UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-Q**




(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** **st** **, 2008**





 ̈ 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.)**116
                North A Street**
              **Madera,
                CA, 93638**(Address
                of principal executive offices)**(559
                ) 474-8690**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 August 31** **st** **, 2008, the Issuer had 7,866,999 Shares of Common Stock outstanding.**




Transitional
      Small Business Disclosure Format (check one): Yes  ̈ **No** **x**





**PART
      I - FINANCIAL INFORMATION**





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





Certain
      statements contained in this Form 10-Q constitute "forward-looking statements"
      within the meaning of Section 27A of the Securities Act of 1933, as amended
      (the
      "Securities Act"), and Section 21E of the Securities Exchange Act of 1934 (the
      “Exchange Act”). 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 Form 10-Q. We do not intend to
      update the forward-looking information to reflect actual results or changes
      in
      the factors affecting such forward-looking information. 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 quarterly reports
      on Form 10-Q and our current reports on Form 8-K. As used in this interim
      report, the terms "we", "us", "our", and “our company” mean Rancho Santa Monica
      Developments, Inc., unless otherwise indicated. All dollar amounts in this
      annual report are in U.S. dollars unless otherwise stated. All dollar amounts
      in
      this Quarterly Report are in U.S. dollars unless otherwise
      stated.


2




**RANCHO
        SANTA MONICA DEVELOPMENTS, INC.**
 
 FINANCIAL
        STATEMENTS
 
 August
        31, 2008 and November 30, 2007
  3
  **RANCHO
          SANTA MONICA DEVELOPMENTS, INC.**
 Balance
          Sheets
 
 August 31,
                
                November 30,2008
                
                2007(Unaudited)ASSETSCURRENT
                    ASSETSCash
                
                $
                3,297
                
                $
                493Total
                    Current Assets
                
                
                3,297
                
                
                493PROPERTY
                    AND EQUIPMENT, NET
                
                
                5,954,630
                
                
                304,108TOTAL
                    ASSETS
                
                $
                5,957,927
                
                $
                304,601LIABILITIES
                    AND STOCKHOLDERS' EQUITYCURRENT
                    LIABILITIESAccounts
                    payable and accrued liabilities
                
                $
                132,500
                
                $
                29,996Due
                    to related parties
                
                
                109,797
                
                
                118,788Convertible
                    debt, net
                
                
                35,000
                
                
                -Notes
                    payable
                
                
                5,450,000
                
                
                50,000Total
                    Current Liabilities
                
                
                5,727,297
                
                
                198,784COMMITMENTS
                    AND CONTINGENCIES
                
                
                -
                
                
                -STOCKHOLDERS'
                    EQUITYPreferred
                    stock; 100,000,000 shares authorized at$0.0001
                    par value, no shares issued or outstanding
                
                
                -
                
                
                -Common
                    stock; 100,000,000 shares authorized at$0.0001
                    par value, 7,866,999 and 7,816,999shares
                    issued and outstanding, respectively
                
                
                7,867
                
                
                7,817Additional
                    paid-in capital
                
                
                364,838
                
                
                211,388Currency
                    translation adjustment
                
                
                (4,835
                )
                
                (4,835
                )Accumulated
                    deficit
                
                
                (137,240
                )
                
                (108,553
                )Total
                    Stockholders' Equity
                
                
                230,630
                
                
                105,817TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY
                
                $
                5,957,927
                
                $
                304,601
 
 The
          accompanying notes are an integral part of these financial
          statements.
  4
  **RANCHO
        SANTA MONICA DEVELOPMENTS, INC.**
 Statements
        of Operations
 (Unaudited)
 
 
 For the Three
              
              For the Three
              
              For the Nine
              
              For the NineMonths Ended
              
              Months Ended
              
              Months Ended
              
              Months EndedAugust 31,
              
              August 31,
              
              August 31,
              
              August 31,2008
              
              2007
              
              2008
              
              2007REVENUES
              
              $
              11,992
              
              $
              33,111
              
              $
              60,939
              
              $
              41,211OPERATING
                  EXPENSESGeneral
                  and administrative
              
              
              27,236
              
              
              18,435
              
              
              59,961
              
              
              29,726Professional
                  fees
              
              
              7,500
              
              
              488
              
              
              19,187
              
              
              3,738Depreciation
                  expense
              
              
              1,924
              
              
              1,820
              
              
              5,978
              
              
              1,820Total
                  Operating Expenses
              
              
              36,660
              
              
              20,743
              
              
              85,126
              
              
              35,284INCOME
                  (LOSS) FROM OPERATIONS
              
              
              (24,668
              )
              
              12,368
              
              
              (24,187
              )
              
              5,927OTHER
                  INCOME (EXPENSE)Interest
                  expense
              
              
              (1,500
              )
              
              (1,500
              )
              
              (4,500
              )
              
              (4,500
              )Total
                  Other Income (Expense)
              
              
              (1,500
              )
              
              (1,500
              )
              
              (4,500
              )
              
              (4,500
              )NET
                  INCOME (LOSS)
              
              $
              (26,168
              )
              $
              10,868
              
              $
              (28,687
              )
              $
              1,427CURRENCY
                  TRANSLATION ADJUSTMENT
              
              
              -
              
              
              -
              
              
              -
              
              
              379COMPREHENSIVE
                  NET INCOME (LOSS)
              
              $
              (26,168
              )
              $
              10,868
              
              $
              (28,687
              )
              $
              1,806BASIC
                  INCOME (LOSS) PER SHARE
              
              $
              (0.00
              )
              $
              0.00
              
              $
              (0.00
              )
              $
              0.00WEIGHTED
                  AVERAGE NUMBEROF
                  COMMON SHARES OUTSTANDING
              
              
              7,866,999
              
              
              7,791,542
              
              
              7,854,499
              
              
              7,791,542
 
 The
        accompanying notes are an integral part of these financial
        statements
  5
 **RANCHO
          SANTA MONICA DEVELOPMENTS, INC.**
 Statements
          of Stockholders' Equity
 (Unaudited)
 Additional
                
                Stock
                
                CurrencyCommon Stock
                
                Paid-In
                
                Subscriptions
                
                Translation
                
                AccumulatedShares
                
                Amount
                
                Capital
                
                Receivable
                
                Adjustment
                
                Deficit
                
                TotalBalance,
                    November 30, 2006
                
                
                7,751,999
                
                $
                7,752
                
                $
                136,453
                
                $
                -
                
                $
                (1,400
                )
                $
                (113,186
                )
                $
                29,619Common
                    stock cancelled
                
                
                (10,000
                )
                
                (10
                )
                
                10
                
                
                -
                
                
                -
                
                
                -
                
                
                -Shares
                    issued for cashat
                    $1.00 per share
                
                
                75,000
                
                
                75
                
                
                74,925
                
                
                -
                
                
                -
                
                
                -
                
                
                75,000Net
                    income for the year endedNovember
                    30, 2007
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (3,435
                )
                
                4,633
                
                
                1,198Balance,
                    November 30, 2007
                
                
                7,816,999
                
                
                7,817
                
                
                211,388
                
                
                -
                
                
                (4,835
                )
                
                (108,553
                )
                
                105,817Fair
                    value of beneficialconversion
                    feature
                
                
                -
                
                
                -
                
                
                112,500
                
                
                -
                
                
                -
                
                
                -
                
                
                112,500Shares
                    issued for cashat
                    $0.82 per share
                
                
                50,000
                
                
                50
                
                
                40,950
                
                
                -
                
                
                -
                
                
                -
                
                
                41,000Net
                    lossfor the nine monthsended
                    August 31, 2008
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (28,687
                )
                
                (28,687
                )Balance,
                    August 31, 2008
                
                
                7,866,999
                
                $
                7,867
                
                $
                364,838
                
                $
                -
                
                $
                (4,835
                )
                $
                (137,240
                )
                $
                230,630
  The
        accompanying notes are an integral part of these financial
        statements.
  6
  **RANCHO
        SANTA MONICA DEVELOPMENTS, INC.**
 Statements
        of Cash Flows
 (Unaudited)
 
 For the Nine
              
              For the NineMonths Ended
              
              Months EndedAugust 31,
              
              August 31,2008
              
              2007OPERATING
                  ACTIVITIESNet
                  income (loss)
              
              $
              (28,687
              )
              $
              1,427Adjustments
                  to reconcile net loss to net cashused
                  by operating activities:Depreciation
                  and amortization
              
              
              5,978
              
              
              1,820Currency
                  translation adjustment
              
              
              -
              
              
              (379
              )Changes
                  in operating assets and liabilities:Change
                  in due to related parties
              
              
              (8,991
              )
              
              104,385Changes
                  in accounts payable and accrued expenses
              
              
              21,504
              
              
              4,987Net
                  Cash Used in Operating Activities
              
              
              (10,196
              )
              
              112,240INVESTING
                  ACTIVITIESPurchase
                  of property and equipment
              
              
              (140,500
              )
              
              (126,351
              )Net
                  Cash Used in Financing Activities
              
              
              (140,500
              )
              
              (126,351
              )FINANCING
                  ACTIVITIESProceeds
                  from notes payable
              
              
              112,500
              
              
              -Proceeds
                  from common stock issued
              
              
              41,000
              
              
              5,940Net
                  Cash Provided by Financing Activities
              
              
              153,500
              
              
              5,940NET
                  DECREASE IN CASH
              
              
              2,804
              
              
              (8,171
              )CASH
                  AT BEGINNING OF PERIOD
              
              
              493
              
              
              8,761CASH
                  AT END OF PERIOD
              
              $
              3,297
              
              $
              590SUPPLIMENTAL
                  DISCLOSURES OFCASH
                  FLOW INFORMATIONCASH
                  PAID FOR:Interest
              
              $
              -
              
              $
              -Income
                  Taxes
              
              $
              -
              
              $
              -NON
                  CASH FINANCING ACTIVITIES:Property
                  and equipment purchased for notes payable
              
              $
              5,400,000
              
              $
              -
 
 The
        accompanying notes are an integral part of these financial
        statements.
  7
  **RANCHO
        SANTA MONICA DEVELOPMENTS, INC.**
 Notes
        to
        the Condensed Financial Statements
 August
        31, 2008 and November 30, 2007
 
 NOTE
                1 -
              CONDENSED
                  FINANCIAL STATEMENTS
 
 The
        accompanying financial statements have been prepared by the Company without
        audit. In the opinion of management, all adjustments (which include only
        normal
        recurring adjustments) necessary to present fairly the financial position,
        results of operations, and cash flows at August 31, 2008, and for all periods
        presented herein, have been made.
 
 Certain
        information and footnote disclosures normally included in financial statements
        prepared in accordance with accounting principles generally accepted in the
        United States of America have been condensed or omitted. It is suggested
        that
        these condensed financial statements be read in conjunction with the financial
        statements and notes thereto included in the Company’s November 30, 2007 audited
        financial statements. The results of operations for the periods ended August
        31,
        2008 and May 31, 2007 are not necessarily indicative of the operating results
        for the full years.
 
 NOTE
                2 -
              GOING
                  CONCERN
 
 The
        Company’s financial statements are prepared using generally accepted accounting
        principles in the United States of America applicable to a going concern
        which
        contemplates the realization of assets and liquidation of liabilities in
        the
        normal course of business. The Company has not yet established an ongoing
        source
        of revenues sufficient to cover its operating costs and allow it to continue
        as
        a going concern. The ability of the Company to continue as a going concern
        is
        dependent on the Company obtaining adequate capital to fund operating losses
        until it becomes profitable. If the Company is unable to obtain adequate
        capital, it could be forced to cease operations.
 
 In
        order
        to continue as a going concern, the Company will need, among other things,
        additional capital resources. Management’s plan is to obtain such resources for
        the Company by obtaining capital from management and significant shareholders
        sufficient to meet its minimal operating expenses and seeking equity and/or
        debt
        financing. However management cannot provide any assurances that the Company
        will be successful in accomplishing any of its plans.
 
 The
        ability of the Company to continue as a going concern is dependent upon its
        ability to successfully accomplish the plans described in the preceding
        paragraph and eventually secure other sources of financing and attain profitable
        operations. The accompanying financial statements do not include any adjustments
        that might be necessary if the Company is unable to continue as a going
        concern.
  8




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





**Cautionary
      Statement Regarding Forward-Looking Statements**





This
      quarterly report contains forward-looking statements as that term is defined
      in
      Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
      Securities Exchange Act of 1934, as amended. These statements relate to future
      events or our future financial performance. In some cases, you can identify
      forward-looking statements by terminology such as "may", "should", "expects",
      "plans", "anticipates", "believes", "estimates", "predicts", "potential" or
      "continue" or the negative of these terms or other comparable terminology.
      These
      statements are only predictions and involve known and unknown risks,
      uncertainties and other factors, including the risks in the section entitled
      "Risk Factors", that may cause our or our industry's actual results, levels
      of
      activity, performance or achievements to be materially different from any future
      results, levels of activity, performance or achievements expressed or implied
      by
      these forward-looking statements.




Although
      we believe that the expectations reflected in the forward-looking statements
      are
      reasonable, we cannot guarantee future results, levels of activity, performance
      or achievements. Except as required by applicable law, including the securities
      laws of the United States, we do not intend to update any of the forward-looking
      statements to conform these statements to actual results.




Our
      unaudited interim financial statements are stated in United States dollars
      and
      are prepared in accordance with United States generally accepted accounting
      principles. The following discussion should be read in conjunction with our
      unaudited interim financial statements and the related notes that appear
      elsewhere in this quarterly report.




In
      this
      quarterly report, unless otherwise specified, all references to "common shares"
      refer to common shares in the capital of our company and the terms "we", "us"
      and "our" mean Rancho Santa Monica Developments, Inc. and it’s wholly owned
      subsidiaries.





**Corporate
      Background**





We
      are a
      development company focused on the development of real estate. We own a resort
      property in Tulum Mexico and have constructed certain facilities and provide
      management services for the apartment units constructed on the adjoining
      property. The resort is an ocean front property hotel located on the Caribbean
      beaches of Tulum, Quintana Roo, Mexico and the resort is named Hotel ParaYso,
      Tulum, Mexico.





We
      have
      signed a purchase contract to acquire real property located at 620-622 Seymour
      Street in Vancouver, British Columbia Canada for the construction of a hi-rise
      hotel, office, or mixed use development of up to 91 condo-hotel suites. The
      site
      is located in the financial district of downtown Vancouver, British Columbia
      Canada.





**Recent
      Corporate Developments**





We
      experienced the following significant developments since August 31 st ,
      2008:





We
      entered into a Consulting Agreement with De Cotiis Group Windsor Holdings Ltd.
      whereby the  Consultant will be paid by the Company at the date of signing
      and first advance of funds to the Company, a fee of ten per cent (10%) cash
      of
      any funds raised and or invested in the Company by a Consultant source,
      introduction or third party introduction company, during the term of the
      Agreement and for 3 years after expiry of this agreement. The Consultant will
      be
      paid at the date of signing by the Company of a third party agreement, a fee
      of
      ten per cent (10%) of the purchase price or market value of any acquisition,
      Joint Venture, or merger by or involving the Company, provided the third party
      involved in this transaction was introduced to Company or notified of the
      Company’s business objectives by the Consultant or a third party introduction
      derived from the Consultant during the term of the Agreement and for 3 years
      after expiry of this agreement. The Consultant will be paid at the date of
      signing by the Company of a third party Agreement, a fee of ten per cent (10%)
      of the total value of any new contracts brought to the Company by Consultant,
      during the term of the Agreement and for 3 years after expiry of this agreement.
        The Consultant will be reimbursed for all approved expenses for work done
      on behalf of the company.  The Company will grant to the Consultant
      irrevocable stock options exercisable for a period of five years from the date
      of the funds being raised or value of the transaction arising from the
      Consultant. The amount of stock options will be 10% of the funds being raised
      or
      value of the transaction at whichever is lower, $0.70 or 20% below share stock
      market, price per share of the Company commencing June 18, 2008.




9


**2.1
      Hotel ParaYso Resort, Tulum, Quintana Roo, Mexico**





We
      own
      property (the “Solidaridad Property”) in Tulum, Mexico as noted in Figure 1. The
      property consists of two developable pods where we can build an additional
      15
      hotel suites. The hotel has been open since February 7 th ,
      2007.
      We also manage the adjoining 11 hotel suites and receive income from the supply
      of management services. The Company entered into an agreement dated for
      reference November 29, 2005 with Monica Galan-Rios for the purchase of certain
      lands located in Solidaridad, Mexico consisting of approximately 1,220 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
                agreed to provide septic and water services to tenants at a rate
                of $50
                per apartment unit per month;





(3)
            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





(4)
            We
                agreed to grant to Ms. Galan-Rios and any of the potential tenants,
                access
                to the road presently existing on the Solidaridad
                Property.





**2.1.1
      Location of Hotel ParaYso Resort, Tulum, Quintana Roo,
      Mexico**





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 in the city of Tulum, 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.




10


Figure
      1


Property
      Location











**2.2
      Hotel ParaYso Vancouver Development Property**





We
      entered into an agreement to purchase 620-622 Seymour Street Property in the
      Financial District of Vancouver, British Columbia, Canada for a mixed use hotel
      or office building. The purchase price for the lands is $5,500,000 Canadian
      Dollars and the expected close date is April 22 nd ,
      2009.
      The vendor of the lands has agreed to provide a vendor take back mortgage for
      $3,000,000 dollars and the Company is required to raise equity of $2,500,000
      dollars on or before April 22 nd ,
      2009.





The
      Company filed a caveat on the 620-622 Seymour Street Property and withheld
      future deposits pending our negotiating efforts with the City of Vancouver
      and
      the redrafting of terms for the property purchase agreement. The City of
      Vancouver has notified us by that it will not support a development of a Hotel
      on the site due the uncertainty of drop-off access off Seymour
      Street.





Management
      is considering whether to continue its plans to pursue the property acquisition
      or abandon its plans for development inlight of the City of Vancouver’s
      decision.





**2.3
      PLAN OF OPERATION**





Our
      plan
      of operation is to acquire, manage, and develop income-producing real property
      in Mexico, Canada and the United States. Our ParaYso Hotel in Tulum Mexico
      currently produces income and has been in operations since February
      7 th ,
      2007.




11




**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 –****RAISE
                  SUFFICIENT EQUITY TO PURCHASE 620-620 Seymour Street, Vancouver,
                  B.C.**
              
              **$**
              **2,500,000**
              
              
              **9
                  Months****PHASE
                  II – RAISE SUFFICIENT EQUITY FOR SOFT COSTS FOR DEVELOPMENT of 620-622
                  Seymour Street**
              
              **$**
              **500,000**
              
              
              **9
                  Months****PHASE
                  III – AQUIRING OTHER DEVELOPMENT OR INCOME****PRODUCING
                  PROPERTIES IN MEXICO**
              
              **$**
              **50,000**
              
              
              **12
                  Months**-
                  Visit other resort areas in Mexico to review real estate development
                  opportunities
                -
                  Negotiate purchase of lands
                -
                  Cash deposit required to secure potential land parcels**TOTAL**
              
              **$**
              **3,050,000**
              
              
              **-**




We
      anticipate spending approximately $3,050,000 in the next 12 months in pursuing
      our plan of operation and to pursue development Property in Vancouver, Canada.
      Currently, we have cash of $18,456 which is insufficient to allow us to meet
      our
      current commitments and to complete our plan of operation for the next twelve
      months. We are will 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:


***Category***
              
              ***Planned Expenditures Over***
                ***The Next Twelve Months***Professional
                  Fees
              
              $
              10,000General
                  Administrative Expenses
              
              $
              25,000Consulting
                  Fees
              
              $
              10,000Contractor
                  Fees
              
              $
              150,200**TOTAL**
              
              **$**
              **195,200**




12




Our
        total
        expenditures over the next twelve months are anticipated to be approximately
        $3,245,200, the majority of which is due to the acquisition of our Vancouver
        Property.




**LIQUIDITY
      AND CAPITAL RESOURCES**





As
      of
      August 31 st , 2008
      we had cash on hand of $3,297. Since our inception, we have used our common
      stock to raise money for our operations and for our property acquisitions.
      We
      are currently under operations for our Solidaridad Property.





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 st ,
      2008
      and for all periods presented in the attached financial statements, have been
      included. Interim results for the six month period ended August 31 st , 2008
      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. All losses accumulated since inception have been considered
      as
      part of the Rancho’s development stage activities.





*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”.




13


*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.





**2.4.
      RISKS AND UNCERTAINTIES**





**2.4.1
      Limited Operating History for the Company**




The
      Company has its main asset is its property in Tulum, Mexico and serves as the
      main security and revenue generator for the Company’s shareholders. The Company
      has been operating its hotel only since February 2007 and therefore the Company
      has limited operating, investment or performance history.





**2.4.2
      Competition**




There
      are
      a number of hotels with which the Company will be forced to compete with in
      the
      downtown Financial District in order to obtain sufficient occupancy and room
      rental rates. The primary competition will come from hotels such as Opus, Four
      Seasons, Hyatt, Hilton, Hotel Vancouver, Pan Pacific, Fairmont, Wedgewood,
      and
      Ritz Carlton. Many of these competitors have a great deal of experience, capital
      resources and managerial capability and could be better placed to access or
      negotiate favourable terms for such Property. 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.
            attract
                purchasers





2.
            sell
                undeveloped rural land





The
      presence of competing real estate development companies in Mexico in Vancouver
      may impact on our ability to raise additional capital in order to fund our
      property acquisitions or property developments in Mexico and Canada 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.





**2.4.3
      Nature of Investments**




Shareholders
      must rely on the ability, expertise, judgment and discretion of management
      of
      the Company. There is no assurance that the Property or investments in the
      Property made by the Company will perform in a manner which will be profitable
      to the Company. The investments require substantial time (such as several years
      or more) in order to complete construction and to obtain the necessary approvals
      from the City of Vancouver. The Company's investments will be in raw land and
      will therefore be illiquid investments. Furthermore, any investments by the
      Company in raw land will be subject to real estate market volatility. The
      Company’s intention is the build a 14 storey 91 suite hotel and there is no
      assurance that the Company will obtain the necessary financing to build the
      Hotel. The Company will require further financings after completing this
      offering to obtain the necessary capital required to obtain
      financing.





**2.4.4
      Ability for the Company to Raise Sufficient Capital for Development
      Financing**




Shareholders
      are dependent upon the ability of the Management of the Company to raise
      sufficient capital or financing to complete the property acquisition and to
      later obtain the sufficient development financing and capital required to
      construct the commercial development.




14


**2.4.5
      Factors Affecting Property**




The
      Company's success depends upon the success of the development approval process,
      the ability of the Company to service the land loan, the development financing,
      and any other costs that come up as they relate to the development process.
      Property, Economic, governmental, industry and internal factors that
      detrimentally affect the financial health of the Property will cause a resulting
      loss of value in the Company's investments.





**2.4.6
      Possible Loss of Limited Liability**




The
      Company may be carrying on business in jurisdictions other than that under
      which
      it was formed. The Company will be registered as an extra-jurisdictional Company
      in those jurisdictions where the Company is advised that it will be carrying
      on
      business by virtue of this Offering or otherwise and where there is provision
      for registration as an extra jurisdictional Company. However, there is a risk
      that Unit Holders may not be afforded limited liability in jurisdictions where
      the Company is not registered to the extent that principles of conflicts of
      law
      recognizing the limitation of liability of Unit Holders have not been
      authoritatively established with respect to Companys formed under laws of one
      jurisdiction but carrying on business in other jurisdictions.





**2.4.7
      Reliance on Company**




Shareholders
      will be required to rely on the ability of the Company to actively manage the
      assets of the Company. The Company will make the actual decisions on the
      development of the Property upon which the success of the Company will depend.
      No assurance can be given that the business approaches utilized by the Manager
      will prove successful. There can be no assurance that satisfactory replacements
      for Company will be available, if needed. The Company will depend, to a great
      extent, on the services of a very limited number of individuals of the Company
      in the administration of the Company's business. The loss of such services
      for
      any reason could impair the ability of the Manager Company to perform its
      advisory activities on behalf of the Company.





**2.4.8
      Reliance on Executive**




The
      Company will depend extensively on its executive management raise sufficient
      capital, obtain the necessary approvals from the City of Vancouver, and obtain
      further capital necessary to construct the Hotel. The loss of the services
      of
      key executive could impair the ability of the Company to properly manage and
      develop the Property.





**2.4.9
      Limited Ability to Liquidate Shares**




The
      current market for liquidating the shares and selling the shares is on the
      Over
      the Counter Bulletin Board in the United States. Shareholders are also under
      certain resale restrictions as per rule 144 of the United States Securities
      Act
      of 1933. The current market for the shares is illiquid and could be difficult
      to
      achieve the current market value for the shares. This Offering of Units is
      not
      qualified by way of prospectus, and consequently the resale of Units could
      be
      subject to restrictions under applicable securities legislation.





**2.4.10
      Tax Liability**




Each
      Unit
      Holder is required to include in computing income, a *pro
      rata* share
      of
      the income of the Company allocated to him. Income will be allocated to Unit
      Holders according to the terms of the Company Agreement and without regard
      to
      the acquisition price of such Units. Unit Holders may have an income tax
      liability in respect of profits not distributed and also in respect of returns
      of capital on the Units exceeding the adjusted cost base of their
      Units.





**2.4.11
      Potential Indemnification Obligations**




Under
      certain circumstances, the Company might be subject to significant
      indemnification obligations in respect of the Company or certain parties related
      to them. The Company will not carry any Insurance to cover such potential
      obligations and none of the foregoing parties will be insured for losses for
      which the Company has agreed to indemnify them. Any indemnification paid by
      the
      Company would reduce the Company's net asset value and, by extension, the value
      of the shares.




15




**2.4.12
      Real Property Development and Ownership**




Real
      estate developments and investments are generally subject to varying degrees
      of
      risk depending on the nature of the property. Such risks include changes in
      general economic conditions (such as the availability and cost of mortgage
      funds), local conditions (such as demand for hotel space, conventions, the
      successful completion of the Canada Line), government regulation (such as
      taxation of property and environmental legislation) and the attractiveness
      of
      hotel suites to potential purchasers. In addition, each segment in the real
      estate development industry is capital intensive and is typically sensitive
      to
      interest rates. The income generated by the Property in which the Company has
      an
      interest is dependent upon general economic conditions and, accordingly, the
      return to investors may be affected by changes in those conditions. Certain
      significant expenditures, including property taxes, maintenance costs, mortgage
      payments, insurance costs and related charges must be made regardless of whether
      or not a property is producing sufficient income to service such expenses.
      In
      addition, the Property of the Company may be subject to mortgages to complete
      the purchase of a particular Property which require debt service payments.
      If
      the Company is unable or unwilling to meet mortgage payments on any property,
      losses could be sustained as a result of the exercise by the mortgagee of its
      rights of foreclosure or sale.





**2.4.13
      Ability to Obtain, Pre-Development Approvals to Allow Future Development on
      the
      Property**




The
      Company will be subject to risks associated with the development of the Property
      such as municipal and government approvals along with potential environmental
      problems. As a result the ability to develop the Property may be affected from
      time to time in varying degrees by obtaining or not obtaining the appropriate
      municipal or government approvals or, alternatively, such approval may be
      subject to such terms and conditions that may delay or change the Property
      and
      thereby altering the profitability of such Property. While management has
      obtained the necessary predevelopment approvals its past projects, this is
      NOT a
      guarantee of future performance.





**2.4.14
      Construction Costs and Uncertainty of Density**




The
      real
      estate industry is significantly impacted by fluctuations in the cost of
      construction and servicing of land. Any material increase in construction and/or
      servicing costs may have a materially adverse effect on the Company in the
      timing of selling the Property or having the Company purchase a portion or
      all
      of the Property. The Density of the Hotel may be adjusted at the discretion
      of
      the Planning Department of the City of Vancouver.





**2.4.15
      Liquidity of Real Estate**




Real
      estate is relatively illiquid. Such illiquidity may limit the ability of the
      Company to diversify its portfolio promptly in response to changing economic
      or
      investment conditions. In recessionary times, it may be virtually impossible
      to
      dispose of certain types of real estate, particularly commercial real estate.
      The costs of holding real estate are considerable, and the Company, as a holder
      of real estate, during a Recessionary period may be faced with ongoing
      expenditures with little prospect of incoming receipts. Without adequate cash
      reserves, it may be necessary for the Company to dispose of Property at low
      prices. Financial difficulties of other property owners may lead to distress
      sales which could further depress real estate values in markets in which the
      Company operates.





**2.4.16
      Regulatory Approvals**




From
      time
      to time the development of Property by the Company will or may require zoning,
      environmental and other approvals from local government agencies. The process
      of
      obtaining such approvals may take many months and there can be no assurance
      that
      the necessary approvals for the Property will be obtained. Holding costs accrue
      while regulatory approvals are being sought and delays can render Property
      uneconomic at any given period. The Manager, while having a track record in
      other projects of obtaining development approvals on other lands, cannot
      guarantee that the Property within this Offering will receive the same level
      of
      development approvals in a timely fashion.





**2.4.17
      Environmental Matters**




Under
      various environmental laws, ordinances and regulations, the current or previous
      owner or operator of real property may be liable for the costs of removal or
      rededication of hazardous or toxic substances on, under or in such property.
      Such laws could impose liability whether or not the Company knew of, or was
      responsible for, the presence of such hazardous or toxic substances. The
      presence of hazardous or toxic substances, or the failure to remove or
      rededicate such substances, if any, could adversely affect the Company's ability
      to sell such real estate or to borrow using such real estate as collateral
      and
      could potentially also result in claims against the Company




16




**2.4.18
      General Real Estate Risks**




Various
      factors can affect the timing and profitability of real estate development.
      While the Company has made certain plans for applying and obtaining a
      Development Permit for the Property, there is no assurance that such plans
      will
      be met on a timely basis or at all. There is also no assurance that the Property
      can be rented to a sufficient occupancy level to make the development
      economically viable. The Company will be subject to risks inherent in the
      ownership of land intended for the future development of commercial real estate
      including:


(i)
      unforeseen delays with the municipal approval process; (ii) cost overruns;
      (iv)
      the inability to secure the appropriate permits and other necessary approvals
      in
      a timely and cost-effective manner; (v) the inability to rent sufficient rooms
      to an occupancy level that is viable; and (vi) the inability to obtain suitable
      property for development.




**2.4.19
      Property Ownership Risk of Tulum Hotel ParaYso 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 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.





**2.4.20**  **Environmental
      And Other Regulations**





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.





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;




17




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 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.




**2.4.21
      The Occurrence In Mexico Of Natural Disasters**




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.




**2.4.22** **We
          Do Not Carry Comprehensive Liability Insurance for the Mexico 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.





**2.4.23**  **Future
      Equity Financings May Dilute Existing Stockholders’ Ownership
      Interests.**





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.





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
      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.




18




**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.





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




Exhibit
              Number
            
            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.




19


**REPORTS
      ON FORM 8-K**




We
      filed
      the following Current Reports on Form 8-K during the fiscal quarter ended August
      31st, 2008:




**Date of Form 8-K**
            
            **Date of Filing with the SEC**
            
            **Description of the Form 8-K**June
                30th, 2008
            
            June
                30th,
                2008
            
            Hired
                consultant, De Cotiis Group Windsor Holdings, Ltd. to assist in capital
                raising and find new development deals for the CompanyJune
                30th, 2008
            
            July
                1st, 2008
            
            Hired
                consultant, De Cotiis Group Windsor Holdings, Ltd. to assist in capital
                raising and find new development deals for the Company, Removal of
                Non-Reliance on Financial
                Statements




**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:
                October 12th , 2008
            By:
            */s/ Graham G. Alexander***GRAHAM G. ALEXANDER**Chief Executive Officer, Chief Financial Officer
              President, Secretary and Treasurer(Principal Executive Officer
              and Principal Accounting Officer)




20