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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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, 2005

 ̈ Transition
  Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934
  For the transition period ________ to ________

COMMISSION FILE NUMBER000-51376

RANCHO SANTA MONICA DEVELOPMENTS
INC.(Exact name of small business issuer as specified in its
charter)

|NEVADA                                                 | 83-0414306                        | **3104 Sunnyhurst Road**                         
|------------------------------------------------------ | --------------------------------- | -------------------------------------------------
|(State or other jurisdiction of incorporation
      or | (IRS Employer Identification No.) | ****North Vancouver, BC, Canada V7K
      2G3****
|organization)                                          |                                   | (Address of
      principal executive offices)   

(604) 537-5905Issuer'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 October
17, 2005, the Issuer had 7,564,332 Shares of Common Stock outstanding.

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

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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 31, 2005
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

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RANCHO SANTA MONICA DEVELOPMENTS INC.(A Development Stage Company)

FINANCIAL STATEMENTS

AUGUST 31, 2005(Unaudited)
  (Stated in U.S. Dollars)

F-1

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RANCHO SANTA MONICA DEVELOPMENTS INC.(A Development Stage Company)

BALANCE SHEETS(Unaudited)
  (Stated in U.S. Dollars)

|                                                       |   | AUGUST 31 |   |   | NOVEMBER 30 |  
|------------------------------------------------------ | - | --------- | - | - | ----------- | -
|                                                       |   | 2005      |   |   | 2004        |  
|ASSETS                                                 |   |           |   |   |             |  
|Current                                                |   |           |   |   |             |  
|Cash                                                   | $ | 5,355     |   | $ | 43,154      |  
|Property(Note 2)                                       |   | 80,000    |   |   | 80,000      |  
|                                                       | $ | 85,355    |   | $ | 123,154     |  
|LIABILITIES                                            |   |           |   |   |             |  
|Current                                                |   |           |   |   |             |  
|Accounts payable and accrued liabilities               | $ | 18,980    |   | $ | 5,331       |  
|Note Payable(Note 3)                                   |   | 50,000    |   |   | 50,000      |  
|                                                       |   | 62,880    |   |   | 55,331      |  
|STOCKHOLDERS EQUITY                                   |   |           |   |   |             |  
|Share Capital                                          |   |           |   |   |             |  
|Authorized:                                            |   |           |   |   |             |  
|100,000,000 common shares with a
      par value of    |   |           |   |   |             |  
|$0.0001
      per share                                |   |           |   |   |             |  
|100,000,000 preferred shares with
      a par value of |   |           |   |   |             |  
|$0.0001
      per share                                |   |           |   |   |             |  
|Issued:                                                |   |           |   |   |             |  
|7,564,332 common shares at May 31, 2005 and at         |   |           |   |   |             |  
|November
      30, 2004                                |   | 7,564     |   |   | 7,564       |  
|Additional paid-in
      capital                       |   | 103,366   |   |   | 103,366     |  
|Subscriptions Receivable                               |   | -         |   |   | (3,000      | )
|Deficit Accumulated During The Development
      Stage |   | (94,555   | ) |   | (40,107     | )
|                                                       |   | 16,375    |   |   | 67,823      |  
|                                                       | $ | 85,355    |   | $ | 123,154     |  

The accompanying notes are an integral part of these financial
  statements.

F-2

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RANCHO SANTA MONICA DEVELOPMENTS INC.(A Development Stage Company)

STATEMENTS OF OPERATIONS(Unaudited)
  (Stated in U.S. Dollars)

|                                  |   | Three     |   |   | Inception |   |   | Nine      |   |   | Inception |   |   | Cumulative   |  
|--------------------------------- | - | --------- | - | - | --------- | - | - | --------- | - | - | --------- | - | - | ------------ | -
|                                  |   | Months    |   |   | May 28,   |   |   | Months    |   |   | May 28,   |   |   | from         |  
|                                  |   | Ended     |   |   | 2004 to   |   |   | Ended     |   |   | 2004 to   |   |   | May 28, 2004 |  
|                                  |   | Aug 31,   |   |   | Aug 31,   |   |   | Aug 31,   |   |   | Aug 31,   |   |   | to Aug 31,   |  
|                                  |   | 2005      |   |   | 2004      |   |   | 2005      |   |   | 2004      |   |   | 2005         |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|REVENUE                           | $ | -         |   | $ | -         |   | $ | -         |   | $ | -         |   | $ | -            |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|OPERATING EXPENSES                |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|Consulting fees                   |   | 4,800     |   |   | -         |   |   | 16,400    |   |   | -         |   |   | 23,600       |  
|General and Administrative        |   | 669       |   |   | 1,529     |   |   | 3,803     |   |   | 1,529     |   |   | 5,602        |  
|Interest on long-term
      debt  |   | 1,500     |   |   | -         |   |   | 4,480     |   |   | -         |   |   | 4,480        |  
|Professional fees                 |   | 7,500     |   |   | 4,000     |   |   | 29,765    |   |   | 4,000     |   |   | 60,873       |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   | 14,469    |   |   | (5,529    | ) |   | 54,448    |   |   | (5,529    | ) |   | 94,555       |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|NET LOSS FOR THE
      PERIOD     | $ | (14,469   | ) | $ | (5,529    | ) | $ | (54,448   | ) | $ | (5,529    | ) | $ | (94,555      | )
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|Basic and Diluted Loss per        |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|Share                             | $ | (0.02     | ) | $ | (0.01     | ) | $ | (0.07     | ) | $ | (0.01     | ) |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|                                  |   |           |   |   |           |   |   |           |   |   |           |   |   |              |  
|Weighted Average Number of Shares |   |           |   |   |           |   |   |           |   |   |           |   |  
|Outstanding                       |   | 7,564,332 |   |   | 4,910,000 |   |   | 7,564,332 |   |   | 4,910,000 |   |   |              |  

The accompanying notes are an integral part of these financial
  statements.

F-3

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RANCHO SANTA MONICA DEVELOPMENTS INC.(A Development Stage Company)

STATEMENTS OF CASH FLOWS(Unaudited)
  (Stated in U.S. Dollars)

|                                                     |   | Nine    |   |   | Inception |   |   | Cumulative   |  
|---------------------------------------------------- | - | ------- | - | - | --------- | - | - | ------------ | -
|                                                     |   | Months  |   |   | May 28,   |   |   | from         |  
|                                                     |   | Ended   |   |   | 2004 to   |   |   | May 28, 2004 |  
|                                                     |   | Aug 31, |   |   | Aug 31,   |   |   | to Aug 31,   |  
|                                                     |   | 2005    |   |   | 2004      |   |   | 2005         |  
|                                                     |   |         |   |   |           |   |   |              |  
|                                                     |   |         |   |   |           |   |   |              |  
|Cash Flows Used By Operating Activities              |   |         |   |   |           |   |   |              |  
|                                                     |   |         |   |   |           |   |   |              |  
|Net Loss for the Period                              | $ | (54,448 | ) | $ | (5,529    | ) | $ | (94,555      | )
|                                                     |   |         |   |   |           |   |   |              |  
|Adjustments to Reconcile Loss to Net Cash
      Used |   |         |   |   |           |   |   |              |  
|by Operating Activities                              |   |         |   |   |           |   |   |              |  
|                                                     |   |         |   |   |           |   |   |              |  
|Changes in Accounts payable and accrued liabilities  |   | 17,980  |   |   | -         |   |   | 18,980       |  
|                                                     |   | (36,468 | ) |   | (5,529    | ) |   | (75,575      | )
|Cash Flows Used by Investing Activity                |   |         |   |   |           |   |   |              |  
|Purchase of property                                 |   | (4,331  | ) |   | -         |   |   | (30,000      | )
|                                                     |   |         |   |   |           |   |   |              |  
|Cash Flows from Financing Activity                   |   |         |   |   |           |   |   |              |  
|Issue of share capital                               |   | 3,000   |   |   | 31,300    |   |   | 110,930      |  
|                                                     |   |         |   |   |           |   |   |              |  
|Increase (Decrease) In Cash                          |   | (37,799 | ) |   | 25,771    |   |   | 5,355        |  
|                                                     |   |         |   |   |           |   |   |              |  
|Cash, Beginning of Period                            |   | 43,154  |   |   | -         |   |   | -            |  
|                                                     |   |         |   |   |           |   |   |              |  
|Cash, End of Period                                  | $ | 5,355   |   | $ | 25,771    |   | $ | 5,355        |  
|                                                     |   |         |   |   |           |   |   |              |  

The accompanying notes are an integral part of these financial
  statements.

F-4

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RANCHO SANTA MONICA DEVELOPMENTS
  INC.(A Development
  Stage Company)

STATEMENT OF STOCKHOLDERS EQUITY

PERIOD FROM INCEPTION, MAY 28, 2004, TO AUGUST
  31, 2005(Unaudited)
  (Stated in U.S. Dollars)

|                   |  | COMMON STOCK |  |   |       |  |   | DEFICIT    |  |   |               |  
|------------------ |  | ------------ |  | - | ----- |  | - | ---------- |  | - | ------------- | -
|                   |  | NUMBER       |  |   |       |  |   |            |  |   |               |  
|                   |  | OF           |  |   |       |  |   | ADDITIONAL |  |   |               |  
|                   |  | COMMON       |  |   | PAR   |  |   | PAID-IN    |  |   | SUBSCRIPTIONS |  
|                   |  | SHARES       |  |   | VALUE |  |   | CAPITAL    |  |   | RECEIVABLE    |  
|                   |  |              |  |   |       |  |   |            |  |   |               |  
|Shares issued for  |  |              |  |   |       |  |   |            |  |   |               |  
|cash at $0.001 per |  |              |  |   |       |  |   |            |  |   |               |  
|share  May 28,    |  |              |  |   |       |  |   |            |  |   |               |  
|2004               |  | 4,000,000    |  | $ | 4,000 |  | $ | -          |  | $ | -             |  
|Shares issued for  |  |              |  |   |       |  |   |            |  |   |               |  
|cash at $0.03 per  |  |              |  |   |       |  |   |            |  |   |               |  
|share  November   |  |              |  |   |       |  |   |            |  |   |               |  
|30, 2004           |  | 3,564,332    |  |   | 3,564 |  |   | 103,366    |  |   | (3,000        | )
|Net loss for the   |  |              |  |   |       |  |   |            |  |   |               |  
|period             |  | -            |  |   | -     |  |   | -          |  |   | -             |  
|                   |  |              |  |   |       |  |   |            |  |   |               |  
|Balance, November  |  |              |  |   |       |  |   |            |  |   |               |  
|30, 2004           |  | 7,564,332    |  |   | 7,564 |  |   | 103,366    |  |   | (3,000        | )
|                   |  |              |  |   |       |  |   |            |  |   |               |  
|Subscriptions      |  |              |  |   |       |  |   |            |  |   |               |  
|received  Aug 31, |  |              |  |   |       |  |   |            |  |   |               |  
|2005               |  | -            |  |   | -     |  |   | -          |  |   | 3,000         |  
|Net loss for the   |  |              |  |   |       |  |   |            |  |   |               |  
|period             |  | -            |  |   | -     |  |   | -          |  |   | -             |  
|                   |  |              |  |   |       |  |   |            |  |   |               |  
|                   |  |              |  |   |       |  |   |            |  |   |               |  
|Balance, May 31,   |  |              |  |   |       |  |   |            |  |   |               |  
|2005               |  | 7,564,332    |  | $ | 7,564 |  | $ | 103,366    |  | $ | -             |  

The accompanying notes are an integral part of these financial
  statements.

F-5

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RANCHO SANTA MONICA DEVELOPMENTS LTD.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

AUGUST 31, 2005(Unaudited)
  (Stated in U. S. Dollars)

|1. | BASIS OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The unaudited financial statements as of August 31,
        2005 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 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 nine month period ended August 31, 2005,
        pursuant to written agreements, the Company paid Directors and Officers
        a total of $16,400 for management services. Cumulatively to that date,
        management fees paid to Directors and Officers totals $23,600.                                                                                                                                                                                          

F-6

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|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 for all remaining permits to complete construction of the apartment
  units which are 80% complete as of October 17, 2005.

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 80% complete. We expect to continue development of our Solidaridad
  Property in May, 2006 and to complete the construction in September, 2006. We
  estimate that we will be required to expend $15,000 to complete the development
  of our property. See Acquisition of Solidaridad Property below.

Recent Corporate Developments

We experienced the following significant developments since our
last fiscal quarter ended March 31, 2005:

On September 2, 2005 Ms. Galan-Rios, the vendor of our
Solidaridad Property, received the final Procuraduría Federal de Protección al
Ambiente (PROFEPA) regularization permit which provides that the following
conditions must be met prior to completing our development of the Solidaridad
Property:

|1. | Ms. Galan-Rios must pay PROFEPA a fee of $117,000 pesos
      or approximately $11,142;                                                                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                  
|2. | Rancho must obtain all required authorizations from the
      applicable Mexican federal authorities before it can continue construction
      on the Solidaridad Property;                                                                      
|   |                                                                                                                                                                                                                                                  
|3. | Rancho needs to obtain authorization for its proposed
      development on the Solidaridad Property from SERMARNAT (Secretaria de
      Medio Ambiente y Recursos Naturales) within 60 business days of the date
      of the PROFEPA permit; and

3

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|4. | Ms. Galan-Rios needs to post a bond of $100,000 pesos
      (approximately $10,500) with SERMARNAT while we conduct a program to
      re-establish and revegitate the dune located on the Solidaridad
      Property.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We have been advised by Monica Galan Rios that she will pay the
  PROFEPA fine as soon as possible, post the required bond for the dune study,
  commence the study, and submit a operations and works completion report with
  SERMARNAT allowing us to continue the development of our Solidaridad Property.
  Upon completion of the above four conditions and receipt of the authorization
  from SERMARNAT, we have been advised that Monica Galan Rios will apply to the
  Municipality of Solidaridad for a regularization permit for the building and
  facilities on the adjoining property. We expect to receive the SERMARNAT authorization
  within five months. As a result we expect to continue development of our Solidaridad
  Property in May, 2006 and to complete the construction in September, 2006.

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.                                                                                                                                                                                         

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

4

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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 1Property Location



5

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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. 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, 2004. 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.

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.

6

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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.

MILESTONES AND OBJECTIVES

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

MILESTONES AND OBJECTIVES
      ANTICIPATED COST
      TIME FRAMEPHASE 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
    $10,000
    3
MonthsPHASE 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
  MonthsTOTAL
    $15,000
    -


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 MonthsProfessional Fees
      $31,000General Administrative Expenses
      $9,000Consulting Fees
      $12,000Contractor Fees
      $11,200Marketing Expenses
      $3,500TOTAL
      $66,700


We have cash of $28,193 and working capital of $22,862 as of
October 17, 2005. We estimate that the completion of the development of our
Solidaridad Property will cost approximately $15,000. Our total expenditures
over the next twelve months are anticipated to be approximately

7

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$81,700, 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 ExpensesRental 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
        feesTotal per Month
      -
      $1,400Total 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 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.

8

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LIQUIDITY AND CAPITAL RESOURCES

|Working Capital           |                          |                            |                      
|------------------------- | ------------------------ | -------------------------- | ---------------------
|                          |                          |                            | Percentage           
|                          | At
      August 31, 2005 | At
      November 30, 2004 | Increase / (Decrease)
|Current Assets            | $5,355                   | $43,154                    | (87.5)%              
|Current Liabilities       | $18,980                  | $5,331                     | 256%                 
|Working Capital (Deficit) | $(13,625)                | $37,823                    | (63.9)%              

|Cash Flows                                     |                |                 |                
|---------------------------------------------- | -------------- | --------------- | ---------------
|                                               | Nine Months    |                 | Cumulative from
|                                               | Ended August   | Inception to    | Inception to   
|                                               | 31,
      2005 | August 31, 2004 | August 31, 2005
|Cash Flows from (used in) Operating Activities | $(54,448)      | $(5,529)        | $(94,555)      
|Cash Flows from (used in) Investing Activities | $(4,331)       | -               | $(30,000)      
|Cash Flows from (used in) Financing Activities | $3,000         | $31,300         | $110,930       
|Net Increase (decrease) in Cash During Period  | $(37,799)      | $25,771         | $5,355         

The decrease in our working capital surplus at August 31, 2005
from our year ended November 30, 2004, and the increase in our cash used during
the period ended on August 31, 2005, from our year ended November 30, 2004 are
primarily a result of the increase in our professional fees related to the
professional fees paid in connection with preparing and filing our Registration
Statement on Form SB-2 and the amendments thereto and from the fact that we had
no revenue or sources of financing during the period ended August 31, 2005.

As of October 17, 2005, we had cash on hand of $28,193. 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, 2004, 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

9

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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.

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 $94,555 for the period from May 28, 2004 (inception) to August 31, 2005, 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:

10

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- 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 our Solidaridad Property fails to generate revenues. We have cash in the
  amount of $28,193 as of October 17, 2005 and our total expenditures over the
  next twelve months are anticipated to be approximately $81,700.
- We estimate that we will be required to expend $15,000 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.
- We cannot complete the development of our property which is presently 80%
  complete, until we receive the required permits from the Mexican Government,
  and there is no assurance that we will receive the required permits.

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, 2004. Our project requires capital
expenditures for 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 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

11

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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 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:

12

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|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 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:

13

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|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.

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

14

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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.

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 October 17, 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

15

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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.

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.

16

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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 Exhibits                                                                                                                                                                         
|        |                                                                                                                                                                                                 
|3.1     | 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 did not file any Current Reports on Form 8-K during the
fiscal quarter ended August 31, 2005. We have not filed any Current Reports on
Form 8-K since August 31, 2005.

18

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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 24, 2005 | By:                                  
|                        |                                      
|                        |                                      
|                        |                                      
|                        |                                      
|                        |                                      
|                        |                                      
|                        |                                      
|Date:  October 24, 2005 | By:                                  
|                        |                                      
|                        |                                      
|                        |                                      

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