**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-QSB**


(Mark
      One)


**[
      X ]** Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange
      Act
      Of 1934





For
      the
      quarterly period ended **August
      31, 2006**





[
      ]
      Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act
      Of
      1934





For
      the
      transition period ________ to ________





**COMMISSION
      FILE NUMBER** **000-51376**








**RANCHO
      SANTA MONICA DEVELOPMENTS INC.**


(Exact
      name of small business issuer as specified in its charter)





**NEVADA**
            
            **83-0414306**(State
                or other jurisdiction of incorporation or organization)
            
            (IRS
                Employer Identification No.)**3104
                Sunnyhurst Road****North
                Vancouver, BC, Canada V7K 2G3**(Address
                of principal executive offices)**(604)
                537-5905**Issuer's
                telephone number**Not
                Applicable**(Former
                name, former address and former fiscal year, if changed since last
                report)





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





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





State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: **As
      of June 13th, 2006, the Issuer had 7,723,499 Shares of Common Stock outstanding.**




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







**PART
      I - FINANCIAL INFORMATION**




**ITEM
      1.**  **FINANCIAL
      STATEMENTS.**





The
      accompanying unaudited financial statements have been prepared in accordance
      with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B, and,
      therefore, do not include all information and footnotes necessary for a complete
      presentation of financial position, results of operations, cash flows, and
      stockholders' equity in conformity with generally accepted accounting
      principles. In the opinion of management, all adjustments considered necessary
      for a fair presentation of the results of operations and financial position
      have
      been included and all such adjustments are of a normal recurring nature.
      Operating results for the nine months ended August 31st, 2006 are not
      necessarily indicative of the results that can be expected for the year ending
      November 30, 2005.





As
      used
      in this Quarterly Report, the terms "we", "us", "our", the “Company” and
“Rancho” mean Rancho Santa Monica Developments Inc. unless otherwise indicated.
      All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise
      stated.


-2-


**MOORE
        & ASSOCIATES, CHARTERED**
  ***ACCOUNTANTS
        AND ADVISORS***
  ***PCAOB
        REGISTERED***
 
 
 
 **Report
        of Independent Registered Public Accounting Firm**
 
 
 
 **Rancho
        Santa Monica Developments Inc.**
 **(A
        Development Stage Company) Las Vegas, Nevada**
  We
        have
        reviewed the accompanying balance sheet of Rancho Santa Monica Developments
        Inc.
        (A Development Stage Company). as of August 31, 2006, and the related statements
        of income, retained earnings, and cash flows for the nine months then ended,
        in
        accordance with the standards of the Public Company Accounting Oversight
        Board
        (United States). All information included in these financial statements is
        the
        representation of the management of Rancho Santa Monica Developments Inc.
        (A
        Development Stage Company).
 
 A
        review
        consists principally of inquiries of company personnel and analytical procedures
        applied to financial data. It is substantially less in scope than an audit
        in
        accordance with generally accepted auditing standards, the objective of which
        is
        the expression of an opinion regarding the financial statements taken as
        a
        whole. Accordingly, we do not express such an opinion.
 
 Based
        on
        our review, we are not aware of any material modifications that should be
        made
        to the financial statements in order for them to be in conformity with generally
        accepted accounting principles.
 
 The
        accompanying financial statements have been prepared assuming that the company
        will continue as a going concern. The Company has no established source of
        revenue and no operations. This raises substantial doubt about the Company’s
        ability to continue as a going concern. The financial statements do not include
        any adjustments that might result from this uncertainty.
 
  /s/
        Moore
& Associates, Chartered Moore
        & Associates,
 Chartered
        Las Vegas, Nevada
  September
        26, 2006
 ***2675
          S. JONES BLVD. SUITE 109, LAS VEGAS, NEVADA 89146 (702) 253-7511 Fax:
          (702)253-7501***
 -3-
    **RANCHO
        SANTA MONICA** **** **DEVELOPMENTS
        INC.**
 **(A
        Development Stage** **** **Company)**
 **FINANCIAL
        STATEMENTS**
 **August
        31,** **2006**
 **(Unaudited)**
 **(Stated
        in U.S. Dollars)**
   -4-
 **RANCHO
          SANTA MONICA** **** **DEVELOPMENTS
          INC.**
 **(A
          Development Stage** **** **Company)**
 
 **BALANCE
          SHEETS**
 **(Unaudited)**
 **(Stated
          in U.S. Dollars)**
  **August
                    31**
                
                NOVEMBER
                    30**2006**
                
                2005**ASSETS****Current**Cash(US
                    Account)
                
                **$**
                **5,298**
                
                $
                4,346Cash
                    (Canadian Account)
                
                **$**
                **45,472**Translation
                    Adjustment(Note5)
                
                **$**
                **(10,567**
                **)****Property**(Note 2)
                
                **$**
                **80,000**
                
                
                80,000CapitalImprovements
                
                **$**
                **54,500****$**
                **174,945**
                
                $
                84,346**LIABILITIES****Current**Accounts
                    payable and accrued liabilities
                
                **$**
                **21,996**
                
                $
                10,965Dueto
                    relatedparties
                
                
                **14,000**
                
                
                12,800**35,996**
                
                
                23,765**Note
                    Payable**(Note3)
                
                
                **50,000**
                
                
                50,000**$**
                **85,996**
                
                
                73,765**STOCKHOLDERS’
                    EQUITY****Share
                    Capital**Authorized:100,000,000common
                    shares with a par valueof
                    $0.0001 per share100,000,000preferred
                    shares withapar
                    value of $0.0001 per shareIssued:7,723,499
                    common shares
                
                
                **7,723**
                
                
                7,564Additional
                    paid-in capital
                
                
                **107,982**
                
                
                103,366**Subscriptions********Receivable**
                
                
                **96,543**
                
                
                **—****Deficit
                    Accumulated During The********Development
                    Stage**
                
                
                **(122,160**
                **)**
                
                (100,349
                )**88,949**
                
                
                10,581**$**
                **174,945**
                
                $
                84,346
 The
          accompanying notes are an  integral
          part of these financial statements.
 -5-
  **RANCHO
          SANTA MONICA** **** **DEVELOPMENTS
          INC.**
 **(A
          Development Stage** **** **Company)**
  **STATEMENTS
          OF OPERATIONS**
 **(Unaudited)**
 **(Stated
          in U.S. Dollars)**
 CumulativePeriodFromThree
                
                Three
                
                Nine
                
                Nine
                
                InceptionMonths
                
                Months
                
                Months
                
                Months
                
                May
                    28thEnded
                
                Ended
                
                Ended
                
                Ended
                
                2004August
                    31
                
                August
                    31
                
                August
                    31
                
                August
                    31
                
                to
                    August 312006
                
                2005
                
                2006
                
                2005
                
                2006**REVENUE**
                
                
                
                
                
                
                
                $
                —
                
                $
                —
                
                $
                —**OPERATING
                    EXPENSES**Travel
                    expenses
                
                
                —
                
                
                —
                
                
                1,190
                
                
                —
                
                
                1,190Consulting
                    fees
                
                
                —
                
                
                4,800
                
                
                1,200
                
                
                16,400
                
                
                23,000General
                    and Administrative
                
                
                1,340
                
                
                669
                
                
                7,121
                
                
                3,803
                
                
                13,365Interest
                    on long-term debt
                
                
                1,500
                
                
                1,500
                
                
                4,000
                
                
                4,480
                
                
                9,980Professional
                    fees
                
                
                750
                
                
                7,500
                
                
                8,300
                
                
                29,765
                
                
                74,6253,590
                
                
                14,469
                
                
                21,811
                
                
                54,448
                
                
                122,160**NET
                    OPERATING LOSS**
                
                **$**
                (3,590
                )
                $
                (14,469
                )
                $
                (21,811
                )
                $
                (54,448
                )
                $
                (122,160
                )**Basic
                    and Diluted Loss per****Share**
                
                $
                (0.01
                )Weighted
                    Average Number of Shares Outstanding
                
                
                7,723,499
 The
          accompanying notes are an  integral
          part of these financial statements.
 -6-
  **RANCHO
          SANTA MONICA** **** **DEVELOPMENTS
          INC.**
 **(A
          Development Stage** **** **Company)**
  **STATEMENTS
          OF CASH FLOWS**
 **(Unaudited)**
 **(Stated
          in U.S. Dollars)**
 CumulativePeriod
                    FromThree
                
                Nine
                
                Nine
                
                InceptionMonths
                
                Months
                
                Months
                
                May
                    28thEnded
                
                Ended
                
                Ended
                
                2004August
                    31
                
                August
                    31
                
                August
                    31
                
                to
                    August 312006
                
                2006
                
                2005
                
                2006**Cash
                    Flows from Operating Activities**Net
                    Loss for the Period
                
                $
                (3,590
                )
                $
                (21,811
                )
                $
                (54,448
                )
                $
                (122,160
                )**Adjustments
                    to Reconcile Loss to Net Cash Used by Operating Activities**Changes
                    in Accounts payable and accrued liabilities
                
                
                1,500
                
                
                11,031
                
                
                17,980
                
                
                21,996Changes
                    in amounts due to related parties
                
                
                —
                
                
                1,200
                
                
                
                
                
                14,000(2,090
                )
                
                (9,580
                )
                
                (36,468
                )
                
                (86,164
                )**Cash
                    Flows from Investing Activity**Purchase
                    of property
                
                
                —
                
                
                
                
                
                (4,331
                )
                
                (30,000
                )Capital
                    Improvements
                
                
                (49,500
                )
                
                (54,500
                )
                
                
                
                
                (54,000
                )Translation
                    Adjustments
                
                
                5,445
                
                
                5,445
                
                
                
                
                
                5,445**Cash
                    Flows from Financing Activity**Issue
                    of share capital
                
                
                —
                
                
                4,775
                
                
                3,000
                
                
                115,705Subscriptions
                    Receivable
                
                
                82,247
                
                
                96,543
                
                
                
                
                
                96,543Translation
                    Adjustments
                
                
                
                
                
                121
                
                
                
                
                
                121**Increase
                    (Decrease) in Cash**
                
                
                36,102
                
                
                42,430
                
                
                (37,799
                )**Cash,
                    Beginning of Period**
                
                
                10,603
                
                
                4,275
                
                
                43,154
                
                
                —**Cash,
                    End of Period**
                
                $
                46,705
                
                
                46,705
                
                
                5,335
                
                
                46,705
 The
          accompanying notes are an  integral
          part of these financial statements.
 -7-
  **RANCHO
          SANTA MONICA** **** **DEVELOPMENTS
          INC.**
 **(A
            Development Stage** **** **Company)**
  **STATEMENT
            OF STOCKHOLDERS’ EQUITY**
  **PERIOD
            FROM INCEPTION, MAY 28, 2004, TO AUGUST 31, 2006**
 **(Unaudited)**
 **(Stated
            in U.S. Dollars)**
 **COMMON
                      STOCK**
                  
                  
                  
                  **DEFICIT****NUMBER**
                  
                  
                  
                  
                  
                  
                  
                  **ACCUMULATED****OF**
                  
                  
                  
                  **ADDITIONAL**
                  
                  
                  
                  **DURING
                      THE****COMMON**
                  
                  **PAR**
                  
                  **PAID-IN**
                  
                  **SUBSCRIPTIONS**
                  
                  **DEVELOPMENT****SHARES**
                  
                  **VALUE**
                  
                  **CAPITAL**
                  
                  **RECEIVABLE**
                  
                  **STAGE**
                  
                  **TOTAL**Shares
                      issued for cash at $0.001 per share - May 28, 2004
                  
                  
                  4,000,000
                  
                  $
                  4,000
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  —
                  
                  $
                  4,000Shares
                      issued for cash at $0.03 per share - November 30, 2004
                  
                  
                  3,564,332
                  
                  
                  3,564
                  
                  
                  106,366
                  
                  
                  (3,000
                  )
                  
                  —
                  
                  
                  103,930Subscriptions
                      received - May 31, 2005
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  3,000
                  
                  
                  —
                  
                  
                  3,000Net
                      loss for the period
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (100,349
                  )
                  
                  (100,349
                  )Balance,
                      November 30, 2005
                  
                  
                  7,564,332
                  
                  
                  7,564
                  
                  
                  106,366
                  
                  
                  —
                  
                  
                  (100,349
                  )
                  
                  10,581Shares
                      issued forcash at $0.03 per share - March 20, 2006
                  
                  
                  159,167
                  
                  $
                  159
                  
                  
                  4,616
                  
                  
                  
                  
                  
                  
                  
                  $
                  4,775Net
                      loss for the period
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (21,811
                  )
                  
                  (21,811
                  )Balance,
                      August 31 2006
                  
                  
                  7,723,499
                  
                  $
                  7,723
                  
                  $
                  103,366
                  
                  $
                  —
                  
                  $
                  (122,160
                  )
                  $
                  (6,455
                  ) The
            accompanying notes are an  integral
            part of these financial statements.


-8-




**RANCHO
      SANTA MONICA** **** **DEVELOPMENTS
      LTD.**


**(A
        Development Stage** **** **Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **AUGUST
        31, 2006**
 **(Unaudited)**
 **(Stated
        in U. S. Dollars)**
   **1.**
              **BASIS
                  OF PRESENTATION**
 The
            unaudited financial statements as of August 31st, 2006 included herein
            have been
            prepared without audit pursuant to the rules and regulations of the Securities
            and Exchange Commission. Certain information and footnote disclosures
            normally
            included in financial statements prepared in accordance with United States
            generally accepted accounting principles have been condensed or omitted
            pursuant
            to such rules and regulations.
  In
            the
            opinion of management, all adjustments (consisting of normal recurring
            accruals)
            considered necessary for a fair presentation have been included. It is
            suggested
            that these financial statements be read in conjunction with the November
            30,
            2004 audited financial statements and notes thereto.
 
 **2.**
              **PROPERTY**
  By
        an
        agreement, dated November 29, 2004, the Company acquired the right to possess
        and make use of a fraction of a property located in the State of Quintana
        Roo,
        Mexico, for consideration of a $30,000 cash payment by December 31, 2004,
        and a
        $50,000 unsecured promissory note. The Company will own title to the property
        upon completion of a legal survey by the Mexican Government.
  A
        total
        of nine apartment units are currently under construction on the portion of
        the
        property not purchased. Upon completion of construction, the Company will
        receive maintenance and management fees of $250 per unit per month, and service
        fees of $50 per unit per month.


**3.**
              **NOTE********PAYABLE**
 
 Note
        Payable is comprised of a $50,000  unsecured  promissory  note,  bearing  interest  at 12%
        per
        annum and payable in  full
        on
        November 29, 2006.
 
 **4.**
              **RELATED
                  PARTIES TRANSACTIONS**
 During
          the three month period ended February 28th, 2006, pursuant to written
          agreements, the Company paid Directors and Officers a total of $1,200 for
          management services. Cumulatively to that date, management fees paid to
          Directors and Officers totals $23,000. The amount $14,000 remains
          unpaid.
  **5.**
              **TRANSLATION
                  ADJUSTMENT**
  Translation
        Adjustment is the exchange difference from Canadian Funds to US funds for
        the
        total Canadian cash balance ($45,472 Canadian Dollars), capital improvements
        wired for the Tulum Property in canadian funds ($54,500 Canadian Dollars),
        and
        the accumulated translation adjustment to date.


-9-




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





**Cautionary
      Statement Regarding Forward-Looking Statements**





Certain
      statements contained in this Quarterly Report constitute "forward-looking
      statements". These statements, identified by words such as “plan”, "anticipate,"
      "believe," "estimate," "should", "expect" and similar expressions include our
      expectations and objectives regarding our future financial position, operating
      results and business strategy. These statements reflect the current views of
      management with respect to future events and are subject to risks, uncertainties
      and other factors that may cause our actual results, performance or
      achievements, or industry results, to be materially different from those
      described in the forward-looking statements. Such risks and uncertainties
      include those set forth under the caption "Management's Discussion and Analysis
      or Plan of Operation" and elsewhere in this Quarterly Report. We advise you
      to
      carefully review the reports and documents we file from time to time with the
      Securities and Exchange Commission (“SEC”), particularly our Annual Reports on
      Form 10-KSB and our Current Reports on Form 8-K.





**Corporate
      Background**





We
      are a
      development stage company focused on the development of real estate. We have
      acquired real property located in Solidaridad, Mexico on which we plan to
      construct certain facilities and provide management services for the apartment
      units being constructed on the adjoining property. Ms. Galan-Rios has applied
      and has received all remaining permits to complete construction of the apartment
      units which are 80% complete as of October 17, 2005. We expect the completion
      of
      the development of the Solidaridad Property and the apartment units on the
      adjoining property will occur by September 30 th ,
      2006.
      For the nine months ending May 31 st ,
      2006,
      we have invested $54,500 in capital improvements to the Solidaridad property.





We
      are
      not obligated to fund any of the costs of construction of the apartment units.
      Our project requires capital expenditures for infrastructure development before
      we can begin generating revenue from our property. Our property development
      is
      90% complete. We intend to complete the construction of the cabanas, reception
      area, sewer system and water facilities in the next three months using local
      contractors. We estimate that we will be required to expend $70,000 to complete
      the development of our property. See “Acquisition of Solidaridad Property”
below.


-10-




**Recent
      Corporate Developments**





We
      experienced the following significant developments since our quarter ending
      May
      31 st ,
      2006:





Mr.
      Trevor Barr was appointed as a Vice President to the Company effective June
      1 st ,
      2006.





We
      commenced construction on the Solidaridad property consisting of the
      following:





1.
            The
                construction of the 2ndcabana for use as either rental purposes or to service the 9 rental
                units
                on the ajoining property.


2.
            The
                installation of all sewer, grey water lines to the cabana units and
                to the
                9 rental units on the ajoining
                property.


3.
            The
                repair of the roof of the 1stcabana.


4.
            The
                expansion of the storage area at the far north west corner of the
                property


5.
            The
                replacement of the roof for the receiption
                area.


6.
            The
                installation of a 500kg propane tank to service the common area and
                the 9
                rental units on the ajoinging
                property.





We
      have
      also indentified several candidates for development in the Puerta Vallarta
      area
      of Mexico as our second development property, Our new vice president, Trevor
      Barr, is conducting an extensive review of these properties.





**Acquisition
      of Solidaridad Property**





We
      entered into an agreement dated for reference November 29, 2004 with Monica
      Galan-Rios for the purchase of certain lands located in Solidaridad, Mexico
      consisting of approximately 2,120 square meters, See Figure 1 below. Under
      the
      terms of the property purchase agreement with Ms. Galan-Rios:





(1)
            In
                consideration of Ms. Galan-Rios’s grant of all of her interests in the
                Solidaridad Property to us, we: (i) paid $30,000 to Ms. Galan-Rios,
                and
                (ii) issued an unsecured promissory note to Ms. Galan-Rios in the
                amount
                of $50,000, plus accrued interest at a rate of 12% per year, maturing
                on
                November 29, 2006;





(2)
            We
                acknowledged that nine apartment units are being constructed by Ms.
                Galan-Rios on land adjacent to the Solidaridad Property and are intended
                to be sold or leased to potential tenants on completion of construction;





(3)
            We
                agreed to provide septic and water services to tenants at a rate
                of $50
                per apartment unit per month;





(4)
            We
                agreed that commencing on the completion of construction of the units,
                for
                a 25 year period following November 29, 2004, we will provide security,
                maintenance and gardening services for the Solidaridad Property for
                a fee
                of $250 per unit per month; and





(5)
            We
                agreed to grant to Ms. Galan-Rios and any of the potential tenants,
                access
                to the road presently existing on the Solidaridad
                Property.


-11-


We
      expect
      that completion of the development of the Solidaridad Property and the apartment
      units on the adjoining property will occur by November 30th, 2006 for operations
      to commence in the early winter of 2006. We presently do not have any written
      agreements with our third party contractors to provide the management,
      maintenance and septic services to the apartment units on the adjoining
      property. All understandings and arrangements with our consultants are presently
      verbal.





Under
      the
      terms of our agreement with Ms. Galan-Rios, we were assigned her interest in
      an
      occupation order issued by the Ejidal Commissariat of the Ejido NCPE Jose Maria
      Pino Suarez for the use and possession of the Solidaridad Property. Under
      Mexican law we own the right to possess and make use of the Solidaridad Property
      but do not own title to the property until a legal survey is completed by the
      Mexican government. The Mexican government is expected to undertake a legal
      survey of the Solidaridad Property and surrounding areas within the next twelve
      months. Once the legal survey is completed the Mexican government may require
      an
      additional fee prior to effecting a transfer of legal title to the property
      to
      Rancho. Because we do not own legal title to our Solidaridad Property we are
      subject to the risk that: (i) conditions may be imposed on our occupation order
      for the property and/or the order may be cancelled; (ii) the Mexican government
      may delay the implementation of a legal survey or decide not to undertake a
      survey of the property; and (iii) if a legal survey is completed there is no
      assurance that we will not be required to pay additional fees for the transfer
      of legal title to the property or that the property boundaries will be identical
      to those granted in the occupation order issued by the Ejidal Commissariat.





**Location
      of Solidaridad Property**





The
      property consists of the Western half of the fraction of Lot #10 located at
      Km
      8, Carretara a Tulum-Boca Paila Ejido Jose Maria Pino Suarez Municipality of
      Solidaridad, Quintana Roo, Mexico. See Figure 1 below. Solidaridad is one of
      the
      eight municipalities that make up the Mexican state of Quintana Roo. Quintana
      Roo is located on the eastern part of the Yucatán Peninsula. It borders the
      Mexican states of Yucatán and Campeche to the north and west, the Caribbean Sea
      to the east, and the nation of Belize to the south.





Figure
      1


Property
      Location


-12-











**PLAN
      OF OPERATION**




Our
      plan
      of operation is to acquire, manage, and develop income-producing real property
      in Mexico. We have not earned any revenues to date. We are awaiting the required
      regulatory federal and municipal permits to be received by Mrs. Rios to complete
      construction and commence our operations on the Solidaridad property. In
      addition, our company is considering acquiring other development or
      income-producing properties in Mexico. Our auditors have made reference to
      the
      substantial doubt as to our ability to continue as a going concern in their
      audit report on our audited financial statements for the period ended November
      30, 2005. We plan to earn revenues from management services, including
      reception, greeting, and general bookkeeping services, provided to the apartment
      units being constructed on the land adjacent to the Solidaridad Property and
      the
      operation of certain facilities on the Solidaridad Property.





Once
      completed, the Solidaridad Property is expected to consist of the two cabanas,
      a
      reception area, washrooms, and a food preparation area. One of the cabanas
      is
      expected to be 8 x 4 meters, and the second cabana is expected to be 6 x 4
      meters. Each cabana is oval shaped and is expected to fit a family of 4 to
      5 but
      are also suited for couples.





The
      amenities that we intend to provide to apartment unit owners and guests are
      as
      follows:





-  a
      tour of
      the Mayan ruins including the Tulum Ruins and the Coba Ruins; and





-  in-room
      spa treatments to be booked with reception.


-13-




These
      additional services are expected to be charged out to the guests and are not
      included in the rental and future revenue stream for Rancho. We are presently
      negotiating with a neighbouring spa and local tour company for provision of
      spa
      packages and tours to residents and guests on the adjoining property.





The
      reception area is expected to consist of a separate wooden building unit already
      constructed which will check in and check out the guests. This also includes
      the
      bookings for the apartment unit guests and the cabana guests of Rancho. The
      guests are expected to be able to book any of the packages they want to,
      including any tours, and spa services. The reception area is expected to be
      serviced by one person who will also be the grounds keeper.





The
      nine
      apartment units on the adjoining property have been sold. Rancho is presently
      negotiating with the owners of the apartment units to receive a commission
      from
      the rental of these units on behalf of the owners by Rancho. If such commission
      is agreed to by the unit owner, Rancho intends to advertise the units through
      various media including brochures, internet, and presentations by its
      principals. We
      also
      intend initially to market the apartment units and our rental facilities by
      creating a website and preparing marketing brochures. We estimate expending
      $3,500 on our initial marketing campaign for the Solidaridad Property. Our
      fees
      for property maintenance and management of the apartment units on the adjoining
      property are not dependent on the sale or rental of the apartment
      units.





We
      have
      engaged an independent contractor to provide property maintenance, gardening
      and
      security services to the Solidaridad Property at a rate of $400 per month.
      Upon
      completion of the apartment units on the adjoining property and the development
      of our Solidaridad Property we intend to increase the payment rate to our
      contractor to $600 per month for property maintenance, gardening and security
      services provided to the Solidaridad Property and the adjoining property. We
      intend to hire an additional contractor to provide property management services
      to the apartment units on the adjoining property and the Solidaridad Property
      at
      a rate of $600 per month upon completion of the apartment units and the
      Solidaridad Property.





Our
      business plan is to continue to develop, maintain and manage our Solidaridad
      Property. We do not anticipate earning revenues until such time as the units
      are
      constructed on the land adjacent to our Solidaridad Property and we complete
      development of the cabanas and the reception area. We are presently in the
      development stage of our business and we can provide no assurance that we will
      be able to generate revenues from the development and management of our
      Solidaridad Property or that the revenues generated will exceed the operating
      costs of our business. We currently have no employees. We conduct our business
      largely through agreements with consultants, independent contractors and
      arms-length third parties. We do not intend to hire any employees over the
      next
      twelve months.


-14-




**MILESTONES
      AND OBJECTIVES**





The
      table
      below highlights our milestones and objectives over the next twelve
      months: ****





**MILESTONES
                AND OBJECTIVES**
            **ANTICIPATED
                COST**
            **TIME
                FRAME****PHASE
                I - COMPANY START-UP**
              -Construct
                Cabanas.
              -Complete
                construction of water and septic facilities for the provision of
                water
                services.
              -Construct
                reception area.
              -Completion
                of construction of Apartment Units by Vendor
            **$75,000**
            **3
                Months****PHASE
                II - MANAGEMENT OF SOLIDARIDAD PROPERTY**
              -Commence
                rental of Cabanas and provision of property management
                services.
              -Obtain
                all necessary regulatory approvals.
              -Hire
                consultants for provision of maintenance, security and management
                services.
            **$5,000**
            **3-6
                Months****PHASE
                III - AQUIRING OTHER DEVELOPMENT OR INCOME****PRODUCING
                PROPERTIES IN MEXICO**
              -
                Visit other resort areas in Mexico to review real estate development
                opportunities
              -
                Negotiate purchase of lands
              -
                Cash deposit required to secure potential land parcels
            **$50,000**
            **12
                Months****TOTAL**
            **$130,000**
            **—**




We
      anticipate spending approximately $55,000 in pursuing our plan of operation
      and
      to pursue other development properties in Mexico over the next twelve months.
      Currently, we have cash of $46,705 which is insufficient to allow us to meet
      our
      current commitments and to complete our plan of operation for the next twelve
      months. In addition, we do not expect our business to achieve profitability
      in
      the near future as we expect to continue to incur substantial product
      development, marketing and operating expenses. We are likely to need substantial
      additional financing in order to implement our long term business strategy
      and
      plan of operation. We anticipate that any additional financing will likely
      be in
      the form of equity financing as substantial debt financing is not expected
      to be
      available at this stage of our business.




Our
      actual expenditures and business plan may differ from the one stated above.
      Our
      Board of Directors may decide not to pursue this plan. In addition, we may
      modify the plan based on available financing.




In
      addition to the costs outlined above, we anticipate that we will incur over
      the
      next twelve months the following expenses:  -15-




***Category***
            ***Planned
                Expenditures Over***
              ***The
                Next Twelve Months***Professional
                Fees
            $31,000General
                Administrative Expenses
            $9,000Consulting
                Fees
            $12,000Contractor
                Fees
            $11,200Marketing
                Expenses
            $3,500**TOTAL**
            **$66,700**





Our
      total
      expenditures over the next twelve months are anticipated to be approximately
      $196,700, the majority of which is due to the development of our Solidaridad
      Property, general, legal, accounting and administrative expenses as a result
      of
      our becoming a reporting issuer under the Exchange Act.





**Revenue**





In
      addition to providing maintenance services and septic/water services to tenants
      of the adjoining property, we plan to construct a reception area and two cabanas
      on the Solidaridad Property for rental to tenants and/or tourists. Initially,
      we
      anticipate revenue will be generated through the following
      channels:





**Revenue
                Stream**
            **Projected
                Fee**
            **Estimated
                Expenses**Rental
                of 2 Cabanas
            $60
                per Cabana per night
            —Management
                Services for 9 Units
            $10
                per Unit per night
            $600
                per month for management consulting services(1)Maintenance,
                Security and Gardening Services for 9 Units
            $250
                per Unit per month
            $600
                per month for maintenance/gardening services(2)Septic
                and Water Services for 9 Units
            $50
                per Unit per month
            $200
                per year for sewer removal and water fees**Total
                per Month**
            **—**
            **$1,400****Total
                per Year**
            **—**
            **$14,600**





(1)
            Commencing
                on completion of the apartment units on the adjoining
                property.


(2)
            We
                have engaged an independent contractor to provide property maintenance,
                gardening and security services to the Solidaridad Property at a
                rate of
                $400 per month. Upon completion of the apartment units on the adjoining
                property and the development of our Solidaridad Property we intend
                to
                increase the payment rate to our contractor to $600 per month for
                property
                maintenance, gardening and security services provided to the Solidaridad
                Property and the adjoining
                property.





In
      the
      event we do not generate any revenues from our Solidaridad Property, we will
      not
      have sufficient cash on hand to fund our proposed expenditures for the next
      twelve months and will  -16-


require
      additional financing to pursue our stated plan of operation. We anticipate
      that
      such funding will be in the form of equity financing from the sale of our common
      stock. However, we cannot provide investors with any assurance that we will
      be
      able to raise sufficient funding from the sale of our common stock to fund
      additional expenditures. The risky nature of this enterprise and lack of
      tangible assets places debt financing beyond the credit-worthiness required
      by
      most banks or typical investors of corporate debt until we generate revenues
      from our property development. We do not have any arrangements in place for
      any
      future equity financing.





**LIQUIDITY
      AND CAPITAL RESOURCES**





As
      of
      September 25th, 2006 we had cash on hand of $46,705. Since our inception, we
      have used our common stock to raise money for our operations and for our
      property acquisitions. We have not attained profitable operations and are
      dependent upon obtaining financing to pursue our plan of operation. For these
      reasons, our auditors stated in their report to our audited financial statements
      for the year ended November 30, 2005, that there is substantial doubt that
      we
      will be able to continue as a going concern.





We
      anticipate continuing to rely on equity sales of our common stock in order
      to
      continue to fund our business operations. Issuances of additional shares will
      result in dilution to our existing stockholders. There is no assurance that
      we
      will achieve any of additional sales of our equity securities or arrange for
      debt or other financing for to fund our planned business activities.





**OFF-BALANCE
      SHEET ARRANGEMENTS**





We
      have
      no significant 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.





**CRITICAL
      ACCOUNTING POLICIES**





The
      financial statements presented with this quarterly report on Form 10-QSB have
      been prepared in accordance with generally accepted accounting principles in
      the
      United States of America for interim financial information. These financial
      statements do not include all information and footnote disclosures required
      for
      an annual set of financial statements prepared under United States generally
      accepted accounting principles. In the opinion of our management, all
      adjustments (consisting solely of normal recurring accruals) considered
      necessary for a fair presentation of the financial position, results of
      operations and cash flows as at August 31, 2005 and for all periods presented
      in
      the attached financial statements, have been included. Interim results for
      the
      nine month period ended August 31, 2005 are not necessarily indicative of the
      results that may be expected for the fiscal year as a whole.





We
      have
      identified below certain accounting policies that are most important to the
      portrayal of our current financial condition and results of
      operation:





*Development
      Stage Company*





Rancho
      is
      a development stage company as defined in the Statements of Financial Accounting
      Standards No. 7. Rancho is devoting substantially all of its present efforts
      to
      establish a new business and none of its planned principal operations have
      commenced. All losses accumulated since inception have been considered as part
      of the Rancho’s development stage activities.


-17-





*Property*




Property
      consists of land and is recorded at cost. Land improvements are capitalized
      and
      maintenance, repairs and minor replacements are expensed as
      incurred.





*Stock
      Based Compensation*





Rancho
      accounts for employee stock based compensation using the intrinsic value method
      prescribed in Accounting Principles Board Opinion No. 25 - “Accounting for Stock
      Issued to Employees”, and related interpretations. Accordingly, compensation
      cost for stock options is measured as the excess, if any, of the market price
      of
      the Company’s common stock at the date of the grant over the amount an employee
      must pay to acquire the common stock. Non-employee stock based compensation
      is
      accounted for using the fair value method in accordance with SFAS No. 123 -
      “Accounting for Stock Based Compensation”.





*Impairment
      of Long-Lived Assets*





Rancho
      periodically evaluates potential impairments of its long-lived assets, including
      intangibles. When Rancho determines that the carrying value of long-lived assets
      may not be recoverable based upon the existence of one or more indicators of
      impairment, Rancho evaluates the projected undiscounted cash flows related
      to
      the assets. If these cash flows are less than the carrying value of the assets,
      Rancho measures the impairment using discounted cash flows or other methods
      of
      determining fair value.





Long-lived
      assets to be disposed of are carried at the lower of cost or fair value less
      estimated costs of disposal.





**RISKS
      AND UNCERTAINTIES**





**We
      Have Yet To Attain Profitable Operations And Because We Will Need Additional
      Financing To Fund The Development Of Our Property, Our Accountants Believe
      There
      Is Substantial Doubt About Our Ability To Continue As A Going
      Concern.**





We
      have
      incurred a net loss of $122,160  for
      the
      period from May 28, 2004 (inception) to May 31st, 2006, and have no revenues
      to
      date. Our future is dependent upon successful completion of our development
      program and obtaining adequate financing to fulfill our development activities.
      The following factors raise substantial doubt that we will be able to continue
      as a going concern:





-
            We
                presently do not have sufficient cash on hand to fund our proposed
                expenditures for the next twelve months and will require additional
                financing if ourSolidaridadProperty fails to generate revenues.We
                have cash in the amount of $46,705****as
                of September 25th , 2006 and our total expenditures over the next
                twelve
                months are anticipated to be approximately $66,500.





-
            We
                estimate that we will be required to expend $75,000 on completion
                of the
                development of our Solidaridad Property and an additional $3,500
                on an
                initial marketing campaign for the property over the next twelve
                months
                before we can commence generating revenues from the property.





-
            We
                expect to continue to expend $1,400 per month on fees to consultants
                and
                contractors until our property is completed.








Our
      financial statements included with this quarterly report have been prepared
      assuming that we will continue as a going concern. Our auditors have made
      reference to the substantial doubt as to our ability to continue as a going
      concern in their audit report on our audited financial statements for the period
      ended November 30, 2005. Our project requires capital expenditures
      for  -18-


infrastructure
      development before we can begin generating revenue from our property. If we
      are
      unsuccessful in our development efforts, we may not be able to recover the
      capital expenditures that we have incurred. If we are not able to achieve
      revenues or complete our development program, then we may not be able to
      continue as a going concern and our financial condition and business prospects
      will be adversely affected. These factors raise substantial doubt that we will
      be able to continue as a going concern and adversely affect our ability to
      obtain additional financing.





**Our
      Short Operating History Makes our Business Difficult To Evaluate, Accordingly,
      We Have A Limited Operating History Upon Which To Base An Evaluation Of Our
      Business And Prospects.**




Our
      business is in the early stage of development and we have not generated any
      revenues or profit to date. Further development of our Solidaridad Property
      is
      necessary prior to our achieving revenues or profitability. We estimate that
      we
      will expend $15,000 over the next twelve months on the development of our
      Solidaridad Property .
      We
      expect to expend an additional $50,000 in identifiying new properties for
      development in Mexico. We
      have a
      limited operating history upon which to base an evaluation of our business
      and
      prospects. Our business and prospects must be considered in light of the risks,
      expenses and difficulties frequently encountered by companies in their early
      stage of development, particularly companies involved in real estate
      development.





Our
      real
      estate development activities entail risks that include:




1.
            construction
                delays or cost overruns, which may increase project development
                costs.





2.
            an
                inability to obtain required governmental permits and
                authorizations.





3.
            failure
                to achieve anticipated rentals of our facilities.





In
      addition, our real estate development activities require capital expenditures.
      We have to obtain funds for our capital expenditures through cash flow from
      operations or financings. We cannot assure you that funds available from cash
      flow and financings will be sufficient to fund our required or desired capital
      expenditures for development. If we are unable to obtain sufficient funds,
      we
      may have to defer or otherwise limit development activities. To address these
      risks, we must successfully implement our business plan. We may not successfully
      implement all or any of our business strategies or successfully address the
      risks and uncertainties that we encounter.





**We
      Do Not Own Legal Title To Our Solidaridad Property, And As A Result May Lose
      All
      Or Substantially All Of Our Interests In The Property**





Under
      the
      terms of the property purchase agreement for our Solidaridad Property, Ms.
      Galan-Rios assigned
      to us her interest in an occupation order issued by the Ejidal Commissariat
      of
      the Ejido NCPE Jose Maria Pino Suarez for the use and possession of the
      Solidaridad Property. Under Mexican law we own the right to possess and make
      use
      of our Solidaridad Property but do not own title to the property until a legal
      survey is completed by the Mexican government. Because we do not own legal
      title
      to our Solidaridad Property we are subject to the risk that: (i) conditions
      may
      be imposed on our occupation order for the property and/or the order may be
      cancelled; (ii) the Mexican government may delay the implementation of a legal
      survey or decide not to undertake a survey of the property; and (iii) if a
      legal
      survey is completed there is no assurance that we will not be required to pay
      additional fees for the transfer of legal title to the property or that the
      property boundaries will be identical to those granted in the occupation order
      issued by  -19-


the
      Ejidal Commissariat. The occurrence of any of the above risks would have a
      material adverse effect our business, results of operations or financial
      condition.





**Environmental
      And Other Regulations May Have An Adverse Effect On Our
      Business.**




Our
      present operations and development activities in Mexico are subject to Mexican
      state and local laws and regulations, respectively, relating to the protection
      of the environment, including those concerning water supply, wastewater, noise,
      soil pollution and generation and handling of hazardous waste and materials
      and
      environmental impact.





If
      Ms.
      Galan-Rios is not successful in obtaining the regularization permit for our
      Solidaridad Property we will not be able to complete our property development,
      which would materially adversely affect our financial condition and our business
      plan. We are also subject to administrative sanctions for any breaches of
      Mexican environmental law as administered by PROFEPA, which can result in fines
      ranging from $350 to $70,000, the requirement to perform environmental
      assessments, and which may result in temporary or permanent closure of all
      or
      part of any facilities on our property.





We
      believe that we are in compliance in all material respects with all Mexican
      state and local laws and regulations relating to water, atmospheric pollution,
      hazardous wastes or substances. We have not been notified by any environmental
      authority or any third party, of any material noncompliance, liability or claim
      related to those environmental matters in connection with any of our present
      properties. The possibility exists that in the future that our facilities and
      operations will encounter: (i) newer and stricter state or local environmental
      laws and regulations, (ii) more rigorous interpretations of existing
      environmental laws and regulations, and/or (iii) stricter enforcement of
      federal, state and local environmental law regulations.





The
      Solidaridad Property is subject to federal, state and local regulations and
      restrictions that may impose significant limitations on our ability to develop
      them. In addition, our ownership and operation of real property is subject
      to
      extensive and evolving federal, state and local environmental laws and other
      regulations. The provisions and enforcement of these environmental laws and
      regulations may become more stringent in the future. Violations of these laws
      and regulations can result in:





1.
            civil
                penalties;





2.
            remediation
                expenses;





3.
            natural
                resource damages;





4.
            personal
                injury damages;





5.
            potential
                injunctions;





6.
            cease
                and desist orders; and





7.
            criminal
                penalties.





In
      addition, some of these environmental laws impose strict liability, which means
      that we may be held liable for any environmental damages on our property
      regardless of our fault. The presence  -20-


of
      hazardous substances on a property may also adversely affect our ability to
      sell
      or develop the property or to borrow using the property as
      collateral.




Changes
      in laws or the interpretation thereof, new enforcement of laws, the
      identification of new facts or the failure of other parties to perform
      remediation could all lead to new or greater liabilities that could materially
      adversely affect our business, results of operations or financial
      condition.




**We
      Are Highly Dependent On Our Senior Management. The Loss Of Any Of Our Executive
      Officers Could Have A Material Adverse Effect On Our Business.**




Our
      future success is highly dependent upon the continued employment of our senior
      management. The loss of any of our executive officers could have a material
      adverse effect on our business. We believe that our continued success depends
      to
      a significant extent upon the efforts and abilities of our senior management
      and
      in particular Graham Alexander, our president, chief financial officer, chief
      executive officer, secretary and treasurer. The loss of Mr. Alexander’s business
      experience, personal knowledge of the Tulum region where our property is
      located, and his local business contacts in Mexico, could materially adversely
      affect our business, results of operations or financial condition.





**The
      Occurrence In Mexico Of Natural Disasters Could Adversely Affect Our
      Business.**




Our
      property is located in Mexico. The occurrence of natural disasters, such as
      fires, hurricanes, floods, unusually heavy or prolonged rain and droughts in
      Mexico could have a material adverse effect on our ability to develop properties
      or realize income from our property.




**Because
      We Are Significantly Smaller And Less Established Than A Majority Of Our
      Competitors, We May Lack The Financial Resources Necessary To Compete
      Effectively And Sustain Profitability.**





Our
      competitors have substantially greater capital resources, name recognition,
      expertise in commercial real estate development and marketing. A number of
      residential and commercial developers and real estate services companies, some
      with greater financial and other resources, compete with us in seeking
      properties for acquisition, resources for development and prospective
      purchasers. Competition from other real estate developers and real estate
      services companies may adversely affect our ability to:




1.
            develop
                rental facilities





2.
            attract
                purchasers





3.
            sell
                undeveloped rural land





The
      presence of competing real estate development companies in Mexico may impact
      on
      our ability to raise additional capital in order to fund our property
      acquisitions or property developments in Mexico if investors are of the view
      that investments in competitors are more attractive. Competition could also
      reduce the availability of properties of merit or increase the cost of acquiring
      the properties.


-21-





**Because
      Our President And Our Vice-President Have Only Agreed To Provide Their Services
      On A Part-Time Basis, They May Not Be Able Or Willing To Devote A Sufficient
      Amount Of Time To Our Business Operations, Causing Our Business To
      Fail.**




Our
      directors and officers are employed on a full time basis by other companies.
      Because we are in the early stages of our business, Mr. Alexander, our
      president, chief financial officer, chief executive officer, secretary and
      treasurer, and Ms. Manetta, our vice-president, are not expected to spend a
      significant amount of time on our business. Mr. Alexander and Ms. Manetta each
      expect to expend approximately 8-10 hours per week on our business. Competing
      demands on their time may lead to a divergence between their interests and
      the
      interests of other shareholders.





**Because
      Our President, Mr. Graham Alexander, Owns 53% Of Our Outstanding Common Stock,
      Investors May Find That Corporate Decisions Influenced By Mr. Alexander Are
      Inconsistent With The Best Interests Of Other
      Stockholders.**





Mr.
      Graham Alexander, our president, chief financial officer, chief executive
      officer, secretary and treasurer, controls 53% of our issued and outstanding
      shares of common stock. Accordingly, in accordance with our articles of
      incorporation and bylaws, Mr. Alexander is able to control who is elected to
      our
      board of directors and thus could act, or could have the power to act, as our
      management. The interests of Mr. Alexander may not be, at all times, the same
      as
      that of other shareholders. Since Mr. Alexander is not simply a passive investor
      but is also one of our active executives, his interests as an executive may,
      at
      times, be adverse to those of passive investors. Where those conflicts exist,
      our shareholders will be dependent upon Mr. Alexander exercising, in a manner
      fair to all of our shareholders, his fiduciary duties as an officer or as a
      member of our board of directors. Also, Mr. Alexander will have the ability
      to
      significantly influence the outcome of most corporate actions requiring
      shareholder approval, including the merger of Rancho with or into another
      company, the sale of all or substantially all of our assets and amendments
      to
      our articles of incorporation. This concentration of ownership with Mr.
      Alexander may also have the effect of delaying, deferring or preventing a change
      in control of Rancho which may be disadvantageous to minority
      shareholders.





**We
      Are Vulnerable To Concentration Risks Because Our Current Revenue Sources Are
      Linked To The Development of Apartment Units On An Adjoining
      Property.**





A
      majority of our revenues are expected to be derived from the provision of
      management services and maintenance services to occupants of a condominium
      development on a property adjacent to our property in Solidaridad, Mexico.
      If
      the construction of the apartment units on the neighboring property is delayed
      or terminated, we may lose the source of all or substantially all of our
      revenues. Our substantial dependence on a single prospect property for cash
      flow
      increases the risk of our future success.





**We
      Do Not Carry Comprehensive Liability Insurance. As A Result, Should An Uninsured
      Loss Occur, We Could Lose Our Capital Invested In The Solidaridad Property,
      As
      Well As The Anticipated Future Revenues From Such Property**





We
      do not
      currently carry comprehensive liability, fire, hurricane, storm, earthquake
      and
      business interruption insurance with respect to our business operations in
      Mexico. Should an uninsured loss occur, we could lose our capital invested
      in
      the Solidaridad Property, as well as the anticipated future revenues from such
      property and would continue to be obligated on any indebtedness or other
      obligations related to the property. Any such loss could have a material adverse
      effect on Rancho.  -22-


**Our
      Ability To Issue “Blank Check” Preferred Stock, Could Have The Effect Of
      Deterring Or Delaying A Take Over Or Other Change In Control, Denying
      Shareholders The Receipt Of A Premium On Their Common Stock And Depress The
      Market Price Of Our Common Stock.**





Rancho’s
      board of directors, without any action by Rancho’s shareholders, has the
      authority to issue the remaining undesignated and unissued authorized shares
      and
      to fix the powers, preferences, rights and limitations of such shares or any
      class or series thereof, without shareholder approval. Persons acquiring such
      shares could have preferential rights with respect to voting, liquidation,
      dissolution or dividends over existing shareholders. The ability to issue
      undesignated shares, could have the effect of deterring or delaying a take
      over
      or other change in control, deny shareholders the receipt of a premium on their
      common stock and depress the market price of Rancho’s common stock.





**Our
      Adoption Of Stock Based Benefit Plans And Future Equity Financings May Dilute
      Existing Stockholders’ Ownership Interests.**





In
      November, 2004, our board of directors approved the 2004 Stock Option Plan
      (the
“2004 Plan”). Under the 2004 Plan, options to purchase up to 750,000 shares of
      our common stock may be granted to our employees, officers, directors, and
      eligible consultants. The 2004 Plan will increase our future compensation costs,
      thereby reducing our earnings, and shareholders may experience a reduction
      in
      ownership interest in the event newly issued shares are used to fund awards
      made
      under the plan. Further, we rely upon the availability of equity capital to
      fund
      our growth, which financing may or may not be available on favorable terms
      or at
      all. Equity capital could include our common stock or preferred stock. We cannot
      guarantee that additional financing, refinancing or other capital will be
      available in the amounts we desire or on favorable terms.





As
      of
      March 1, 2005, we have raised equity capital through the issuance of 4,000,000
      shares of our restricted common stock to our President, Mr. Alexander, on May
      28, 2004 and through the offering of 3,564,332 shares of our restricted common
      stock to certain shareholders on November 30, 2004. On May 28, 2006, 4,000,000
      shares of our common stock held by Mr. Alexander will be available for resale
      to
      the public in accordance with the volume, public notice and trading limitations
      of Rule 144. On November 30, 2006, an additional 3,564,332 shares of our common
      stock will be available for resale to the public in accordance with the volume,
      public notice and trading limitations of Rule 144. Subject to the completion
      of
      the development of our Solidaridad Property and any revenues generated in
      relation thereto, we anticipate continuing to rely on equity sales of our common
      stock in order to fund our business operations. Issuances of additional shares
      will result in dilution to our existing stockholders. There is no assurance
      that
      we will achieve any additional sales of our equity securities or arrange for
      debt or other financing to fund our planned business activities.





**ITEM
      3.**  **CONTROLS
      AND PROCEDURES.**




**Evaluation
      Of Disclosure Controls And Procedures**





As
      of the
      end of the period covered by this Quarterly Report, our management carried
      out
      an evaluation, under the supervision and with the participation of our principal
      executive officer and principal financial officer, of the effectiveness of
      the
      design and operation of our disclosure controls and procedures (as defined
      in
      Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation,
      our principal executive officer and principal financial officer has concluded
      that our disclosure controls and procedures are, as of the date covered by
      this  -23-


Quarterly
      Report, effective to ensure that the information required to be disclosed by
      us
      in the reports that we file or submit under the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC
      rules and forms.





**Changes
      In Internal Controls Over Financial Reporting**





In
      connection with the evaluation of our internal controls during our last fiscal
      quarter, our principal executive officer and principal financial officer has
      determined that there have been no changes to our internal controls over
      financial reporting that has materially affected, or is reasonably likely to
      materially affect, our internal controls over financial reporting.




**PART
      II - OTHER INFORMATION**





**ITEM
      1.**  **LEGAL
      PROCEEDINGS.**





None.








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





None.







**ITEM
      3.**  **DEFAULTS
      UPON SENIOR SECURITIES.**





None.








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





None.








**ITEM
      5.**  **OTHER
      INFORMATION.**





None.  -24-


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




ExhibitNumber
            
            Description
                of Exhibits3.1
            
            Articles
                of Incorporation.(1)3.2
            
            Bylaws,
                as amended.(1)4.1
            
            Form
                of Share Certificate.(1)10.1
            
            2004
                Stock Option Plan.(1)10.2
            
            Management
                Consulting Agreement dated October 1, 2004 between Rancho Santa Monica
                Developments Inc. and Graham G. Alexander.(1)10.3
            
            Management
                Consulting Agreement dated October 1, 2004 between Rancho Santa Monica
                Developments Inc. and Angela Manetta.(1)10.4
            
            Extension
                Agreement dated December 31, 2004 between Rancho Santa Monica Developments
                Inc. and Graham G. Alexander.(1)10.5
            
            Extension
                Agreement dated December 31, 2004 between Rancho Santa Monica Developments
                Inc. and Angela Manetta.(1)10.6
            
            Purchase
                Agreement dated for reference November 29, 2004 between Monica Galan-Rios
                and Rancho Santa Monica Developments Inc.(1)10.7
            
            Promissory
                Note dated November 29, 2004 Monica Galan-Rios and Rancho Santa Monica
                Developments Inc.(1)31.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Section
                302 of the Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.





(1)  Filed
      with the SEC as an exhibit to our Registration Statement on Form SB-2 originally
      filed on January 29, 2005, as amended.





**REPORTS
      ON FORM 8-K**




We
      filed
      the following Current Reports on Form 8-K during the fiscal quarter ended
      February 28th, 2006:




**Date
                of Form 8-K**
            **Date
                of Filing with the SEC**
            **Description
                of the Form 8-K**June
                1st,
                2006
            June
                1st,
                2006
            Appointment
                of Trevor Barr as Vice President of the
                Company








-25-




**SIGNATURES**





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




**RANCHO
                SANTA MONICA DEVELOPMENTS INC.**Date:
            September
                26th, 2006
            By:
            /s/
**Graham
              G. Alexander****GRAHAM
                G. ALEXANDER**Chief
                Executive Officer, Chief Financial Officer
              President,
                Secretary and Treasurer(Principal
                Executive Officerand
                Principal Accounting Officer)




-26-