Falcon Ridge Development 10K 2008 Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ("Act")

For the fiscal year ended September 30, 2008

Commission File No. 0-28789

FALCON RIDGE DEVELOPMENT, INC.

(Exact name of Registrant as specified in its charter)

NEVADA		84-1461919
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

5111 Juan Tabo Boulevard N.E.
Albuquerque, New Mexico		87111
(Address of principal executive offices)		(Zip code)

505.856.6043

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, 0.001 par value	OTCBB

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |_|

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act Yes |_| No |X|

Revenues for the most recent fiscal year were $93,281.00

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of January 6, 2009, based upon the average high and low prices of such stock on that date was $172,576. Solely for purposes of the foregoing calculation all of the Registrant's directors and officers are deemed to be affiliates.

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer []	Accelerated filer []
Non-accelerated filer [] (Do not check if a smaller reporting company)	Smaller reporting company [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:

Common Stock, $.001 Par Value - 78,054,805shares of outstanding as of January 6, 2009.

Transitional Small Business Disclosure Format Yes |_| No |X|

FALCON RIDGE DEVELOPMENT, INC.

2008 ANNUAL REPORT ON FORM 10-K

Table of Contents

Part	Item(s)		Page

I.	1.	Business	4
	1A.	Risk Factors	5
	2.	Properties	10
	3.	Legal Proceedings	11
	4.	Submission of Matters to a Vote of Security Holders	11
II.	5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
	6.	Selected Financial Data	13
	7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
	7A.	Quantitative and Qualitative Disclosures About Market Risk	13
	8.	Financial Statements and Supplementary Data	F-1
	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	17
	9A.	Controls and Procedures	17
	9B.	Other Information	17
III.	10.	Directors and Executive Officers of the Registrant	18
	11.	Executive Compensation	19
	12.	Security Ownership of Certain Beneficial Owners and Management	20
	13.	Certain Relationships and Related Transactions	21
	14.	Principal Accountant Fees and Services	22
IV.	15.	Exhibits, Financial Statement Schedules	22
		Signatures	23

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PART I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make statements in this report that relate to matters that are not historical facts that we refer to as "forward-looking statements" regarding, among other things, our business strategy, our prospects and our financial position. These statements may be identified by the use of forward-looking terminology such as "believes," "estimates, "expects, "intends," "may," "will," "should" or "anticipates" or the negative or other variation of these or similar words, or by discussion of strategy or risks and uncertainties. Forward-looking statements in this report include, among other things, statements concerning:

projections of future results of operations or financial condition;

expectations for our properties; and

expectation of the continued availability of capital resources.

Any forward-looking statement made by us necessarily is based upon a number of estimates and assumptions that, while considered reasonable by us, are inherently subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond our control, and are subject to change. Actual results of our operations may vary materially from any forward-looking statement made by or on our behalf. Forward-looking statements should not be regarded as representations by us or any other person that the forward-looking statements will be achieved. Undue reliance should not be placed on any forward-looking statements.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

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Item 1. Description of Business

Introduction

Falcon Ridge Development, Inc. (the "Company" or “we” or “us”) is a Nevada corporation. Our principal business address is 5111 Juan Tabo Boulevard N.E., Albuquerque, New Mexico 87111. We changed the domicile of the company from Colorado to Nevada on or about July 6, 2005 and changed our name from PocketSpec Technologies, Inc. to Falcon Ridge Development, Inc. We have various subsidiaries, Sierra Norte, LLC ("Sierra Norte"), Spanish Trails, LLC ("Spanish Trails"), Falcon Ridge Financial LLC., Falcon Ridge Realty LLC., Falcon Ridge Investments LLC. We operate in the real estate industry and services to the real estate industry. We acquire tracts of raw land and develop them into communities. Often these communities include residential, commercial, industrial and retail components to them. We plan to offer our own housing products in these and other communities developed by other developers. In addition, in 2007 we completed the formation of various wholly owned subsidiaries including Falcon Ridge Financial LLC, Falcon Ridge Realty LLC and Falcon Ridge Investments LLC. Falcon Ridge Financial places and brokers real estate mortgages of all types but primarily concentrates on residential mortgages. Falcon Ridge Realty is our resale division and concentrates on selling homes for the general public under listing and sale agreements with individual clients. Falcon Ridge Investments, LLC is a vehicle for creating and operating private placement offerings as well as other type of investment vehicles’.

On May 20, 2005, we completed a reverse acquisition transaction. We acquired Sierra Norte, a New Mexico limited liability company, which thereby became our wholly-owned subsidiary. Sierra Norte is a land development company in the Albuquerque, New Mexico area. Formerly, we were a technology company in the business of developing and marketing color comparison devices. We acquired Spanish Trails on July 6, 2005 as discussed below. Originally, we were incorporated as Monument Galleries, Inc., a Colorado corporation, on May 15, 1998.

As a result of the Sierra Norte acquisition, the former security holders of Sierra Norte acquired a majority of our outstanding shares of common stock. For accounting purposes, Sierra Norte has been deemed to be the acquirer in the acquisition and, consequently, the assets, liabilities and historical operations that are reflected in our financial statements are those of Sierra Norte, which are recorded at the historical cost basis of Sierra Norte. The reverse acquisition was consummated under Colorado law pursuant to an Agreement and Plan of Reorganization dated May 20, 2005.

On July 6, 2005, we entered into an exchange of securities whereby we acquired 100% of the ownership of Spanish Trails, in exchange for the issuance of a total of 614,882,069 (pre-reverse split) of our common shares. As a result of the Spanish Trails acquisition, the former security holders of Spanish Trails acquired a majority of our outstanding shares of common stock, but we did not have a change of control because the owners of a majority of Spanish Trails were the executive officers and majority shareholders of the Company. After the exchange, 752,262,441 (pre-reverse split) shares of common stock were issued and outstanding.

Also, on July 6, 2005 we reincorporated our company to Nevada from Colorado and changed our name to Falcon Ridge Development Inc., after shareholder approval. In connection with the name change, we changed to a new trading symbol, FLRD.BB.

On August 16, 2006 we affected a 1 for 200 reverse split of our common stock. This reduced the outstanding common shares from 752,262,441 to 3,761,312. Our current trading symbol is FCNR.BB.

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We are currently own the rights to 139 acres under real estate contract with an individual. The land’s original platting significantly limited the number of useable lots. We are re-platting the entire 139 acres. 96 acres of our Spanish Trails project is progressing through local real estate governmental clearance towardfinal approval of our platting plan. We anticipate the process should be completed by late spring 2008. At current time we have stopped moving forward on this project pending improvement in market conditions. The mortgage was due August 1, 2008. Its extension is at the discretion of the mortgage holder who has not agreed to extend at the time of this filing. The Company has stopped making payments and is in the process of evaluating its options, including deed in lieu of foreclosure.

Considerable up-front costs in any real estate platting project must first be incurred and paid for, thus in the early stages of our real estate projects significant amounts of capital can be required until platting occurs, and lots are improved and sold. Predictably, greater revenues will be achieved as soon as a portion of the lots are improved and sold. When the lot development plan has been completed and accepted by Valencia County, New Mexico, and construction of the lots completed, the sale of these lots will be currently funded and closed. It is also our intention to initiate a home building division, which will construct entry level homes with the remaining developed Spanish Trails project lots. The sale of homes and, consequently, the pace of construction, will be determined by the rate of market absorption.

We have not been involved in any bankruptcy, receivership, or similar proceeding.

(b) Business of the Issuer

Falcon Ridge Development, Inc. (the "Company" or “we” or “us”) is a Nevada corporation. Our principal business address is 5111 Juan Tabo Boulevard N.E., Albuquerque, New Mexico 87111. We changed the domicile of the company from Colorado to Nevada on or about July 6, 2005 and changed our name from PocketSpec Technologies, Inc. to Falcon Ridge Development, Inc. We have various subsidiaries, Sierra Norte, LLC ("Sierra Norte"), Spanish Trails, LLC ("Spanish Trails"), Falcon Ridge Financial LLC., Falcon Ridge Realty LLC., Falcon Ridge Investments LLC. We operate in the real estate industry and services to the real estate industry. We acquire tracts of raw land and develop them into communities. Often these communities include residential, commercial, industrial and retail components to them. We plan to offer our own housing product in these and other communities developed by other developers. In addition, in 2007 we completed the formation of various wholly owned subsidiaries including Falcon Ridge Financial LLC, Falcon Ridge Realty LLC and Falcon Ridge Investments LLC. Falcon Ridge Financial places and brokers real estate mortgages of all types but primarily concentrates on residential mortgages. Falcon Ridge Realty is our resale division and concentrates on selling homes for the general public under listing and sale agreements with individual clients. Falcon Ridge Investments, LLC is a vehicle for creating and operating private placement offerings as well as other type of investment vehicles’.

Item 1A. Risk Factors

WE HAVE NO HISTORY OF PROFITABILITY FROM OUR DEVELOPMENT OF REAL ESTATE.

Sales of our real estate development properties may never generate sufficient revenues to fund our continuing operations. We may never generate positive cash flow or attain profitability in the future. As of September 30, 2008, our accumulated deficit was $7,349,634. For the fiscal year ended September 30, 2008, we incurred a loss of $ 4,572,620. These losses have primarily resulted from:

A lack of funding for construction has resulted in an inability to produce lots for sale; and costs of operating a public company that included increased accounting and legal fees.

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BECAUSE OF OUR LIMITED HISTORY AND THE POTENTIAL FOR COMPETITION, AN INVESTMENT IN US IS INHERENTLY RISKY.

Because we are a company with a limited history, our operations are subject to numerous risks similar to that of a start-up company. We expect the real estate development business to be highly competitive because many developers have access to the same market. Substantially all of them have greater financial resources and longer operating histories than we have and can be expected to compete within the business in which we engage and intend to engage. We cannot assure that we will have the necessary resources to be competitive.

WE MAY NOT BE ABLE TO CONDUCT SUCCESSFUL OPERATIONS IN THE FUTURE.

The results of our operations will depend, among other things, upon our ability to develop and market our properties. Furthermore, our proposed operations may not generate income sufficient to meet operating expenses or will generate income and capital appreciation, if any, at rates lower than those anticipated or necessary to sustain ourselves. Our operations may be affected by many factors, some known by us, some unknown, and some which are beyond our control. Any of these problems, or a combination thereof, could have a materially adverse effect on our viability as an entity and might cause the investment of our shareholders to be impaired or lost.

TO FULLY DEVELOP OUR BUSINESS PLAN, WE WILL NEED ADDITIONAL FINANCING.

For the foreseeable future, we expect to rely principally upon internal financing, although we have raised limited private placement and debt instrument funds during the past fiscal year and may be required to do so in the future. We cannot guarantee the success of this plan. We believe that from time to time, we may have to obtain additional financing in order to conduct our business in a manner consistent with our proposed operations. There can be no guaranty that additional funds will be available when, and if, needed. If we are unable to obtain financing, or if its terms are too costly, we may be forced to curtail proposed expansion of operations until such time as alternative financing may be arranged, which could have a materially adverse impact on our operations and our shareholders' investment. At the present time, we are negotiating bank and other financing institutions for the Spanish Trails Project.

IF WE FAIL TO EXPAND OUR CONTROLS AND INTEGRATE NEW PERSONNEL TO SUPPORT OUR ANTICIPATED GROWTH, OUR BUSINESS OPERATIONS WILL SUFFER.

Management is in the process of analyzing and adopting new policies and procedures to improve the design and operations of our disclosure controls, including review and education concerning Form 8-K requirements. We have changed our policy with respect to financial controls in order to alert us with respect to funding provided by related parties and changes in disclosure requirements.

WE ANTICIPATE THAT WE WILL BE SUBJECT TO INTENSE COMPETITION.

We will face intense competition in the development of real estate near Albuquerque, New Mexico. Many national developers have started developing in the nearby areas with similar developments.

WE LACK CAPITAL.

We currently lack the capital necessary to independently sustain our operations. Management is actively negotiating financing through lending institutions and other sources to meet its short term working capital needs and is negotiating long term capital options. There can be no guaranty that additional funds will be available. If we are unable to obtain financing, or if its terms are too costly, we may be forced to curtail proposed expansion of operations until such time as alternative financing may be arranged, which could have a materially adverse impact on our operations and our shareholders' investment.

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WE HAVE LIMITED HUMAN RESOURCES NECESSARY TO EXPAND OPERATIONS.

We have a small staff of skilled developers and supplement our human resource needs through sub-contracting. We are planning to acquire additional resources internally thereby reducing the use of sub-contractors and increasing direct control over our operations. If we are unable to acquire additional resources internally we will be forced to use sub-contractors that may or may not be available to work when and where we need them thereby limiting our ability to expand operations as we intend.

OUR ULTIMATE SUCCESS WILL BE DEPENDENT UPON MANAGEMENT.

Our success is dependent upon the decision making of our directors and our executive officers, who are Fred M. Montano and Karen Y. Duran. These individuals intend to commit as much time as necessary to our business. The loss of any or all of these individuals could have a materially adverse impact on our operations. We have oral employment agreements with our officers and directors, but have not obtained key man life insurance on the lives of any of these individuals.

OUR STOCK PRICE MAY BE VOLATILE, AND YOU MAY NOT BE ABLE TO RESELL YOUR SHARES AT OR ABOVE YOUR INITIAL PURCHASE PRICE.

There has been, and continues to be, a limited public market for our common stock. Although our common stock trades on the NASD Bulletin Board, an active trading market for our shares has not developed, and may never develop or be sustained. If you purchase shares of common stock, you may not be able to resell those shares at or above the initial price you paid. The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, including the following:

actual or anticipated fluctuations in our operating results;

changes in financial estimates by securities analysts or our failure to perform in line with such estimates;

changes in market valuations of other real estate companies, particularly those that sell products similar to ours; announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;

introduction of new design and planning enhancements that reduce the need for our products; and

departure of key personnel.

Most of our common stock is currently restricted. As restrictions on resale end, the market price of our stock could drop significantly if the holders of restricted shares sell them or are perceived by the market as intending to sell them. This could cause the market price of our common stock to drop significantly, even if our business is doing well.

OUR COMMON STOCK HAS A LIMITED PUBLIC TRADING MARKET.

While our common stock currently trades in the Over-the-Counter Bulletin Board market, our market is limited and sporadic. We cannot assure that such a market will improve in the future, even if our securities are ever listed on the NASDAQ Small Cap Market or the American Stock Exchange. We cannot assure that an investor will be able to liquidate the investor’s investment without considerable delay, if at all. If a more active market does develop, the price may be highly volatile. The factors which we have discussed in this document may have a significant impact on the market price of the common stock. The relatively low price of our common stock may keep many brokerage firms from engaging in transactions in our common stock.

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THE OVER-THE-COUNTER MARKET FOR STOCK SUCH AS OURS HAS HAD EXTREME PRICE AND VOLUME FLUCTUATIONS.

The securities of companies such as ours have historically experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations and other factors, such as new product developments and trends in the our industry and in the investment markets generally, as well as economic conditions and annual variations in our operational results, may have a negative effect on the market price of our common stock.

WE ARE SUBJECT TO RISKS ASSOCIATED WITH INVESTMENTS IN REAL ESTATE

The value of, and our income from, our properties may decline due to developments that adversely affect real estate generally and those that are specific to our properties. General factors that may adversely affect our real estate portfolios include:

increases in interest rates;

a general tightening of the availability of credit;

a decline in the economic conditions in one or more of our primary markets;

an increase in competition for customers or a decrease in demand by customers;

an increase in supply of our property types in our primary markets;

declines in consumer spending during an economic recession that adversely affect our revenue; and

the adoption on the national, state or local level of more restrictive laws and governmental regulations, including more restrictive zoning, land use or environmental regulations and increased real estate taxes.

Additional factors may adversely affect the value of, and our income from, specific properties, including:

adverse changes in the perceptions of prospective purchasers of the attractiveness of the property;

opposition from local community or political groups with respect to development or construction at a particular site;


	·	a change in existing comprehensive zoning plans or zoning regulations that impose additional restrictions on use or requirements with respect to our property;

our inability to provide adequate management and maintenance or to obtain adequate insurance;

an increase in operating costs;

new development of a competitor's property in or in close proximity to one of our current markets; and

earthquakes, floods or underinsured or uninsured natural disasters.

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The occurrence of one or more of the above risks could result in significant delays or unexpected expenses. If any of these occur, we may not achieve our projected returns on properties under development and we could lose some or all of our investments in those properties.

WE ARE SUBJECT TO REAL ESTATE DEVELOPMENT RISKS

Our development projects are subject to significant risks relating to our ability to complete our projects on time and on budget. Factors that may result in a development project exceeding budget or being prevented from completion include:

an inability to secure sufficient financing on favorable terms, including an inability to refinance construction loans;

The subprime mortgage financial crisis of 2008 has brought about a rise in defaults and home foreclosures. It has also caused tighter lending standards. All this combined appears to be driving down home prices and affecting consumer confidence. The negative effect of the subprime situation is effecting the companies ability to sell homes and secure financing. It will also effect the goss margin and volume of business completed by Falcon Financial, the companies’ other division.

construction delays or cost overruns, either of which may increase project development costs;

an increase in commodity costs;

an inability to obtain zoning, occupancy and other required governmental permits and authorizations;

If any of these occur, we may not achieve our projected returns on properties under development and we could lose some or all of our investments in those properties.

WE ARE VULNERABLE TO CONCENTRATION RISKS BECAUSE OUR OPERATIONS ARE CURRENTLY ALMOST EXCLUSIVE TO THE ALBUQUERQUE, NEW MEXICO AREA MARKET.

Our real estate activities are almost entirely located in the Albuquerque, New Mexico area. Because of our geographic concentration and limited number of projects, our operations are more vulnerable to local economic downturns and adverse project-specific risks than those of larger, more diversified companies.

The performance of the Albuquerque economy greatly affects our sales and, consequently the underlying values of our properties. The Albuquerque economy is heavily influenced by conditions and employment in the defense industry and in government. A decrease in government supported projects through budget cuts or otherwise, could adversely affect the economy in our market. Rising interest rates may adversely affect our ability to sell lots and homes.

OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION ARE GREATLY AFFECTED BY THE PERFORMANCE OF THE REAL ESTATE INDUSTRY.

Our real estate activities are subject to numerous factors beyond our control, including local real estate market conditions (both where our properties are located and in areas where our potential customers reside), substantial existing and potential competition, general national, regional and local economic conditions, fluctuations in interest rates and mortgage availability and changes in demographic conditions. Real estate markets have historically been subject to strong periodic cycles driven by numerous factors beyond the control of market participants.

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Real estate investments often cannot easily be converted into cash and market values may be adversely affected by these economic circumstances, market fundamentals, competition and demographic conditions. Because of the effect these factors have on real estate values, it is difficult to predict with certainty the level of future sales or sales prices that will be realized for individual assets.

Our real estate operations are also dependent upon the availability and cost of mortgage financing for potential customers, to the extent they finance their purchases, and for buyers of the potential customers' existing residences.

OUR OPERATIONS ARE SUBJECT TO AN INTENSIVE REGULATORY APPROVAL PROCESS.

Before we can develop a property, we must obtain a variety of approvals from local and state governments with respect to such matters as zoning, density, parking, sub-division, site planning and environmental issues. Certain of these approvals are discretionary by nature. Because certain government

agencies and special interest groups are involved there is a high degree of uncertainty in obtaining these approvals.

THE REAL ESTATE BUSINESS IS VERY COMPETITIVE AND MANY OF OUR COMPETITORS ARE LARGER AND FINANCIALLY STRONGER THAN WE ARE.

The real estate business is highly competitive. We compete with a large number of companies and individuals, and many of them have significantly greater financial and other resources than we have. Our competitors include local developers who are committed primarily to particular markets and also national

developers who acquire properties throughout the U.S. Because we are a company with a limited history, our operations are subject to numerous risks similar to that of a start-up company. We cannot assure that we will have the necessary resources to be competitive.

OUR OPERATIONS ARE SUBJECT TO NATURAL RISKS.

Our performance may be adversely affected by weather conditions that delay development or damage property.

The U.S. military intervention in Iraq, the terrorist attacks in the U.S. on September 11, 2001 and the potential for additional future terrorist acts have created economic, political and social uncertainties that could materially and adversely affect our business.

Further acts of terrorism could be directed against the U.S. domestically or abroad, these acts of terrorism could be directed against properties and personnel of companies such as ours. Moreover, while our property and business interruption insurance covers damages to insured property

directly caused by terrorism, this insurance does not cover damages and losses caused by war. Terrorism and war developments may materially and adversely affect our business and profitability and the prices of our common stock in ways that we cannot predict at this time.

Item 2. Description of Property

(a) The principal office of our company is located at 5111 Juan Tabo Boulevard N.E., Albuquerque, New Mexico 87111. We do not own the building that our principal offices are located; however we do sub-lease the building on a month to month tenancy.

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Affiliated Party Lease -

Falcon Ridge Development LLC (a related party) leases our office space from Tucana LLC (a related party) for $5,250 per month through May 14, 2007 with annual escalations of $250 per month through May 14, 2008. Tucana LLC is owned by Fred Montano and Karen Duran our CEO and CFO.

(b) Investment Policies

We acquire property for the purpose of developing, operating and reselling it.

Two of our principals own two companies that are involved in real estate development.

We currently own, under a real estate contract, 139 acres in Belen, New Mexico. We plan to develop lots for resale to third party builders and in the current year we plan to offer for sale system built homes. The terms of the mortgages on this land are described below;

Note payable Metro Loan Corp, with interest at 12 percent interest only payments in monthly installments of $11,100.00 collateralized by a First Mortgage due August 1, 2008. Terms of the Loan Agreement describe an Extension Option. Terms of the Extension Option are for two additional six (6) month periods at the higher of (i) eighteen percent (18%) interest or (ii) Prime Rate plus 1,000 basis points. Renewal Option is NOT AUTOMATIC and is at the discretion of the Lender. Fred Montano and the Corporation are Guarantors of this mortgage.		Balance at September 30, 2008, $1,150,000
Second Mortgage and Note to Karen Duran and/or Fred M. Montano with interest at 3% over prime as stated in Wall Street Journal with monthly installments of interest and $20,000.00 principal payments		Balance at September 30, 2008 $1,136,074

Item 3. Legal Proceedings

There are no legal proceedings, to which we are a party, which could have a material adverse effect on our business, financial condition or operating results. However, a former attorney has filed a complaint and obtained a default judgment against us for fees and costs in the approximate amount of $ 47,000. We believe that the judgment will be reversed and we will enter arbitration with the attorney. We have included $ 38,000 in these financial statements and the costs assessed by the attorney of approximately $ 9,000 are not included.

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

As permitted by Nevada corporate law, our majority shareholders acted by consent on October 4, 2007 to re-elect the board of directors that became effective on October 4, 2007. Part II

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Item 5. Market for Common Equity and Related Stockholder Matters

(a) Principal Market or Markets.

Since May 2001, our securities have been listed for trading in the Over-the-Counter market on the NASD's "Electronic Bulletin Board." We currently trade under the symbol FCNR.BB. The following table sets forth the high and low bid quotation for our common stock for each fiscal quarterly period of 2008 and 2007.

There is no market for our preferred stock.

Bid Price ( Adjusted for a 200 for 1 split for periods prior to the split)

2008	High	Low
First Quarter	0.55	0.16
Second Quarter	0.19	0.10
Third Quarter	0.14	0.01
Fourth Quarter	0.018	0.004
2007	High	Low
First Quarter	1.50	0.50
Second Quarter	1.25	.06
Third Quarter	1.25	0.05
Fourth Quarter	0.45	0.02
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(b) Approximate Number of Holders of Common Stock and Preferred Stock

As of September 30, 2008, we had a total of 47,315,917 shares of common stock outstanding. The number of holders of record of our common stock at that date was approximately 180.

As of September 30, 2008, we had a total of 354,000 shares of preferred stock outstanding. The number of holders of record of our preferred stock at that date was fourteen.

Holders of common stock and preferred stock are entitled to receive such dividends as may be declared by our Board of Directors. We paid no dividends on the common stock during the periods reported herein:

(d) nor do we anticipate paying dividends in the foreseeable future.

(e) Repurchases

We did not repurchase any of the common stock or preferred stock during the year.

(f) Issuance of Unregistered Stock

We issued 194,000 shares of preferred stock for $2.50 per share. Our preferred stock is not publicly traded.

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Item 6. Selected Financial Data

Reference is made to the financial statements, the notes, and the reports of our registered public accounting firm commencing on page F-1 of this report, which financial statements, notes, and reports are incorporated herein by reference.

Item 7. Management's Discussion and Analysis and Results of Operations

This section discusses the results of our operations. You should read the following discussions and analyses in conjunction with the audited consolidated financial statements that are included in this Form 10-K. Certain statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations constitute "forward-looking statements," which statements involve risks and uncertainties described elsewhere in this report. The historical information should not necessarily be taken as a reliable indication of our future performance.

(a) Management's Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

In mid to late 2008, conditions within the homebuilding industry became very challenging. Estimates are that sales purchases were down 15-20%. Despite current conditions, Management believes that housing market conditions will improve. We estimate the improvement will occur over the long-term. In the short term, we expect that conditions will continue to be demanding, and may deteriorate further before recovery. Several factors contributed to the difficult environment, including: lack of financing, continued high inventory levels for both new and existing homes in addition to a glut of developed building lots, The result will be seen in continued downward pressure of large price reductions and higher sales incentives. Adding to this stress is the credit tightening of the mortgage markets, along with increasing home foreclosures in many markets. These factors taken with other unforeseeable occurrences will result in lower gross profits for the industry in general

STRATEGY

We believe the long-term fundamentals, namely population growth and household formation, remain solid and will continue to support housing demand. This is especially true when put in the context of specific, targeted markets that the Company is in a position to enter. We also believe current market conditions are extremely challenging and demanding and will remain so for the near term. However, it will moderate over the long term. In the interim, we are exploring other areas related to real estate that could generate revenue for the Company. For instance, we are currently exploring potential merger(s) and/or acquisition(s) of related businesses and Corporations. Renegotiating or cancelling land option purchase contracts from current levels is also under serious consideration. The ability to obtain financing, both for development and home building projects, and for home mortgages, remains extremely difficult to obtain. Any or all\of these factors can predictably lower sales volume and gross profits significantly Management is also exploring how to best use its real estate and finance experience, One area of focus is loan workouts. In this scenario the Company may create a division to help real estate owners in financial distress avoid foreclosure through the use of structured refinance and loan modifications. It is currently under Letter of Intent with one such company as a potential acquisition.

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Forward-Looking Statements

This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates, and projections about our industry, management beliefs, and certain assumptions made by our management. Words such as "anticipates," expects," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly our Annual Reports on Form 10-K and any Current Reports on Form 8-K.

Overview and History

We are a Nevada corporation with two subsidiaries, Sierra Norte, LLC ("Sierra Norte") and Spanish Trails, LLC ("Spanish Trails"). We are in the real estate industry and acquire tracts of raw land and develop them into residential lots for sale to homebuilders. We plan to expand our operations in 2007 into homebuilding on our Spanish Trails lots. Our executive offices are located in the Albuquerque, New Mexico area.

On May 20, 2005, we completed a reverse acquisition transaction. We acquired Sierra Norte, a New Mexico limited liability company, which thereby became our wholly-owned subsidiary. Sierra Norte is a land development company in the Albuquerque, New Mexico area. Formerly we were a technology company which was in the business of developing and marketing color comparison devices. We acquired Spanish Trails on July 6, 2005 as discussed below.

On August 16, 2006 we affected a 1 for 200 reverse split of our common stock. This reduced the outstanding shares from 752,262,441 to 3,761,312 and we changed our trading symbol to FCNR.BB.

- 14 -

Our Spanish Trails project is progressing through local real estate governmental clearance toward final approval of our platting plan. We anticipate the process should be completed in 2008. When our platting receives final approval, we will be able to begin construction of the development. Considerable up front costs in any real estate project must first be incurred and paid for, thus in the early stages of our real estate projects significant amounts of capital can be required before Platting approval occurs, lots are improved, built and sold. Revenues will be achieved as soon as all or a portion of the lots are improved and and accepted by the Valencia County, New Mexico. After which sales to third parties of homes /andor lots can be closed. It is also our intention to sell a portion of the finished lots to other builders and to construct homes on a portion of the completed lots. The sale of homes and, consequently, the pace of construction, will be determined by the rate of market absorption as well as other market conditions.

Results of Operations

Year Ended September 30, 2008 Compared to Year Ended September 30, 2007

We had revenue of 93,281 for the twelve months ended September 30, 2008 compared to revenues of $32,017 for the year ended September 30, 2007. This increase was due to more brokerage commissions in fiscal 2008 over 2007.

Our costs of sales for the twelve months ended September 30, 2008 was $-0- compared to costs of sales of $-0- for the year months ended September 30, 2007. Our selling, general and administrative expenses for the twelve months ended September 30, 2008 were $390,582, compared to selling, general and administrative expenses of $571,646 for the year ended September 30, 2007. The major components of these expenses are rent, legal and loan processing costs and commission.

Consulting and stock based compensation was $3,805,912 in 2008 compared to $430,468 for the year ended September 30, 2007.The increase on consulting fees is due primarily for stock bonuses valued at $2,000,000 awarded to the President and Chief Financial Officer and $887,292 in the cost of warrants issued to a consulting firm

Our planned principal source of revenue in the near term is expected to be from 139 acres of land we own in the Spanish Trails project, which is being developed as discussed above. However, the first mortgage of $1,150,000 is in default and the Company is considering an option of surrendering the deed in lieu of foreclosure.

Liquidity and Capital Resources

At September 30, 2008 our cash position was $1,119.

From time to time we need working capital when we do not have funds to pay for lot development or general and administrative expenses. During the twelve months ended September 30, 2007, our chief financial officer and Falcon Ridge Development LLC (a related party) has loaned us funds for us to meet some of our obligations and to continue working on platting and preparing lots for home building. In May and June of 2008 the Company raised $207,123 in additional working by issuing notes payable. In addition,

In the month of September the Company raised $15,000 of working capital by issuing two notes payable of which $5,000 was loaned by a director of the Company. With increasing losses and the continued worsening of the economy, the ability of the Company to raise additional working capital is a major concern. Thus, being faced with a working capital shortage we may be required to seek financing which may not be available or, if available, it could be on terms which are cost prohibitive to us.

- 15 -

Most of our costs are incurred in the initial phases of our real estate projects. Our revenue and profitability depends upon our ability to develop, manage and sell real estate projects on a timely basis and to control our costs. We expect that we will develop a more consistent pipeline of activity as we mature and, thereby, a more consistent source of revenues and profit. If we succeed in this effort and generate sufficient revenues, we will expect to be profitable. However, we cannot assure that we will be profitable or that we can raise sufficient capital to succeed.

We do not intend to pay dividends for the foreseeable future. We do not expect our revenues to be impacted by seasonal demands.

Recently Issued Accounting Pronouncements

We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position or cash flows.

Critical Accounting Policies

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require our most difficult, subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These critical

accounting policies relate to long lived assets, contractual adjustments to revenue, and contingencies and litigation. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could impact on our future financial conditions or results of operations.

(b) Off-Balance Sheet Arrangements

We have no Off-Balance Sheet Arrangements

- 16 -

Item 8. Finanacial Statements and Supplementary Data

FALCON RIDGE DEVELOPMENT INC.

Consolidated Financial Statements

September 30, 2008

F - - 1

FALCON RIDGE DEVELOPMENT, INC,

Index to Financial Statements

		Page


Balance Sheet at September 30, 2008 and 2007		F-3

Statements of Operations for the for the twelve months
	ended September 30, 2008 and September 30, 2007	F-4

Statements of Stockholders' Deficit for the twelve months
	ended September 30, 2008 and September 30, 2007	F-5

Statements of Cash Flow for the for twelve months
	ended September 30, 2008 and September 30, 2007	F-6

Notes to Financial Statements		F-7

F - - 2

MOORE & ASSOCIATES, CHARTERED

ACCOUNTANTS AND ADVISORS

PCAOB REGISTERED

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Falcon Ridge Development, Inc.

We have audited the accompanying consolidated balance sheets of Falcon Ridge Development, Inc. as of September 30, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Falcon Ridge Development, Inc. as of September 30, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company experienced significant operating losses during 2008 and 2007, of $4,572,620 and $1,290,190 respectively. In addition the Company has stockholders’ deficit of $1,105,056 as of September 30, 2008. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Moore & Associates, Chartered

Moore & Associates Chartered

Las Vegas, Nevada

January 13, 2009

6490 West Desert Inn Rd, Las Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501

F - - 3

FALCON RIDGE DEVELOPMENT, INC.

CONSOLIDATED BALANCE SHEET

	September 30,			September 30,
	2008			2007

Assets

Cash	$	1,119		$	74,521
Fixed assets, net of accumulated depreciation		45,211			32,787
Real estate held for development and sale		3,191,570			3,175,984

Total assets	$	3,237,900		$	3,283,292

Liabilities and Stockholders' Deficit

Liabilities

Accounts payable	$	657,428		$	444,523
Notes payable related parties		1,154,766			1,136,074
Notes payable		1,569,123			1,350,000
Retainage payable		90,000			90,000
Accrued interest		363,430			120,216
Accrued expenses		23,209			2,587
Convertible Preferred stock Series B , $.001 par value, 400,000 shares
authorized, 160,000 shares outstanding; liquidation value $485,000		485,000			485,000
Total liabilities		4,342,957			3,628,400

Stockholders' Deficit

Convertible Preferred stock, $.001 par value; 1,000,000 shares authorized:
Preferred stock, Series A, $.001 par value,
400,000 shares authorized, 160,000 shares issued and
outstanding , aggregate liquidation preference of $400,000.		400,000			400,000
Common stock, $.001 par value, 900,000,000 shares
authorized, 47,315,917 and 18,459,337 shares issued and
outstanding respectively		47,316			18,459
Additional paid-in capital		5,886,152			2,013,447
Unexpired warrants		(88,890	)		-
Accumulated deficit		(7,349,634	)		(2,777,014	)

Total Stockholders' deficit		(1,105,056	)		(345,108	)

Total Liabilities and Stockholders' Deficit	$	3,237,900		$	3,283,292

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

F - - 4

FALCON RIDGE DEVELOPMENT, INC,

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended			Year Ended
	September 30,			September 30,
	2008			2007

Net sales	$	93,281		$	32,017

Expenses:
Payroll related expenses		105,904			175,202
Depreciation		9,359			6,308
Consulting and stock-based compensation		3,805,912			430,468
Selling, general and administrative expenses		390,582			571,646

Total expenses		4,311,757			1,183,624

Other income (expense):
Interest expense		(354,143	)		(138,583	)

Total other income and (expense)		(354,143	)		(138,583	)


Loss before provision for income taxes		(4,572,620	)		(1,290,190	)
Income taxes		-			-

Net Loss	$	(4,572,620	)	$	(1,290,190	)



Loss per share	$	(0.132	)	$	(0.070	)



Weighted average number of shares outstanding		34,560,126			18,459,337

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

F - - 5

FALCON RIDGE DEVELOPMENT, INC,

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

										Common			Additional
		Preferred Stock								Stock			paid-in		Unexpensed			Accumulated
		Shares		Par value			Shares			Par value			capital		warrants			deficit			Total





Balance December 31, 2005				$	400,000			3,761,312		$	752,262		$	899,420	$	-		$	(1,068,850	)	$	982,832
Stock issuance for Cash			194,000		485,000			-			-			-		-			-			485,000
Reclassified to liabilities			-		(485,000	)		-			-			-		-			-			(485,000	)
Loss			-		-			-			-			-		-			(417,974	)		(417,974	)

	Balance September 30, 2006		354,000		400,000			3,761,312			752,262			899,420		-			(1,486,824	)		564,858

	Reclass common stock and APIC		-		-			(79	)		(748,501	)		748,501		-			-			-
	Issuance of common stock		-		-			14,698,104			14,698			365,526		-			-			380,224
	Net loss 9-30-2007		-		-			-			-			-		-			(1,290,190	)		(1,290,190	)


Balance September 30, 2007			354,000		400,000			18,459,337			18,459			2,013,447		-			(2,777,014	)		(345,108	)

	Stock issued for service							28,650,000			28,650			2,860,221								2,888,871
	Stock issued for debt							206,580			207			10,102								10,309
	Warrants issued with notes payable													115,090		(88,890	)					26,200
	Warrants issued for service													887,292		-						887,292
Net loss 09-30-08																			(4,572,620	)		(4,572,620	)


Balance September 30, 2008			354,000	$	400,000			47,315,917		$	47,316		$	5,886,152	$	(88,890	)	$	(7,349,634	)	$	(1,105,056	)

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

F - - 6

FALCON RIDGE DEVELOPMENT, INC,

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended			Year Ended
	September 30,			September 30,
	2008			2007
Cash flows from operating activities:
Net income/loss	$	(4,572,620	)	$	(1,290,190	)
Adjustments to reconcile net loss to net cash
Stock issued for services		2,888,871			-
Warrants expensed		913,492			-
used by operating activities:
Depreciation		9,359			6,308
Changes in operating assets and liabilities,

Real estate held for development and sale		(15,586	)		(332,544	)
Other current assets		-			220
Accounts payable		212,905			108,333
Accrued interest		243,214			120,216
Accrued liabilities		20,930			(43,208	)
Stock based compensation		10,000			(10,000	)
		-			-
		-			-
Net cash (used in) provided by
operating activities		(289,435	)		(1,440,865	)

Cash flows from investing activities:

Acquisition of fixed assets		(21,782	)		(2,713	)

Net cash used in
investing activities		(21,782	)		(2,713	)

Cash flows from financing activities:
Increase in related party notes payable		18,692			154,432
Increase notes payable		219,123			979,689
Notes converted to common stock		-			380,224
Proceeds from shares to be issued		-			-
Stock based compensation		-			-

Net cash from financing activities		237,815			1,514,345


Net change in cash		(73,402	)		70,767

Cash:
Beginning of period		74,521			3,754

End period	$	1,119		$	74,521

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes	$	-		$	-
Interest	$	20,150		$	138,583

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

F - - 7

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

Organization, Shell Merger and Principles of Consolidation

Organization

Falcon Ridge Development, Inc. ("FRDI" or the "Company") is engaged in the real estate industry and acquires tracts of raw land and develops them into communities. Including, lots for sale to homebuilders and homes for sale to the public. These operations are predominantly located in the City of Rio Rancho, New Mexico and Belen, New Mexico. Since inception, the Falcon Ridge Development, Inc. has developed one property known as Sierra Norte.

Going Concern

The Company experienced significant operating losses during 2008 and 2007, of $4,572,620 and $1,290,190 respectively. In addition the Company has a stockholders’ deficit of $1,105,056 as of September 30, 2008. The Company incurred a negative cash flow from operating activities of $289,435 for the year ended September 30, 2008, and implementation of its business plan is dependent upon its ability to raise additional capital. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management believes that it will be successful in raising additional capital and that it has assets available to securitize debt should the Company look to borrow. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of the recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

Shell Merger

Falcon Ridge Development, Inc. (the "Company" or “we” or “us”) is a Nevada corporation. Our principal business address is 5111 Juan Tabo Boulevard N.E., Albuquerque, New Mexico 87111. We changed the domicile of the company from Colorado to Nevada on or about July 6, 2005 and changed our name from PocketSpec Technologies, Inc. to Falcon Ridge Development, Inc. We have various subsidiaries, Sierra Norte, LLC ("Sierra Norte"), Spanish Trails, LLC ("Spanish Trails"), Falcon Ridge Financial LLC., Falcon Ridge Realty LLC., Falcon Ridge Investments LLC. We operate in the real estate industry and services to the real estate industry. We acquire tracts of raw land and develop them into communities. Often these communities include residential, commercial, industrial and retail components to them. We plan to offer our own housing product in these and other communities developed by other developers. In addition, in 2006 we completed the formation of various wholly owned subsidiaries including Falcon Ridge Financial LLC, Falcon Ridge Realty LLC and Falcon Ridge Investments LLC. Falcon Ridge Financial places and brokers real estate mortgages of all types but primarily concentrates on residential mortgages. Falcon Ridge Realty is our resale division and concentrates on selling homes for the general public under listing and sale agreements with individual clients. Falcon Ridge Investments, LLC is a vehicle for creating and operating private placement offerings as well as other type of investment vehicles’.

F - - 8

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

Principles of Consolidation

The consolidated financial statements include the accounts of Falcon Ridge Development, Inc. and its wholly owned subsidiaries SNLLC and Spanish Trails LLC (STLLC) (together, the "Company"). Intercompany transactions and balances have been eliminated in the consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain prior-period amounts have been reclassified for comparative purposes to conform to the current period presentation.

STLLC decided, in the fourth quarter of 2005, that the $471,908 Falcon Ridge Development, LLC ("FRLLC") recorded as a contribution to capital during the third quarter of 2005 in the acquisition of the Cordova Property should be repaid to FRLLC. Therefore, the Company reclassified the $471,908 from additional paid in capital to indebtedness to related parties in the accompanying consolidated financial statements.

Revenue Recognition on Sales of Real Estate

The profit on sales of real estate is accounted for in accordance with the provisions of SFAS No. 66, "Accounting for Sales of Real Estate." The Company recognizes revenue from the sale of real estate at the time the sale is closed and the title is transferred from the Company to the buyer.

Cash and Cash Equivalents

The Company considers all highly liquid securities with original maturities of three months or less when acquired to be cash equivalents. The Company had no cash equivalents at September 30, 2008.

Real Estate Held for Sale

The carrying value of land and development includes the initial acquisition costs of land, improvements thereto, and other costs incidental to the acquisition or development of land. These costs are allocated to properties on a relative sales value basis and are charged to costs of sales as specific properties are sold. Due to the nature of the business, land and development costs have been classified as an operating activity on the consolidated statement of cash flows.

F - - 9

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

Impact credits received from the negotiated settlement with the City of Rio Rancho are offset against land development costs.

The company reviews the fair value less costs to sell of land under development at the end of each reporting cycle and where the carrying value of the asset is not recoverable and exceeds its fair value an impairment loss will be recognized.

Interest

The Company capitalizes interest costs to real estate held for resale during development and construction. Capitalized interest is charged to cost of sales as the related lots are delivered to the buyer.

Fixed Assets and Depreciation

Fixed assets are recorded at cost. Expenditures that extend the useful lives of assets are capitalized. Repairs, maintenance and renewals that do not extend the useful lives of the assets are expensed as incurred. Depreciation is provided on the straight-line method over the following estimated useful lives: software, 5

years; equipment, 5 years.

Earnings (loss) per Common Share

Basic net income per share is computed by dividing the net income available to common shareholders (the numerator) for the period by the weighted average number of common shares outstanding (the denominator) during the period. The computation of diluted earnings is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares had been issued.

At September 30, 2008 and September 30, 2007, there was no variance between basic and diluted loss per share as the convertible preferred stock outstanding, if converted, would be anti-dilutive.

Impairment or Disposal of Long-Lived Assets

The Company evaluates real estate projects and other long-lived assets on an individual basis for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" and SFAS 67 “Accounting for Costs and Initial Rental Operations of Real Estate Projects.” An asset is considered impaired if its carrying amount exceeds the future net cash flow the asset is expected to generate or its net realizable value. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair market value. We assess the recoverability of our real estate projects, long-lived and intangible assets by determining whether the unamortized balances can be recovered through undiscounted future net cash flows of the related assets. The amount of impairment, if any, is measured based on projected discounted future net cash flows. When impairment exists the carrying value of the asset will be reduced by an allowance for the amount of the impairment. There is no impairment in 2008 or 2007.

F - - 10

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

Stock-based Compensation

The Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS 123R), effective January 1, 2007. SFAS 123R requires the recognition of the fair value of stock-based compensation in net income. The Company has elected the modified prospective transition method for adopting SFAS 123R. Under this method, the provisions of SFAS 123R apply to all awards granted or modified after the date of adoption. In addition, the unrecognized expense of awards not yet vested at the date of adoption, determined under the original provisions of SFAS 123, shall be recognized in net income in the periods after the date of adoption. The Company had no unvested awards at September 30, 2008 and no awards were granted during the year ended September 30, 2007.

Income Taxes

Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets that are not expected to be recovered from future operations.

Financial Instruments and Concentration of Credit Risk

The carrying amounts of the Company's financial assets and liabilities, including cash, accounts payable, and preferred shares with mandatory redemption at September 30,2007, approximate fair value because of the short maturity of these instruments. The carrying amount of the Company's notes payable approximates fair value at September 30, 2007, since the notes are at floating rates or fixed rates that approximate current market rates for notes with similar risks and maturities.

Preferred Shares subject to mandatory redemption

The features of our Series B Preferred Stock within SFAS 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. Due to redemption features of the securities, the preferred shares are being classified as a liability in these financial statements. The securities give the holder the option of a net cash settlement or a settlement in common share based on a conversion rate. The settlement amount under SFAS 150 at September 30, 2007 would have been 640,264 shares at a bid price of $ 1.01 per share or $ 646,666.

New Accounting Standards

SFAS No. 151, "Inventory Costs," is effective for fiscal years beginning after June 15, 2005. This statement amends the guidance in Accounting Research Bulletin ("ARB") No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). The adoption of SFAS 151 did not have a material impact on the Company's financial statements.

F - - 11

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

SFAS No. 152, "Accounting for Real Estate Time-Sharing Transactions," is effective for fiscal years beginning after June 15, 2005. This statement amends SFAS No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in American Institute of Certified Public Accountants Statement of Position 04-2, Accounting for Real Estate Time-Sharing Transactions. The adoption of SFAS No. 152 did not have a material impact on the Company's

financial statements.

SFAS No. 123(R), "Share-Based Payment," replaces SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees." This statement requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. The Company is required to apply this statement in the first interim period that begins after December 15, 2005. The adoption of SFAS No. 123(R) did not have a material impact on the Company's financial.

SFAS No. 153, "Exchanges of Non-monetary Assets" - an amendment of APB Opinion No. 29, is effective for fiscal years beginning after June 15, 2005. This statement addresses the measurement of exchange of non-monetary assets and eliminates the exception from fair-value measurement for non-monetary exchanges

of similar productive assets in paragraph 21(b) of APB Opinion No. 29, "Accounting for Non-monetary Transactions," and replaces it with an exception for exchanges that do not have commercial substance. The adoption of SFAS No. 153 did not have a material impact on the Company's financial statements.

FIN No. 46(R) revised FIN No. 46, "Consolidation of Variable Interest Entities," requiring the consolidation by a business of variable interest entities in which it is the primary beneficiary. The adoption of FIN No. 46 did not have an impact on the Company's financial statements.

The EITF reached a consensus on Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share" ("EITF 04-8"), which addresses when the dilutive effect of contingently convertible debt instruments should be included in diluted earnings (loss) per share. EITF 04-8 is effective for reporting periods ending after December 15, 2004. The adoption of EITF 04-8 did not have an impact on diluted earnings (loss) per share.

(2) Related Party Transactions

The Company conducts its operations in a building rented by an affiliate. During the twelve months ended September 30, 2008 and September 30, 2007, the Company recorded rent expense of $ 66,900 and $59,500, respectively.

The Company's affiliate pays certain expenses on its behalf. The Company reimburses these expenses paid on its behalf by the affiliate at actual cost. Overhead expenses and indirect labor incurred by the affiliate are allocated to the Company based on management-approved estimates of time and effort. The Company reviews the estimated rate from time-to-time.

F - - 12

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

Indebtedness to related parties consisted of the following at September 30, 2008:

Note payable to Karen Duran &/or Fred Montano, bearing interest at Published Prime plus 3%, payable in monthly installments of $20, 000.00 plus interest commencing on October 1, 2007. The note is secured by the land and development costs of the Spanish Trails development. To September 30, 2008, no principle or interest payments have been made.

Total financing under the agreement is $1,136,074.

Karen Duran and Fred Montano have advanced the Company funds for working capital purposes during the year. As of September 30, 2008, the amounts so advanced total $13, 692. The advances are not interest bearing.

On August 25, 2008, the Company borrowed $5,000 for working capital, from Troy Duran, director of the Company and the brother of Karen Duran. The note is due February 5, 2009 and has an interest rate of 11%.

As of September 30, 2008, total indebtedness to related parties was $1,154,766. As of September 30, 2007 related party indebtedness was $1,136,074, which consisted of the secured note to Karen Duran &/or Fred Montano.

(3) Fixed Assets

Fixed assets consist of the following at September 30, 2008 and 2007:

	2008		2007
Website development	$	26,030	$	26,030
Software		6,319		6,319
Equipment		10,694		10,694
Network computer system		21,782		-
Fixed asset totals		64,825		43,043
Accumulated depreciation		19,614		10,256
Fixed assets, net	$	45,211	$	32,787

For the twelve month periods ended September 30, 2008 and September 30, 2007, the Company recorded depreciation expense of $9,359 and $6,308 respectively.

(4) Real Estate Operations

The Company completed development of Sierra Norte I and II subdivisions in Rio Rancho, New Mexico in 2005. The Company is in the process of developing approximately 139 +/- acres of raw land in the Belen, New Mexico referred to as "Spanish Trails." Spanish Trails consists of 139 +/- acres of land which is being re-plotted into approximately 530 lots.

Real estate held for resale, consists of the following at September 30, 2008 and 2007:

	2008		2007

Real estate held for development and sale	$	3,919,570	$	3,175,984

F - - 13

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

Costs incurred during fiscal 2008 were primarily for lot development.

(5) Notes Payable

Note payable consists of the following at September 30, 2008:

-	Note payable Freedom Financial, with interest payable at 10% per annum,conversation rights at maturity with 2% renewal fee, Conversation option at $0.75 of current price of the Company’s common stock.

-	The principal balance on this note is $200,000.

Note payable Metro Loan Corp, with interest at 12 percent interest only payments in monthly installments of $11,100.00 collateralized by a First Mortgage due August 1, 2008. Terms of the Loan Agreement describe an Extension Option. Terms of the Extension Option are for two additional six (6) month periods at the higher of (i) eighteen percent (18%) interest or (ii) Prime Rate plus 1,000 basis points. Option is NOT AUTOMATIC and is at the discretion of the Lender. Fred Montano is a Guarantor of this mortgage.

-	The mortgage was due August 1, 2008. Its extension is at the discretion of the mortgage holder who has not agreed to extend at the time of this filing. The Company has stopped making payments and is in the process of evaluating its options, including deed in lieu of foreclosure.

-	Total principal amount of the note is $1,150,000

During the three month period ending June 30, 2008, the Company issued several notes with warrants. The notes bear interest compounded monthly at 10% for the first sixty days, 12% for the next 12 months, and 18% interest thereafter. The maturity dates and amounts are as follows:

Maturity Date	Principal Amounts
May, 2009	$	70,000
October, 2009		60,000
July, 2010		10,000
May, 2011		67,123
Total	$	207,123

In September of 2008, the issued a note at an interest rate of 11% due February 5, 2009.

The principal amount of the note is $10,000.

F - - 14

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

(6) Warrants

On October 8, 2007, the Company issued 2,000,000 warrants with an estimated value of $ 887,809 to Redwood Consulting LLC. The warrants have an exercise price of $0.50 per share, the warrants become exercisable either twelve months after the underlying common stock issuable in the exercise of these warrants is declared registered and effective by the SEC in the Company’s current SEC registration statement; or 5:30 P.M. Pacific Daylight Savings Time on October 8, 2015. The warrants expire 5:30 PM Pacific Daylight Savings Time on October 8, 2015, or twelve months after becoming exercisable. The Company has recorded consulting fees relating to these options of $887,809. As of the date of this report, none of the warrants have vested.

The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with dividend yield of 0%; expected volatility of 169%; risk-free interest rate of 4.12%; and expected life of 8 years.

During the three month period ending June 30, 2008, the Company issued 1,344,000 warrants with an estimated value of $ 106,590 to several shareholders with notes in the amount of $207,123. The warrants have an exercise price of $0.05 per share, the warrants become exercisable at the effective date. The warrants expire thirty months after becoming exercisable. The Company has recorded interest expense relating to these options of $17,700. All of the warrants have vested.

The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with dividend yield of 0%; expected volatility of 135%; risk-free interest rate of 4.12%; and expected life of 2.3 years.

A summary of stock option and warrant activity for all plans follows:

	Options Outstanding		Warrants Outstanding		Exercise price
Granted		-		5,244,000	$	.05-.050
Exercised		-		-
Canceled		-		+

Balance, September 30, 2008		-		5,224,000	$	.05-.50

Following is a summary of the status of fixed options and warrants outstanding at September 30,2008:
	Outstanding Options and Warrants			Exercisable Options and Warrants
Exercise Price Range	Number	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price	Number Exercisable	Weighted Average Exercise Price
$ 0.50	2,000,000	7.2 years	$ 0.50	-	$ 0.00
0.05	3,244,000	2.0 years	$ 0.05	-	$0.05

F - - 15

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

(7) Income Taxes and Change in Estimate

A reconciliation of U.S. statutory federal income tax rate to the effective rate follows for the period ended September 30, 2008:

U.S. statutory federal rate	20.00	%
State income tax rate	4.80	%
Net operating loss for which no tax benefit is currently available	-24.80	%

For the year ended September 30, 2008 the company estimated that the company would have a loss for income taxes purposes and therefore reported no provision

(8) Shareholders' Deficit

Preferred Stock

On July 20, 2005, the Company established Series A Convertible Preferred Shares and authorized 400,000 shares. The preferences are as follows:

Shares are non-cumulative with a preference over common shares if and when a dividend is declared.

Shares are convertible into common stock at any time on the basis of 100 common shares for 1 share of preferred stock. This conversion rate is subject to adjustments for forward or reverse splits or other capitalizations. The option was of no intrinsic benefit, at the commitment date, to the preferred shareholder.

Shares have a priority over common shares upon liquidation.

Shares are callable at any time by the Company at the original purchase price. The Preferred Shareholders will have thirty days thereafter to convert to common stock.

9) Series B Preferred Shares

The features of our Series B Preferred Stock and determined that it falls within SFAS 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. Due to redemption features of the securities, the preferred shares are being classified as a liability in these financial statements. The securities give the holder the option of a net cash settlement or a settlement in common share based on a conversion rate. The value of the liability is fixed at the stated value of $485,000. However, the number of common shares into which the preferred shares are convertible is inversely related to changes in the Company’s common stock. Although the potential conversion could conceivably require the Company to issue a number of shares in excess of its authorized limit, the Company does not believe that its liability recorded at September 30, 2007, associated with the Series B preferred stock is appropriate in that such obligation would not exceed the aggregate stated value.

On April 15, the Company established Series B Convertible Preferred Shares and authorized 400,000 shares. The preferences are as follows:

F - - 16

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

Shares are non-cumulative with a preference over common shares if and when a dividend is declared.

Investor will receive a dividend of 12% per annum payable monthly for a period of eighteen months from the date of purchase.

Shares are convertible into common stock at any time on the basis of 75% of the average current bid price for the preceding 20 days of the Company's receipt of notice to convert. This conversion rate is subject to adjustments for forward or reverse splits or other capitalizations. The option was of no intrinsic benefit, at the commitment date, to the preferred shareholder.

Shares have a priority over common shares upon liquidation.

Shares are callable by the Company at any time after 12 months of issuance of Preferred B shares at the original purchase price. The Preferred Shareholders will have sixty days thereafter to convert to common stock. The shares will be repurchased after eighteen months for the original issue price.

(10) Recent sales of unregistered securities:

On June 29, 2007 the company issued 3,660,346 shares of restricted stock as compensation for future services related to advertising, directors' fees, and financial and administrative services performed by third parties. None of the issued shares contain warrants or option rights.

On October 8, 2007 the Company issued 350,000 restricted shares at $0.45 to Redwood Consulting, LLC pursuant to their consulting contract valued at $ 157,500.

On February 5, 2008 the Company issued 10,000,000 restricted shares at $0.10 to Fred Montano for his services valued at $1,000,000.

On February 5, 2008 the Company issued 10,000,000 restricted shares at $0.10 to Karen Duran for her services valued at $1,000,000.

On February 5, 2008 the Company issued 115,000 restricted shares at $0.10 to Gerry Berg for his services valued at $11,500.

On February 5, 2008 the Company issued 250,000 restricted shares at $0.10 to Troy Duran for his services valued at $25,000.

On February 5, 2008 the Company issued 250,000 restricted shares at $0.10 to Sebastian Ramirez for his services valued at $25,000.

On February 5, 2008 the Company issued 2,250,000 restricted shares at $0.10 to Periscope for consulting services valued at $225,000.

On February 5, 2008 the Company issued 55,000 restricted shares at $0.10 to Robert Malasek for consulting services valued at $5,500.

On March 3, 2008 the Company issued 358,000 restricted shares at $0.10 to Bismark Consulting for consulting services valued at $35,800.

F - - 17

FALCON RIDGE DEVELOPMENT, INC.

Notes to Consolidated Financial Statements

On March 17, 2008 the Company issued 750,000 restricted shares at $0.10 to Periscope Management for consulting services valued at $75,000.

On March 17, 2008 the Company issued 3,000,000 restricted shares at $0.10 to Tamarack Corporation for consulting services valued at $300,000.

(11) Subsequent Events

In October of 2008 the company issued the following S-8 common shares:

2,222,222 and 500,000 shares were issued to consultants for services valued at $0.0045 and $0.006 per share respectively for a combined value of $13,000.

1,416,666 shares were issued to employees for payroll. These shares were valued at $0.008 per share or a total value of $11,333.

4,400,000 shares were issued to employees under an Employee Stock Option Plan. The awarded shares vested immediately and the option price per share was $0.008 or a total value of $35,200.

1,200,000 shares were issued to a consultant. These shares were valued at $0.006 per share or a total value of $7,200.

In October of 2008 the Company issued the following restricted common shares:

21,000,000 shares were issued to officers and directors as a stock bonus. These shares were valued at $0.003 per share or a total value of $63,000.

F - - 18

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

We did not have any disagreements on accounting and financial disclosures with our present accounting firm during the reporting period.

On February 9, 2007 we appointed Moore and Associates as our accountant. Our agreement with our prior accountants expired.

Epstein Weber & Conover, PLC as our accountant rendered an opinion on our audit for the nine months ended September 30, 2006. There were no disagreements between us and Epstein Weber & Conover, PLC.

Item 9A. Controls and Procedures

Management is responsible is responsible for establishing and maintaining adequate internal control over financial reporting. As of the end of the period covered by this report, our chief executive officer and our chief financial officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15b under the Securities Exchange Act of 1934. Based on their review of our disclosure controls and procedures, they have concluded that our disclosure controls and procedures are effective in timely alerting each of them to material information relating to us that is required to be included in our periodic SEC filings. Since our Company has been acquired as a result of the Sierra Norte acquisition discussed above, and a new board and management has been installed, we have been able to timely file our Form 10-QSBs and our Form 8-Ks. Management is in the continuing process of analyzing and adopting new policies and procedures to improve the design and operations of our disclosure controls, We acknowledge that a change with respect to financial controls has been made to alert us with respect to funding provided by related parties and that the changes in disclosure controls, particularly recognizing Form 8-K events, are ongoing. We expect these changes in internal controls will have a significant effect on our disclosure controls after the evaluation date and the date of this report.

Changes to Internal Controls include a reorganization of available staff to better segregate duties, acquisition and implementation of more sophisticated accounting software and a personnel plan to hire additional accounting and administrative staff. We continue to schedule training for employees and management in critical areas to enhance their ability to perform the duties assigned to them.

Item 9B. Other Information

There is no information we were required to report on Form 8-K during our fourth fiscal quarter of the year ended September 30, 2008 that was not so reported.

- 17 -

Part III

Item 10. Directors, Executive Officers, Promoters, and Control Persons; Compliance with Section 16(a) of the Exchange Act

The following reporting persons failed to Forms 4 and 5 required under Section 16(a) of the Exchange Act for the year ended September 30, 2008 as follows:

Reporting Person	Number of Forms not filed	Transactions not reported
Fred M Montano	One Form 4 and one Form 5	One transaction not reported on Form 4.
Karen Y. Duran	One Form 4 and one Form 5	One transaction not reported on Form 4.
Sebastian Ramirez	One Form 4 and one Form 5	One transaction not reported on Form 4.
Troy Duran	One Form 4 and one Form 5	One transaction not reported on Form 4.

The following table provides information regarding our directors and executive officers and key employees of Falcon Ridge Development, Inc. as of September 30, 2008:

Name	Age	Position

Fred M. Montano CEO	57	Chief Executive Officer, President and
		Chairman of the Board

Karen Y. Duran CFO	66	Chief Financial Officer and Secretary/Treasurer

Sebastian Ramirez	57	Director

Troy Duran	43	Director

Fred Montano, has been our chairman of the board, chief executive officer and president since May 2005. He also was our treasurer from May to June, 2005. Mr. Montano holds a New Mexico real estate broker’s license. Since the late 1980’s, he has concentrated on identification and acquisition of developable properties, engineering land plans, obtaining entitlements for projects, and managing the construction and sale of finished lots to builders. Until 1997, he performed this service for developers and builders; thereafter, he acted on his own behalf as managing member of Falcon Ridge Development, LLC, a private New Mexico real estate development company. From 1977 to 1989, he acted as a broker in commercial real state sales and management of income producing properties and owned and operated a fee property management company. From 1977 to 1980, he worked as a residential sales agent.

Karen Duran, has been our secretary since May 2005 and our treasurer and chief financial officer since June 2005. Since 1997, she has been an owner of Falcon Ridge Development, LLC. Before that, she did real estate development on behalf of client home builders. She is a licensed New Mexico real estate broker. Ms. Duran is the mother of Troy Duran, a director of Falcon Ridge.

Troy Duran, has been a director since June 2005. Mr. Duran is a communications and marketing specialist, with more than 23 years experience in broadcast advertising. He has owned a radio production company, specializing in imaging and voice-over work, since 2002. From 2000 to 2002, he was the production director for KMOX, news talk radio in St. Louis, Missouri. Mr. Duran is the son of Ms. Duran, our secretary, treasurer and chief financial officer.

- 18 -

Sebastian Ramirez, has been a director since June 2005. Since 1999, he has been president of Sebastian R. Ramirez Advisors, a consulting firm specializing in market research and analysis, market development, and strategic planning. Since 2004, he has also been a partner in Cascade Design and Development, a company offering professional architectural, engineering, and planning services to public and private sectors in New Mexico. From 1993 to 1998, he was president of Rampart Development Corporation, a diversified firm offering full service engineering, land development, and financial planning services to public and private sector clients in New Mexico. From 1996 to 2001, Mr. Ramirez served on the board of trustees of the University of New Mexico. From 1991 to 1993, he served on the New Mexico Quincentenary Commission. From 1991 to 1992, he was on the advisory committee of the New Mexico Border Development Authority. Mr. Ramirez holds a bachelor of arts in political science from the University of New Mexico, and has done post-graduate work on a master’s degree from that same institution.

Our Company does not have an audit committee.

We are not required to have an audit committee and we do not have an independent financial expert. Our chief operating and financial officers oversee daily operations and report directly to the board. Currently, we are conducting a search for an independent financial expert to serve on the board and form an audit committee.

Item 11. Executive Compensation

The following table sets forth information regarding the compensation paid by Falcon Ridge Development to each of the following individuals for services rendered in all capacities for the years indicated:

SUMMARY COMPENSATION TABLE
					Long Term Compensation
		Annual Compensation			Awards		Payouts
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)
Name and Principle Position (1)	Year	Salary ($)	Bonus ($)	Other Annual Comp- sensation ($)	Restricted Stock Award(s) ($)	Securities Underlying Option/SARs (#)	LTIP Payouts ($)	All Other Comp- sensation ($)
Fred M. Montano CEO	2008 2007 2005	$0.00 $23,000 $ 4,000	$1,000,000 $0.00 $0.00
Karen Y. Duran, CFO	2008 2007 2005	$0.00 $23,000 $24,000	$1,000,000 $0.00 $0.00

______________

(1) See Item 9 above which describes the principal positions of the named executives.

Compensation of Directors

Each of the outside directors, Troy Duran and Sebastian Ramirez, received compensation in the form of 250,000 shares of restricted common stock valued at $$0.10 per share or a total value of $25,000 per director.

- 19 -

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Our shareholders have not authorized the issuance of any common stock or preferred stock under equity compensation plans. Nor do we plan on requesting the shareholders to approve such compensation arrangements.

The following table sets forth certain information regarding the beneficial ownership of our common stock as of September 30, 2008, for (i) each stockholder who is known by us to own beneficially more than 5% of our common stock, (ii) each director and executive officer, and (iii) all of our directors and executive officers as a group. Except as otherwise indicated, we believe, based on information furnished by the persons named in this table, that such persons have direct interest in and voting and investment power with respect to all shares of common stock beneficially owned by them, subject to community property laws, where applicable.

As of September 30, 2008, there were 47,315,917 shares of our common stock outstanding and 160,000 shares of our Series A convertible preferred stock outstanding. The convertible preferred stock is convertible at the option of the holder into Ѕ to 1 a share of common stock. The convertible preferred stock does not have a dividend but has a preference in liquidation over our common stock.

As of September 30, 2008, there were 194,000 shares of our Series B convertible preferred stock outstanding. The Series B convertible preferred stock is convertible at the option of the holder into common stock at 75% of the average current bid price for the preceding 20 days of the Company's receipt of notice to convert. The Series B convertible preferred stock is paid interest at 12% per annum. The convertible preferred stock does not have a dividend but has a preference in liquidation over our common stock.

	Number of Shares			Percentage
Stockholder	Common	Preferred	Common	Preferred

Fred M. Montano(1)(2)	13,291,250	0	28.09%	0%

Karen Y. Duran (1)(2)	14,430,921	0	30.50%	0%

Sebastian Ramirez(1)	500,000	0	1.59%	0%

Troy Duran(1)	750,000	0	1.59%	0%

Marxton Consulting (3)	3,000,000	0	6.37%	0%

All executive officers and directors as a group	29,222,171	0	61.76%	0%

_______________

(1)

The business address is 5111 Juan Tabo Boulevard N.E., Albuquerque, New Mexico 87111.

- 20 -

(2)

Ms. Duran and Mr. Montano are co-owners of Real Estate Services, Inc., which holds of record 82,064 (post reverse split) shares of common stock. By virtue of Ms. Duran's 50% ownership of Real beneficial owner of all of the shares of Common Stock held of record by Real Estate Services, Inc. However, she expressly disclaims ownership of 50% of the shares of the common stock held of record by Real Estate Services, Inc. By virtue of Mr. Montano's 50% ownership of Real Estate Services, Inc. and his position with it as an officer, Mr. Montano may be deemed to be the beneficial owner of all of the shares of common stock held of record by Real Estate Services, Inc. However, he expressly disclaims ownership of 50% of the shares of the common stock held of record by Real Estate Services, Inc.

(3)

Marxton Consulting, 700 Gardenview Ct, Ste 205, Encinitas, CA 92024

Item 13. Certain Relationships and Related Transactions

On May 20, 2005, we completed an acquisition transaction. We acquired Sierra Norte, LLC, a New Mexico limited liability company, which became our wholly-owned subsidiary. Sierra Norte, LLC is a land development company in the Albuquerque, New Mexico area. Our president and director, Mr. Fred Montano, and our secretary/treasurer, Ms. Karen Duran, members of Sierra Norte, LLC, received, respectively, 165,000 (post reverse split) and 135,000 (post reverse split) shares of our common stock as a result of the acquisition. Please see the discussion under “Change of Control,” above. Mr. Troy Duran, one of our directors, is the son of Ms. Karen Duran. He did not receive shares in the acquisition transaction.

On July 6, 2005, we acquired 100% of the ownership of Spanish Trails, LLC, a New Mexico limited liability company. In exchange for that ownership, we issued 3,074,410 (post reverse split) shares of our common stock, 1,197,186 of which were issued to our president and a director, Fred Montano, and 979,671 of which were issued to our secretary, treasurer and chief financial officer, Karen Duran. Mr. Troy Duran, one of our directors, is the son of Ms. Karen Duran. He did not receive shares in the transaction.

- 21 -

Item 14. Principal Accountant Fees and Services

The Company's principal accountant, Moore & Associates, Las Vegas NV, billed us $ 9,000 in fees during the year ended September 30, 2008,all of which were for audit fees. The Company's principal accountant Epstein Weber & Conover LLP for the year ended September 30, 2007 billed us $ 10,150 for audit fees. They billed us $ 4,500 for income tax compliance work and $ 4,355 for audit-related fees.

PART IV

Item 15. Exhibits

Exhibit Number	Description

2.1	Agreement and Plan of Reorganization - Pocketspec Technologies, Inc. and Sierra Norte LLC (a)

2.2	Acquisition Agreement - Pocketspec Technologies, Inc. and Spanish Trails, LLC (b)

3.1	Articles of Incorporation of Falcon Ridge Development, Inc. previously filed.

3.2	Bylaws of Falcon Ridge Development, Inc. previously filed.

3.3	Articles of Organization of Sierra Norte, LLC previously filed.

3.4	Operating Agreement of Sierra Norte, LLC previously filed.

3.5	Articles of Organization of Spanish Trails, LLC previously filed.

3.6	Operating Agreement of Spanish Trails, LLC previously filed.

4.1	Articles of Amendment - Establishment of Series of Preferred Stock previously filed.

10.1	Purchase Agreement - Spanish Trails, LLC and D.R. Horton (Confidential portions of this agreement noted by *** have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality under Rule 24b-2 of the Securities Exchange Act of 1934.) Previously filed.

14.1	Code of Ethics

21.1	List of Subsidiaries

23.1	Consents of experts

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a)*

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a)*

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

99	Additional Exhibits - None

- 22 -

SIGNATURES

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

	FALCON RIDGE DEVELOPMENT, INC.

Date: January 13, 2009	By:	/s/ Fred M. Montano
		Fred M. Montano Chief Executive Officer/Director

	By:	/s/ Karen Y. Duran
		Karen Y. Duran Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Fred M. Montano	Chairman of the Board	January 13 2009
Fred M. Montano	Directors and Chief Executive Officer

/s/ Karen Y. Duran	Chief Financial Officer	January 13, 2009
Karen Y. Duran

/s/ Sebastian Ramirez	Director	January 13, 2009
Sebastian Ramirez

/s/ Troy Duran	Director	January 13, 2009
Troy Duran

- 23 -

EXHIBIT INDEX

Exhibit Number	Description

2.1	Agreement and Plan of Reorganization - Pocketspec Technologies, Inc. and Sierra Norte LLC (a)

2.2	Acquisition Agreement - Pocketspec Technologies, Inc. and Spanish Trails, LLC (b)

3.1	Articles of Incorporation of Falcon Ridge Development, Inc. previously filed.

3.2	Bylaws of Falcon Ridge Development, Inc. previously filed.

3.3	Articles of Organization of Sierra Norte, LLC previously filed.

3.4	Operating Agreement of Sierra Norte, LLC previously filed.

3.5	Articles of Organization of Spanish Trails, LLC previously filed.

3.6	Operating Agreement of Spanish Trails, LLC previously filed.

4.1	Articles of Amendment - Establishment of Series of Preferred Stock previously filed.

10.1	Purchase Agreement - Spanish Trails, LLC and D.R. Horton (Confidential portions of this agreement noted by *** have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality under Rule 24b-2 of the Securities Exchange Act of 1934.) Previously filed.

14.1	Code of Ethics

21.1	List of Subsidiaries

23.1	Consents of experts

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a)*

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a)*

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

99	Additional Exhibits - None

- 24 - -

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	7th grade Good

Falcon Ridge Development (PKSP) Inactive 10-K2008 FY Annual report

Content analysis