Hydrogen Future (HFCO) 10-Q 2009 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedJune 30, 2009

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ________________

Commission file number: 333-138927

EL PALENQUE VIVERO, INC.
(Exact name of registrant as specified in its charter)
Nevada	20-5277531
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
Privada de Tabasco #27, Colonia Maravillas Cuernavaca, Morelos, Mexico  62320
(Address of principal executive offices)
(305) 394-9730
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has 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 Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  o

No  x(Not applicable)

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

Large accelerated filero	Accelerated filero
Non-accelerated filero	Smaller reporting companyx
(Do not check if a smaller reporting company)

1

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes x  Noo

As of August 1, 2009, there were 4,550,000 shares of the issuer’s common stock, par value $0.001, outstanding.

2

EL PALENQUE VIVERO, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009

TABLE OF CONTENTS

		PAGE
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4T.	Controls and Procedures	19
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Submission of Matter to a Vote of Security Holders	20
Item 5.	Other Information	20
Item 6.	Exhibits	20
	SIGNATURES	21

3

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form 10-K filed with the SEC on December 24, 2008. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year ending September 30, 2009.

4

EL PALENQUE VIVERO, INC.

(A Development Stage Company)

INDEX TO INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD OF JUNE 21, 2006 (INCEPTION) TO JUNE 30, 2009

Page(s)

Balance Sheets as of June 30, 2009 (unaudited) and September 30, 2008

6

Statements of Operations for the three and nine months ended June 30, 2009 and

2008, and from June 21, 2006 (Inception) to June 30, 2009 (unaudited)

7

Statement of Changes in Stockholders’ Equity for the period of

June 21, 2006 (Inception) to June 30, 2009 (unaudited)

8

Statements of Cash Flows for the nine months ended June 30, 2009 and 2008
and from June 21, 2006 (Inception) to June 30, 2009 (unaudited)

9

Notes to Interim Financial Statements

10-16

5

El Palenque Vivero, Inc.

(A Development Stage Company)

Balance Sheets

	ASSETS
				As of		As of
				June 30,		September 30,
				2009		2008
				(Unaudited)
CURRENT ASSETS
		Cash and cash equivalents	$	56,195	$	67,302
TOTAL ASSETS			$	56,195	$	67,302
	LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
		Accounts payable and accrued liabilities	$	300	$	3,092
TOTAL LIABILITIES				300		3,092
STOCKHOLDERS’ EQUITY
Capital Stock(Note 3)
		Authorized:
		100,000,000 preferred shares, $0.001 par value
		100,000,000 common shares, $0.001 par value
		Issued and outstanding shares:
		4,550,000 common shares		4,550		4,550
		Additional paid-in capital		97,450		97,450
		Deficit accumulated during the development stage		(46,105)		(37,790)
Total Stockholders’ Equity				55,895		64,210
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	56,195	$	67,302

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

6

El Palenque Vivero, Inc.

(A Development Stage Company)

Interim Statements of Operations

(Unaudited)

										Cumulative from
										Inception
										(June 21, 2006) to
			Three Months Ended June 30,				Nine Months Ended June 30,			June 30,
			2009		2008		2009		2008	2009
REVENUES		$	-	$	-	$	-	$	-	$	-
OPERATING EXPENSES
	Professional fees		2,699		1,812		8,124		8,470		39,048
	General and administrative		49		99		379		6,107		8,075
Total Operating Expenses			2,748		1,911		8,503		14,577		47,123
Other Income (Expense)
	Interest income		28		175		188		668		1,018
Net (Loss) before Income Taxes			(2,720)		(1,736)		(8,315)		(13,909)		(46,105)
Provision for Income Taxes(Note 4)			-		-		-		-		-
Net (Loss)		$	(2,720)	$	(1,736)	$	(8,315)	$	(13,909)	$	(46,105)
PER SHARE DATA:
	Basic and diluted loss per
	common share	$	(0.00)	$	(0.00)	$	(0.00)	$	(0.00)
	Weighted average number of
	common shares outstanding		4,550,000		4,550,000		4,550,000		4,550,000

-The accompanying notes are an integral part of these financial statements –

7

El Palenque Vivero, Inc.

(A Development Stage Company)

Interim Statement of Changes in Stockholders’ Equity

For the period of June 21, 2006 (Inception) to June 30, 2009

							Deficit
							Accumulated
					Additional		During the
	Common Stock				Paid-in		Development
	Shares		Amount		Capital		Stage			Total
Inception – June 21, 2006		-	$	-	$	-	$	-	$	-
Common shares issued to a founder
at $0.005 cash per share, June 30, 2006		1,000,000		1,000		4,000		-		5,000
Common shares issued to founders
at $0.01 cash per share, August 1, 2006		1,500,000		1,500		13,500		-		15,000
Loss for the period		-		-		-		(2,631)		(2,631)
Balance – September 30, 2006		2,500,000		2,500		17,500		(2,631)		17,369
Common shares issued for cash
at $0.04 per share, June 1, 2007		2,050,000		2,050		79,950		-		82,000
Loss for the year		-		-		-		(16,960)		(16,960)
Balance – September 30, 2007		4,550,000		4,550		97,450		(19,591)		82,409
Loss for the year		-		-		-		(18,199)		(18,199)
Balance – September 30, 2008		4,550,000		4,550		97,450		(37,790)		64,210
Loss for the period(Unaudited)		-		-		-		(8,315)		(8,315)
Balance – June 30,, 2009(Unaudited)		4,550,000	$	4,550	$	97,450	$	(46,105)	$	55,895

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

8

El Palenque Vivero, Inc.

(A Development Stage Company)

Interim Statements of Cash Flows

(Unaudited)

							Cumulative from
							Inception
							(June 21, 2006) to
				Nine Months Ended June 30,			June 30,
				2009		2008	2009
OPERATING ACTIVITIES
	Net loss		$	(8,315)	$	(13,909)	$	(46,105)
	Changes in Operating Assets and Liabilities:
	Increase (decrease) in accounts payable and accrued liabilities			(2,792)		(600)		300
		Net Cash Used in Operating Activities		(11,107)		(14,509)		(45,805)
INVESTING ACTIVITIES
		Net Cash Provided by (Used in) Investing Activities		-		-		-
FINANCING ACTIVITIES
	Common stock issued for cash			-		-		102,000
		Net Cash Provided by Financing Activities		-		-		102,000
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				(11,107)		(14,509)		56,195
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD				67,302		84,009		-
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	56,195	$	69,500	$	56,195
Supplemental Cash Flow Disclosures:
	Cash paid for Interest		$	-	$	-	$	-
	Cash paid for Income Taxes		$	-	$	-	$	-

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

9

El Palenque Vivero, Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

June 30, 2009

(Unaudited)

NOTE 1 -

ORGANIZATION AND DESCRIPTION OF BUSINESS

El Palenque Vivero, Inc. (the “Company”) was incorporated in the State of Nevada on June 21, 2006.  The Company was originally incorporated as El Palenque Nercery, Inc. and changed its name to El Palenque Vivero, Inc. on June 30, 2006.  It is based in Cuernavaca, Morelos Mexico.  The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is September 30.

The Company is a development stage company that intends to open and operate a plant nursery in the state of Morelos, Mexico.  To date, the Company’s activities have been limited to its formation and the raising of equity capital.  

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.  The Company had $56,195 and $67,302 in cash and cash equivalents at June 30, 2009 and September 30, 2008, respectively.

Start-Up Costs

In accordance with the American Institute of Certified Public Accountants Statement of Position 98-5, “Reporting on the Costs of Start-up Activities”, the Company expenses all costs incurred in connection with the start-up and organization of the Company.

Earnings (Loss) per Share of Common Stock

The Company has adopted Financial Accounting Standards Board (“FASB”) Statement Number 128,“Earnings per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.  In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.

10

El Palenque Vivero, Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

June 30, 2009

(Unaudited)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Segmented Reporting

SFAS Number 131,“Disclosure About Segments of an Enterprise and Related Information”, changed the way public companies report information about segments of their business in their quarterly reports issued to shareholders.  It also requires entity-wide disclosures about the products and services an entity provides, the material countries in which it holds assets and reports revenues and its major customers.  The company presently operates only in Mexico.

Foreign Currency Transactions

The Company’s functional currency is the Mexican Peso.  The Company’s reporting currency is the U.S. Dollar.  All transactions initiated in Mexican Pesos are translated to U.S. Dollars in accordance with SFAS No. 52 “Foreign Currency Translation” as follows:

(i)

Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;

(ii)

Equity at historical rates; and

(iii)

Revenue and expense items at the average rate of exchange prevailing during the period.

Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity as a component of comprehensive income or loss.  Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income.

For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date.  If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the period.

No significant realized exchange gains or losses were recorded from inception (June 21, 2006) to June 30, 2009.

Stock-Based Compensation

The Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123(R),“Share-Based Payment”, which establishes accounting for equity instruments exchanged for employee services.  Under the provisions of SFAS 123(R), stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees’ requisite service period (generally the vesting period of the equity grant).  The Company accounts for share-based payments to non-employees, in accordance with SFAS 123 (as originally issued) and Emerging Issues Task force Issue No 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”.

11

El Palenque Vivero, Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

June 30, 2009

(Unaudited)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Comprehensive Income (Loss)

SFAS No. 130,“Reporting Comprehensive Income”, establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements.  From inception (June 21, 2006) to June 30, 2009, the Company had no items of other comprehensive income.  Therefore, net loss equals comprehensive loss from inception (June 21, 2006) to June 30, 2009.

Revenue Recognition

The Company recognizes revenue from the sale of products and services in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 104 (“SAB 104”),“Revenue Recognition in Financial Statements.”  Revenue will consist of plant sales and will be recognized only when all of the following criteria have been met:

(i)

Persuasive evidence for an agreement exists;

(ii)

Delivery has occurred;

(iii)

The fee is fixed or determinable; and

(iv)

Revenue is reasonably assured.

Recent Accounting Pronouncements

None of the following new pronouncements has current application to the Company, but will be implemented in the Company’s future financial reporting when applicable.

In June 2009, the FASB issued SFAS No. 168,“The FASB Accounting Standards Codification^TM  and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162.”  FASB Statement No. 162,“The Hierarchy of Generally Accepted Accounting Principles,” which became effective on November 13, 2008, identified the sources of accounting principles and the framework for selecting the principles used in preparing the financial statements of nongovernmental entities that are presented in conformity with GAAP. Statement 162 arranged these sources of GAAP in a hierarchy for users to apply accordingly. Once the Codification is in effect, all of its content will carry the same level of authority, effectively superseding Statement 162. In other words, the GAAP hierarchy will be modified to include only two levels of GAAP: authoritative and nonauthoritative. As a result, this Statement replaces Statement 162 to indicate this change to the GAAP hierarchy.  This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009.

In June 2009, the FASB issued SFAS No. 167,“Amendments to FASB Interpretation No. 46(R).”  This Statement is to improve financial reporting by enterprises involved with variable interest entities. The Board undertook this project to address (1) the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003),“Consolidation of Variable Interest Entities,” as a result of the elimination of the qualifying special-purpose entity concept in FASB Statement No. 166,“Accounting for Transfers of Financial Assets,” and (2) constituent concerns about the application of certain key provisions of Interpretation 46(R), including those in which the accounting and disclosures under the Interpretation do not always provide timely and useful information about an enterprise’s involvement in a variable interest entity.

12

El Palenque Vivero, Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

June 30, 2009

(Unaudited)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)

This Statement shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter.  Earlier application is prohibited.

In June 2009, the FASB issued SFAS No. 166,“Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140.” This Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets.   The Board undertook this project to address (1) practices that have developed since the issuance of FASB Statement No. 140,“Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” that are not consistent with the original intent and key requirements of that Statement and (2) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors.  This Statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited.   This Statement must be applied to transfers occurring on or after the effective date.  

In May 2009, the FASB issued SFAS No. 165,“Subsequent Events.”  The objective of this Statement is to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth: (1) The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements. (2) The circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements. (3) The disclosures that an entity should make about events or transactions that occurred after the balance sheet date. In accordance with this Statement, an entity should apply the requirements to interim or annual financial periods ending after June 15, 2009.

In June 2008, the FASB issued FASB Staff Position EITF 03-6-1,Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the computation of earnings per share under the two-class method as described in FASB Statement of Financial Accounting Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material effect on our financial positionand results of operations if adopted.

13

El Palenque Vivero, Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

June 30, 2009

(Unaudited)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)

In May 2008, the FASB issued SFAS No. 163,“Accounting for Financial Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60.” Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60,“Accounting and Reporting by Insurance Enterprises.” That diversity results in inconsistencies in the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred under SFAS No. 5,“Accounting for Contingencies.” This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years.

In May 2008, the FASB issued SFAS No. 162,“The Hierarchy of Generally Accepted Accounting Principles.” This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411,“The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.”

In March 2008, the FASB issued SFAS No. 161, “Disclosure about Derivative Instruments and Hedging Activities – an amendment to FASB Statement No. 133.” The use and complexity of derivative instruments and hedging activities have increased significantly over the past several years. Constituents have expressed concerns that the existing disclosure requirements in SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, do not provide adequate information about how derivative and hedging activities affect an entity’s financial position, financial performance, and cash flows. Accordingly, this Statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

In December 2007, the FASB issued SFAS No. 160,“Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51.” This Statement amends ARB No. 51 to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards of the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent.  SFAS No. 160 is effective for fiscal years, and interim periods with those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends).

14

El Palenque Vivero, Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

June 30, 2009

(Unaudited)

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)

In December 2007, the FASB issued a revision to SFAS No. 141 (revised 2007),“Business Combinations.” The objective of this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

NOTE 3 -   CAPITAL STOCK

Authorized Stock

The Company has authorized 100,000,000 common shares and 100,000,000 preferred shares, both with a par value of $0.001 per share.  Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

Share Issuance

From inception of the Company (June 21, 2006) to June 30, 2009, the Company has issued 1,000,000 common shares at $0.005 per share, 1,500,000 common shares at $0.01 per share, and 2,050,000 common shares at $0.04 per share, resulting in total proceeds of $102,000 and 4,550,000 common shares issued and outstanding at June 30, 2009. Of these shares, 2,500,000 were issued to directors and officers of the Company and 2,050,000 were issued to independent investors.

There are no preferred shares outstanding.  The Company has issued no authorized preferred shares.  The Company has no stock option plan, warrants or other dilutive securities.

NOTE 4 -

INCOME TAXES

The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under SFAS No. 109 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years. Minimal development stage deferred tax assets arising as a result of net operating loss carryforwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carryforwards generated during the period from June 21, 2006 (date of inception) through June 30, 2009 of $46,105 will begin to expire in 2026. Accordingly, deferred tax assets of approximately $15,500 were offset by the valuation allowance, which increased by approximately $2,500 and $5,000 during the nine months ended June 30, 2009 and 2008, respectively.

15

El Palenque Vivero, Inc.

(A Development Stage Company)

Notes to Interim Financial Statements

June 30, 2009

(Unaudited)

NOTE 5 -

GOING CONCERN AND LIQUIDITY CONSIDERATIONS

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  As at June 30, 2009, the Company had a loss from operations of $11,107, an accumulated deficit of $46,105, and working capital of $55,895 and has earned no revenues since inception.  The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending September 30, 2009.

The ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan.

In response to these problems, management intends to raise additional funds through public or private placement offerings.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

16

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses.  Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language.  Our actual results may differ significantly from those projected in the forward-looking statements.  Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the “Description of Business – Risk Factors” section in our Annual Report on Form 10-K for the year ended September 30, 2008.  You should carefully review the risks described in our Annual Report and in other documents we file from time to time with the Securities and Exchange Commission.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

All references in this Form 10-Q to the “Company,” “El Palenque,” “we,” “us” or “our” are to El Palenque Vivero, Inc.

Results of Operations

We have generated no revenues since inception (June 21, 2006) and have incurred $46,105 in expenses through June 30, 2009.

The following table provides selected financial data about our company as of and for the nine months ended June 30, 2009 and the year ended September 30, 2008.

Balance Sheet Data:		June 30, 2009		September 30, 2008
Cash	$	56,195	$	67,302
Total assets	$	56,195	$	67,302
Total liabilities	$	300	$	3,092
Stockholders' Equity	$	55,895	$	64,210

Net cash provided by financing activities since inception through June 30, 2009, was $102,000, consisting of $82,000 raised from the sale of common stock from independent investors and $20,000 from directors and/or officers of the Company.

Plan of Operation

Our auditors have issued a going concern opinion on our September 30, 2008, audited financial statements, refer to note 5. This means that there is substantial doubt that we can continue as an ongoing

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business for the next twelve months unless we obtain additional capital to pay for our expenses. This is because we have not generated any revenues and there is no assurance we will ever reach this point. Accordingly, we must raise sufficient capital from other sources. Our only other source for cash at this time is investments by others. We must raise cash to stay in business. We raised $82,000 from our private and public offerings. Under these offerings we sold 2,050,000 shares at $0.04 per share to independent shareholders. These shares, together with 2,500,000 shares sold to two directors upon inception for $20,000, brings the total proceeds received from stock sales to $102,000 and the total number of shares issued to 4,550,000 shares.

El Palenque is a development stage company that has no operations, no revenue, no financial backing and limited assets.  Our plan is to open a plant nursery in Cuernavaca, Mexico and market our products to local residents and businesses via advertising and word of mouth.

We had planned to start operations by leasing approximately two (2) hectares (approx. 5 acres) of land for our plant nursery in the city of Cuernavaca in the state of Morelos, Mexico.  However, the Company has postponed its plans to proceed with the nursery due to unexpected complications in working in Mexico.  The Company continues to work towards that goal.  The Company is also seeking additional business opportunities, but has yet to identify any viable options.  We have not undertaken any research and development as of the date of this report, or identified any real property to lease for its nursery.

When and if the Company elects to proceed with its plant nursery, once property has been identified and leased, the Company will proceed with its business plan by incorporating a Mexican subsidiary and hire employees to work the nursery 6-10 months following the incorporation of the subsidiary.  Employees would begin the development of the nursery buildings and land improvements.  The Company does not expect to be able to generate revenue from the nursery with the next 12 months of development.

We estimate that we will be able to satisfy our cash requirements for the next 12 months.

Limited Operating History; Need for Additional Capital

There is no historical financial information about us upon which to base an evaluation of our performance.  We are a development stage corporation and have not generated any revenues from business operations.  We cannot guarantee we will be successful in our business operations.  Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

We have no assurance that future financing will be available to us on acceptable terms.  If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations.  Equity financing could result in additional dilution to existing shareholders.

Currently, we have no financing plans.

Liquidity and Capital Resources

As of the date of this report, we have yet to generate any revenues from our business operations.

Since inception our main source for cash has been the sale of our equity securities.  Upon inception, we issued 2,500,000 shares of common stock to two directors for $20,000.  In June 2006, we completed a private offering of 925,000 shares of common stock to 18 persons in consideration of $37,000.  This offering was made pursuant to the exemption from registration contained in Rule 504 of Regulation D under the Securities Act.  During December 2006 to June 2007, we issued 1,125,000 shares of common

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stock to 19 persons in consideration of $45,000.  These shares were issued pursuant to our Prospectus filed as part of our registration statement on Form SB2 and declared effective on December 11, 2006.  We raised a total of $102,000 from the sale of our common stock.

As of the date of this filing, we have yet to begin operations and therefore have not generated any revenues.

As of June 30, 2009, our cash and total assets were $56,195 and our total liabilities were $300.

ITEM 3.

QUANITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T.

CONTROLS AND PROCEDURES (See touchstone 10-Q/A)

Evaluation of Our Disclosure Controls and Internal Controls

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements. Our management, including our Chief Executive Officer and Acting Chief Financial Officer (one individual) assessed the effectiveness of our internal control over financial reporting as of June 30, 2009. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control—Integrated FrameworkBased on our assessment we believe that, as of June 30, 2009, our internal control over financial reporting were effective based on those criteria.

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and acting chief financial officer (one individual), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of June 30, 2009. Based on this evaluation, our chief executive officer and acting chief financial officer have concluded that, as of June 30, 2009, our disclosure controls and procedures were effective.

Officers’ Certifications

Appearing as exhibits to this quarterly report are “Certifications” of our Chief Executive Officer and Chief Financial Officer. The Certifications are required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Quarterly Report contains information concerning the Controls Evaluation referred to in the Section 302 Certification. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

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Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2009 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

In the ordinary course of our business, we may from time to time become subject to routine litigation or administrative proceedings which are incidental to our business. We are not a party to nor are we aware of any existing, pending or threatened lawsuits or other legal actions involving us.

ITEM 1A.

RISK FACTORS

Not applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We did not issue any equity securities during the quarter ended June 30, 2009.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.  EXHIBITS

Exhibit No.

Description

31.1

Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive and Financial Officer

32.1

Rule 1350 Certification of Principal Executive and Financial Officer

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SIGNATURES

Pursuant to the requirements 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.

EL PALENQUE VIVERO, INC.

Dated:  August 1, 2009

By: /s/ Francisco Mendez

Francisco Mendez
Director, President, Treasurer,

Principal Executive Officer,

Principal Financial Officer.

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