financing Activities

82,000


20,000


102,000NET INCREASE IN CASH AND CASH
EQUIVALENTS

70,569


13,440


84,009CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD

13,440


-


-CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
84,009

$
13,440

$
84,009Supplemental Cash Flow Disclosures:Cash paid for Interest

$
-

$
-

$
-Cash paid for Income Taxes

$
-

$
-

$
-  -The accompanying notes are an integral part
of these financial statements -  F-7


25


El Palenque Vivero, Inc. (A
Development Stage Company) Notes
to Financial Statements September 30, 2007 and 2006    NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS  El Palenque Vivero, Inc. (the Company) was incorporated in the
State of Nevada on June 21, 2006.  The Company was originally incorporated
as El Palenque Nercery, Inc. and changed its name to El Palenque Vivero, Inc. on
June 30, 2006.  It is based in Cuernavaca, Morelos Mexico.  The
accounting and reporting policies of the Company conform to accounting
principles generally accepted in the United States of America, and the Companys
fiscal year end is September 30. The Company is a development stage company that intends to open
and operate a plant nursery in the state of Morelos, Mexico.  To date, the
Companys activities have been limited to its formation and the raising of
equity capital.  At present, management devoted most of its activities to
raising money pursuant to an SB-2 Registration Statement, declared effective on
December 11, 2006.  The offering was closed on June 1, 2007.  NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Use of Estimates  The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period.  Actual results could
differ from those estimates. The Companys periodic filings with the Securities
and Exchange Commission include, where applicable, disclosures of estimates,
assumptions, uncertainties and markets that could affect the financial
statements and future operations of the Company. Cash and Cash Equivalents  Cash and cash equivalents include cash in banks, money market
funds, and certificates of term deposits with maturities of less than three
months from inception, which are readily convertible to known amounts of cash
and which, in the opinion of management, are subject to an insignificant risk of
loss in value.  The Company had $84,009 in cash and cash equivalents at
September 30, 2007 ($13,440  - September 30, 2006).  Start-Up Costs  In accordance with the American Institute of Certified Public
Accountants Statement of Position 98-5, Reporting on the Costs of Start-up
Activities, the Company expenses all costs incurred in connection with the
start-up and organization of the Company.          F-8


26


El Palenque Vivero, Inc. (A
Development Stage Company) Notes
to Financial Statements September 30, 2007 and 2006    NOTE
2 - SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)  Earnings (Loss) per Share of Common Stock  The Company has adopted Financial Accounting Standards Board
(FASB) Statement Number 128, Earnings per Share, (EPS) which
requires presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation.  In the
accompanying financial statements, basic earnings (loss) per share is computed
by dividing net income (loss) by the weighted average number of shares of common
stock outstanding during the period.  Segmented Reporting  SFAS Number 131, Disclosure About Segments of an Enterprise
and Related Information, changed the way public companies report
information about segments of their business in their quarterly reports issued
to shareholders.  It also requires entity-wide disclosures about the
products and services an entity provides, the material countries in which it
holds assets and reports revenues and its major customers.  The company
presently operates only in Mexico.  Foreign Currency Transactions  The Companys functional currency is the Mexican Peso.  The
Companys reporting currency is the U.S. Dollar.  All transactions
initiated in Mexican Pesos are translated to U.S. Dollars in accordance with
SFAS No. 52 Foreign Currency Translation as follows:  (i) Monetary assets and liabilities at the rate of exchange in effect
at the balance sheet date; (ii) Equity at historical rates; and (iii) Revenue and expense items at the average rate of exchange
prevailing during the period.  Adjustments arising from such translations are deferred until
realization and are included as a separate component of stockholders equity as
a component of comprehensive income or loss.  Therefore, translation
adjustments are not included in determining net income (loss) but reported as
other comprehensive income.  For foreign currency transactions, the Company translates these
amounts to the Companys functional currency at the exchange rate effective on
the invoice date.  If the exchange rate changes between the time of
purchase and the time actual payment is made, a foreign exchange transaction
gain or loss results which is included in determining net income for the
period.  No significant realized exchange gains or losses were recorded
from inception (June 21, 2006) to September 30, 2007.       F-9


27


El Palenque Vivero, Inc. (A
Development Stage Company) Notes
to Financial Statements September 30, 2007 and 2006    NOTE
2 - SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)  Stock-Based Compensation  The Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 123(R), Share-Based Payment, which
establishes accounting for equity instruments exchanged for employee services.
 Under the provisions of SFAS 123(R), stock-based compensation cost is
measured at the grant date, based on the calculated fair value of the award, and
is recognized as an expense over the employees requisite service period
(generally the vesting period of the equity grant).  The Company accounts
for share-based payments to non-employees, in accordance with SFAS 123 (as
originally issued) and Emerging Issues Task force Issue No 96-18, Accounting
for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling, Goods or Services.  Comprehensive Income (Loss)  SFAS No. 130, Reporting Comprehensive Income, establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements.  For the year ended
September 30, 2007 and the period ended 2006, the Company had no items of other
comprehensive income.  Therefore, net loss equals comprehensive loss for
the year ended September 30, 2007 and the period ended 2006.  Revenue Recognition  The Company recognizes revenue from the sale of products and
services in accordance with the Securities and Exchange Commission Staff
Accounting Bulletin No. 104 (SAB 104), Revenue Recognition in Financial
Statements.  Revenue will consist of plant sales income and will be
recognized only when all of the following criteria have been met:  (i) Persuasive evidence for an agreement exists; (ii) Delivery has occurred; (iii) The fee is fixed or determinable; and (iv) Revenue is reasonably assured.  Recent Accounting Pronouncements  None of the following new pronouncements has current application
to the Company, but will be implemented in the Companys future financial
reporting when applicable.  In February 2007, FASB issued Financial Accounting Standards No.
159, The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an amendment of FASB Statement No. 115.  This
Statement permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This Statement is
expected to expand the use of fair value measurement, which is consistent with
the Boards long-term measurement objectives for accounting for financial
instruments.  SFAS 159 is effective as of the beginning of an entitys
first fiscal year that begins after November 15, 2007.  F-10


28


El Palenque Vivero, Inc. (A
Development Stage Company) Notes
to Financial Statements September 30, 2007 and 2006    NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)  Recent Accounting Pronouncements (continued)  In September 2006, FASB issued Financial Accounting Standards No.
157, Fair Value Measurements.   This Statement defines fair
value, establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP), and expands disclosures about fair value
measurements. This Statement applies under other accounting pronouncements that
require or permit fair value measurements, the Board having previously concluded
in those accounting pronouncements that fair value is the relevant measurement
attribute. Accordingly, this Statement does not require any new fair value
measurements. However, for some entities, the application of this Statement will
change current practice.  SFAS 157 is effective in the first fiscal year
that begins after November 15, 2007.  NOTE 3 -   CAPITAL STOCK  Authorized
Stock  The Company has authorized 100,000,000 common shares and
100,000,000 preferred shares, both with a par value of $0.001 per share.
 Each common share entitles the holder to one vote, in person or proxy, on
any matter on which action of the stockholders of the corporation is sought.  Share Issuance  From inception of the Company (June 21, 2006) to September 30,
2007, the Company has issued 1,000,000 common shares at $0.005 per share,
1,500,000 common shares at $0.01 per share, and 2,050,000 common shares at $0.04
per share, resulting in total proceeds of $102,000 and 4,550,000 common shares
issued and outstanding at September 30, 2007 (2,500,000 common shares at
September 30, 2006). Of these shares, 2,500,000 were issued to directors and
officers of the Company and 2,050,000 were issued to independent investors.  There are no preferred shares outstanding.  The Company has
issued no authorized preferred shares.The Company has no
stock option plan, warrants or other dilutive securities.  NOTE 4 - INCOME TAXES  The Company recognizes the tax effects of transactions in the year
in which such transactions enter into the determination of net income,
regardless of when reported for tax purposes. Deferred taxes are provided in the
financial statements under SFAS No. 109 to give effect to the resulting
temporary differences which may arise from differences in the bases of fixed
assets, depreciation methods, allowances, and start-up costs based on the income
taxes expected to be payable in future years. Minimal development stage deferred
tax assets arising as a result of net operating loss carryforwards have been
offset completely by a valuation allowance due to the uncertainty of their
utilization in future periods. Operating loss carryforwards generated during the
period from June 21, 2006 (date of inception) through September 30, 2007 of
$19,591 will begin to expire in 2026. Accordingly, deferred tax assets of
approximately $6,500 were offset by the valuation allowance, which increased by
approximately $5,600 and $900 during the year ended September 30, 2007 and the
period ended September 30, 2006, respectively.  F-11


29


El Palenque Vivero, Inc. (A
Development Stage Company) Notes
to Financial Statements September 30, 2007 and 2006    NOTE 5 - GOING CONCERN AND LIQUIDITY CONSIDERATIONS  The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates the
realization of assets and the liquidation of liabilities in the normal course of
business.  As at September 30, 2007, the Company has a loss from operations
of $16,960, an accumulated deficit of $19,591, and working capital of $82,409
and has earned no revenues since inception.  The Company intends to fund
operations through equity financing arrangements, which may be insufficient to
fund its capital expenditures, working capital and other cash requirements for
the year ending September 30, 2008.  The ability of the Company to emerge from the development stage is
dependent upon, among other things, obtaining additional financing to continue
operations, and development of its business plan.  In response to these problems, management intends to raise
additional funds through public or private placement offerings.  These factors, among others, raise substantial doubt about the
Companys ability to continue as a going concern.  The accompanying
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.                            F-12


30


ITEM 8.  CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE  Not applicable.  ITEM 8A.  CONTROLS
AND PROCEDURES  Francisco Mendez, our
principal executive and financial officer, conducted an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended, as of the end of the period covered by this
report (the Evaluation Date).  Based on this evaluation, he concluded
that, as of the Evaluation Date, our disclosure controls and procedures were
effective to provide a reasonable level of assurance that information relating
to us required to be disclosed in our Securities and Exchange Commission (SEC)
reports (i) is recorded, processed, summarized and reported within the time
periods specified in the SEC rules and forms and (ii) is accumulated and
communicated to our management, including our chief executive officer and chief
financial officer, to allow timely decisions regarding required disclosure.  There were no changes in
our internal control over financial reporting that occurred during the last
fiscal quarter of the period covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.  A control system, no matter
how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met.  Further, the
design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs.  Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within our Company have been detected.
 Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.  ITEM 8B.  OTHER
INFORMATION  Not applicable.  PART III  ITEM 9.  DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS, AND CORPORATE
GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT  Executive Officers
and Directors  The following table sets
forth certain information, as of December 1, 2007, with respect to our two
officers and directors:  Name and
Address
Age
PositionsFrancisco Mendez
Privada de Tabasco #
27,
Colonia Maravillas,
Cuernavaca, Morelos,
Mexico  62320
51
President, Chief
Executive Officer, Chief Financial Officer, Treasurer and member of the
Board of DirectorsYosbani Mendez
8567 Coral Way,
#198
Miami, FL
33155
36
Secretary and member
of the Board of Directors  Francisco Mendez has held
the positions of President, CEO, CFO, Treasurer and a director and Yosbani
Mendez the positions of Secretary and director since inception.  They are
expected to hold said offices/positions until the next annual meeting of our
stockholders.


31


Messrs.Mendez are our only officers, directors, promoters, and control
persons.  Background of our
Officer and Directors  Francisco
Mendez Mr.
Mendez has a Masters of Sports Training, which he obtained in 1986 from the
Instituto Superior de Cultura Fisica Manuel Fajardo, in Havana, Cuba. Mr.
Mendez was a weight lifter in the heavy weight class, where he joined the Cuban
national team in 1973 and competed until 1981. He had a distinguished amateur
career representing Cuba in many competitions culminating in being the Junior
World Champion in 1978, placing eighth in the heavy weight class in the 1976
Olympics in Montreal as a junior age competitor, and finishing fourth in the
1980 Moscow Olympics. Since
2000, Mr. Mendez has been self-employed businessman, specializing in the
residential housing construction market, where he undertakes construction,
remodeling, design, and professional landscaping services.  In 2005, he
incorporated a Mexican company called Constructora Colibrica S.A. and is the
President and sole owner of the company.  This company has two main areas
of business, the management and administration of estates and construction.
 Through this company, he manages 8 employees for the management and
administration; these employees provide maintenance, landscaping and ongoing
gardening services for the estates of wealthy individuals. Mr. Mendez, through
this company, also does residential speculation construction and remodeling
projects.  He has been focused buying residential lots and constructing
houses for resale to the middle to upper-middle class in Cuernavaca, Morelos
Mexico. Mr.
Mendez will devote 30% of his time to us, or approximately 12 hours per week to
our operations. Currently, the remaining 70% of Mr. Mendez's time is devoted to
his running Constructora Colibrica S.A. Yosbani
Mendez Mr.
Mendez graduated with a Bachelor of Science Degree in Physical Education in
1995, from the Instituto Superior de Educacion Fisica Manuel Fajardo, in Pinar
del Rio, Cuba. Mr. Mendez had his Bachelor of Science Degree validated from the
University of Central Florida in 1998. Since
2000 - present, Mr. Mendez has been working for the city of Miami Beach Fire
Department, in their Ocean Rescue Division. His responsibility is as a Lifeguard
on Miami Beach. Mr. Mendez is the President and sole owner of Hercules One Pool
Service Inc., incorporated in Florida. This company provides pool services to
clients in the Miami-Dade County. Mr.
Mendez will devote 20% of his time to us, or approximately 8 hours per week to
our operation. Currently, the remaining 80% of Mr. Mendez's time is devoted to
his work with the Miami Beach Fire Department and with running Hercules One Pool
Services, Inc. Involvement in
Certain Legal Proceedings  To our knowledge, during
the past five years, no present or former director or executive officer of our
company: (1) filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed by
a court for the business or present of such a person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an executive
officer within two years before the time of such filing; (2) was convicted in a
criminal proceeding or named subject of a pending criminal proceeding (excluding
traffic violations and other minor offenses); (3) was the subject of any order,
judgment or decree, not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or temporarily enjoining him from
or otherwise limiting the following activities: (i) acting as a futures
commission merchant, introducing broker, commodity trading advisor,


32


commodity pool operator,
floor broker, leverage transaction merchant, associated person of any of the
foregoing, or as an investment advisor, underwriter, broker or dealer in
securities, or as an affiliated person, director of any investment company, or
engaging in or continuing any conduct or practice in connection with such
activity; (ii) engaging in any type of business practice; (iii) engaging in any
activity in connection with the purchase or sale of any security or commodity or
in connection with any violation of federal or state securities laws or federal
commodity laws; (4) was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any federal or state authority
barring, suspending or otherwise limiting for more than 60 days the right of
such person to engage in any activity described above under this Item, or to be
associated with persons engaged in any such activity; (5) was found by a court
of competent jurisdiction in a civil action or by the Securities and Exchange
Commission to have violated any federal or state securities law and the judgment
was not subsequently reversed, suspended or vacated; (6) was found by a court of
competent jurisdiction in a civil action or by the Commodity Futures Trading
Commission to have violated any federal commodities law, and the judgment in
such civil action or finding by the Commodity Futures Trading Commission has not
been subsequently reversed, suspended or vacated.   Board of
Directors  None of our
directors receive any remuneration for acting as such.  Directors may
however be reimbursed for their expenses, if any, for attendance at meetings of
the Board of Directors.  Our Board of Directors may designate from among
its members an executive committee and one or more other committees.  No
such committees have been appointed to date.  Accordingly, we do not have
an audit committee or an audit committee financial expert.  We are
presently not required to have an audit committee financial expert and do not
believe we otherwise need one at this time due to our lack of material business
operations.  Similarly we do not have a nominating committee or a committee
performing similar functions.  Our entire board serves the functions of an
audit committee and a nominating committee.  We have not implemented
procedures by which our security holders may recommend board nominees to us but
expect to do so in the future, when and if we engage in material business
operations.  We are not
presently required to have independent directors.  Our two directors,
Francisco and Yosbani Mendez are not independent.  If we ever become a
listed issuer whose securities are listed on a national securities exchange or
on an automated inter-dealer quotation system of a national securities
association, which has independent director requirements, we intend to comply
with all applicable requirements relating to director independence.  Code of
Ethics  We have adopted a corporate
code of ethics.  We believe our code of ethics is reasonably designed to
deter wrong doing and promote honest and ethical conduct; provide full, fair,
accurate, timely and understandable disclosure in public reports; comply with
applicable laws; ensure prompt internal reporting of code violations; and
provide accountability for adherence to the code. A copy of the code of ethics
is attached hereto as Exhibit 14.1.  We will also provide to any person,
without charge and upon request, a copy of the code of ethics.  Any such
request must be made in writing to us at, 8567 Coral Way, Ste 198, Miami, FL
33155.  Employment
Agreements  We have no employment
contracts with any of our officers or employees.  Compliance with
Section 16(a) of the Exchange Act  Because we do not have a
class of equity securities registered pursuant to Section 12 of the Exchange
Act, our executive officers, directors and persons who beneficially own more
than 10% of our common stock are not required to file initial reports of
ownership and reports of changes in ownership with the SEC under Section 16(a)
of the Exchange Act. ITEM 10.  EXECUTIVE
COMPENSATION.  The following table sets
forth information concerning the total compensation paid or accrued by us during
the year ended September 30, 2007 and the period ended September 30, 2006 to (i)
all individuals that served as our chief


33


executive officer or acted
in a similar capacity for us at any time during the fiscal year ended September
30, 2007 and (ii) all individuals that served as executive officers of ours at
any time during the fiscal year ended September 30, 2007 that received annual
compensation during the fiscal year ended September 30, 2007 in excess of
$100,000.  SUMMARY COMPENSATION TABLEName and Principal Position
Year
Salary ($)
Bonus ($)
Stock Awards ($)
Option Awards ($)
Non-Equity Incentive Plan Compen-sation ($)
Change in Pension Value and Non-qualified Deferred
Compen-sation Earnings ($)
All Other Compen-sation ($)
Total ($)Francisco
Mendez, CEO, CFO, Treasurer, Director
2007
2006
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0Yosbani
Mendez, Secretary, Director
2007
2006
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0  Currently, none of our
officers and/or directors is being compensated for their services during the
development stage of our business operations.  We have not paid any
salaries in 2007, and we do not anticipate paying any salaries at any time in
2007.  We will not begin paying salaries until we have adequate funds to do
so.  The officers and directors
are reimbursed for any out-of-pocket expenses they incur on our behalf.  In
addition, in the future, we may approve payment of salaries for our officers and
directors, but currently, no such plans have been approved.  We also do not
currently have any benefits, such as health insurance, life insurance or any
other benefits available to our employees.  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR ENDOption Awards
Stock AwardsName
Number of Securities Underlying Unexercised Options (#)
Exercisable
Number of Securities Underlying Unexercised Options (#)
Unexercisable
Equity Incentive Plan Awards; Number of Securities Underlying
Unexercised Unearned Options (#)
Option Exercise Price ($)
Option Expiration Date
Number of Shares or Units of Stock That Have Not Vested
(#)
Market Value of Shares or Units of Stock That Have Not Vested
($)
Equity Incentive Plan Awards: Number of Unearned Shares,
Units or Other Rights That Have Not Vested (#)
Equity Incentive Plan Awards: Market or Payout Value of
Unearned Shares, Units or Other Rights That Have Not Vested (#)Francisco
Mendez
0
0
0
0
0
0
0
0
0


34


Yosbani
Mendez
0
0
0
0
0
0
0
0
0  We have not issued any
stock options or maintained any stock option or other incentive plans since our
inception.  We have no plans in place and have never maintained any plans
that provide for the payment of retirement benefits or benefits that will be
paid primarily following retirement including, but not limited to, tax qualified
deferred benefit plans, supplemental executive retirement plans, tax-qualified
deferred contribution plans and nonqualified deferred contribution plans.
 Similarly, we have no contracts, agreements, plans or arrangements,
whether written or unwritten, that provide for payments to the named executive
officers or any other persons following, or in connection with the resignation,
retirement or other termination of a named executive officer, or a change in
control of us or a change in a named executive officers responsibilities
following a change in control.  As of the date hereof, we
have not entered into employment contracts with any of our officers and do not
intend to enter into any employment contracts until such time as it profitable
to do so.  Compensation of
Directors  None of our directors
receive any compensation for serving as such, for serving on committees of the
board of directors or for special assignments.  During the fiscal year
ended September 30, 2007, there were no other arrangements between us and our
directors that resulted in our making payments to any of our directors for any
services provided to us by them as directors.  Indemnification  Under our bylaws, we may
indemnify an officer or director who is made a party to any proceeding,
including a lawsuit, because of his position, if he acted in good faith and in a
manner he reasonably believed to be in our best interest.  We may advance
expenses incurred in defending a proceeding.  To the extent that the
officer or director is successful on the merits in a proceeding as to which he
is to be indemnified, we must indemnify him against all expenses incurred,
including attorneys fees.  With respect to a derivative action, indemnity
may be made only for expenses actually and reasonably incurred in defending the
proceeding, and if the officer or director is judged liable, only by a court
order.  The indemnification is intended to be to the fullest extent
permitted by the laws of the State of Nevada.  Regarding indemnification
for liabilities arising under the Securities Act, which may be permitted to
directors or officers under Nevada law, we are informed that, in the opinion of
the Securities and Exchange Commission, indemnification is against public
policy, as expressed in the Act and is, therefore, unenforceable.  ITEM 11.  SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.  The following table sets
forth information with respect to the beneficial ownership of our common stock
known by us as of December 1, 2007 by (i) each person or entity known by us to
be the beneficial owner of more than 5% of our common stock, (ii) each of our
directors, (iii) each of our executive officers, and (iv) all of our directors
and executive officers as a group.  The percentages in the table have been
calculated on the basis of treating as outstanding for a particular person, all
shares of our common stock outstanding on such date and all shares of our common
stock issuable to such holder in the event of exercise of outstanding options,
warrants, rights or conversion privileges owned by such person at said date
which are exercisable within 60 days of such date.  Except as otherwise
indicated, the persons listed below have sole voting and investment power with
respect to all shares of our common stock owned by them, except to the extent
such power may be shared with a spouse.  Name
and Address
of
Beneficial Owner
Shares of Common Stock
Beneficially Owned
Percentage
Ownership**


35


Francisco Mendez
(1)
Privada de Tabasco #
27,
Colonia Maravillas,
Cuernavaca, Morelos,
Mexico  62320
1,500,000
33.0%Yosbani Mendez
(1)
8567 Coral Way,
#198
Miami, FL
33155
1,000,000
22.0%All
officers and directors as a group (2 people)
2,500,000
55.0%  (1)  Francisco and
Yosbani Mendez are cousins.  **The percentage ownership
is calculated based on 4,550,000 shares of our common stock issued and
outstanding as of December 1, 2007.  Securities Authorized
for Issuance under Equity Compensation Plans  We do not presently
maintain any equity compensation plans and have not maintained any such plans
since our inception.  ITEM 12.  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.  In June and August, 2006,
we issued a total of 2,500,000 shares of restricted common stock to Francisco
and Yosbani Mendez, our then directors and officers.  This was accounted
for as an issuance of shares of common stock in the amount of $20,000.
 These shares of common stock are restricted securities, as defined in Rule
144 of the Rules and Regulations of the SEC promulgated under the Securities
Act.


36


PART III  ITEM 13.
  EXHIBITS.   Exhibits  The
following Exhibits are being filed with this report on Form 10-KSB: Exhibit No.
SEC Report Reference Number
Description3.1
3.1
Articles
of Incorporation of Registrant. (1)3.2
3.2
Bylaws
of Registrant. (1)14.1
14.1
Code
of Ethics. (2)31.1/31.2

Rule
13(a)  14(a)/15(d)  14(a) Certification of Principal Executive and
Financial Officer. (2)32.1/31.2

Rule
1350 Certification of Chief Executive and Financial Officer. (2)  (1) Filed with the Securities and Exchange Commission on November 22,
2006 as an exhibit, numbered as indicated above, to the Registrants
registration statement on the Registrants Registration Statement on Form SB-2
(file no. 333-138927), which exhibit is incorporated herein by reference. (2) Filed herewith.


37


ITEM 14.  PRINCIPAL
ACCOUNTANT FEES AND SERVICES.  Audit Fees The aggregate fees billed by our principal accountant for services
rendered during the fiscal year ended September 30, 2007 and the period ended
September 30, 2006, respectively, are set forth in the table below:  Fee
Category
Year
ended
September 30, 2007
From
Inception
(June
21, 2006) to
September 30, 2006Audit fees
(1)
$ 3,950
$
1,500Audit-related fees
(2)
0
0Tax fees
(3)
0
500All other fees
(4)
0
0Total
fees
$ 3,950
$
2,000  (1) Audit fees consists of fees incurred for professional services
rendered for the audit of annual financial statements, for reviews of interim
financial statements included in our quarterly reports on Form 10-QSB and for
services that are normally provided in connection with statutory and regulatory
filings or engagements. (2) Audit-related fees consists of fees billed for professional
services that are reasonably related to the performance of the audit or review
of our financial statements, but are not reported under Audit fees. (3) Tax fees consists of fees billed for professional services
relating to tax compliance, tax advice and tax planning, consisting of
preparation of our corporate tax returns for the period ended September 30,
2006.  Our principal accountants are currently preparing the 2007 tax
return.  (4) All other fees consists of fees billed for all other
services.  Audit
Committees Pre-Approval Policies and Procedures  We do not at this time have
an audit committee, therefore, no policies or procedures other than those
required by SEC rules on auditor independence, have been implemented.  The
Board of Directors will have to pre-approve the engagement of our principal
independent accountants to provide non-audit services.  No non-audit
services, except for the preparation of corporate tax returns, for which
pre-approval has been obtained, were provided by our principal independent
accountants in 2007 and 2006.  Section 10A(i) of the Securities Exchange
Act of 1934 prohibits our auditors from performing audit services for us as well
as any services not considered to be audit services unless such services are
pre-approved by the board of directors (in lieu of the audit committee) or
unless the services meet certain de minimis standards.


38


SIGNATURES  In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.  Date:
 December 12, 2007 EL
PALENQUE VIVERO, INC.   By:       
***/s/ Francisco
Mendez*** ** Name: Francisco
Mendez Title: President   In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated. Signature
Title
Date***/s/ Francisco
Mendez***
Francisco
Mendez
President
(principal executive officer), Chief Financial Officer (principal
financial officer), Treasurer, and member of the Board of
Directors
December
12, 2007***/s/ Yosbani
Mendez***
Yosbani
Mendez
Secretary,
and member of the Board of Directors
December
12, 2007


39


CERTIFICATIONS OF CHIEF EXECUTIVE AND FINANCIAL OFFICER Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 EXHIBIT
31.1 and EXHIBIT
31.2 I,
Francisco Mendez, certify that:  1. I
have reviewed this annual report on Form 10-KSB of El Palenque Vivero, Inc.; 2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report; 3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the small business issuer as
of, and for, the periods presented in this report; 4. I
am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the small business issuer and have: (a) Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under my supervision, to ensure that material
information relating to the small business issuer, including its consolidated
subsidiaries, is made known to me by others within those entities, particularly
during the period in which this report is being prepared; (b) Designed
such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under my supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles; (c) Evaluated
the effectiveness of the small business issuers disclosure controls and
procedures and presented in this report my conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and (d) Disclosed
in this report any change in the small business issuers internal control over
financial reporting that occurred during the period covered by this annual
report that has materially affected, or is reasonably likely to materially
affect, the small business issuers internal control over financial reporting;
and 5. I
have disclosed, based on my most recent evaluation of internal control over
financial reporting, to the small business issuers auditors and the audit
committee of the small business issuers board of directors (or persons
performing the equivalent functions): (a) All
significant deficiencies and material weakness in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the small business issuers ability to record, process,
summarize and report financial information; and (b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial
reporting. Date:
 December __, 2007 Francisco
Mendez Principal
Executive and Financial Officer       Exhibit 32.1 and Exhibit 32.2 CERTIFICATION OF CHIEF EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  In
connection with the Annual Report of El Palenque Vivero, Inc. (the Company) on
Form 10-KSB for the fiscal year ended September 30, 2007 as filed with the
Securities and Exchange Commission on the date hereof (the Report), I,
Francisco Mendez, Chief Executive and Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Sect. 1350, as adopted pursuant to Sect. 906 of the
Sarbanes-Oxley Act of 2002, that: (1) The
Report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and (2) The
information contained in the Report fairly presents, in all material respects,
the financial condition and result of operations of the Company. IN
WITNESS WHEREOF, the undersigned has executed this certification as of the ____
day of December, 2007.  _________________________________ Francisco
Mendez Chief
Executive and Financial Officer