United States
Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB

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

For the quarterly period ended September 30, 2005
------------------

Commission File Number 000-28789
---------

Falcon Ridge Development Inc.
(formerly known as PocketSpec Technologies Inc.)
-------------------------------------------------------
(Exact name of registrant as specified in its charter)

Nevada 84-1461919
------------------------------ -------------------
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)

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

Registrant's telephone number: (866) 302-2248
-------------

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

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 752,137,441 shares of common stock.

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

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements. F-1

Item 2. Management's Discussion and Analysis or Plan of Operation. 9

Item 3. Controls and Procedures. 14

PART II - OTHER INFORMATION

Item 1. Legal Proceedings. 15

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15

Item 3. Defaults Upon Senior Securities. 15

Item 4. Submission of Matters to a Vote of Security Holders. 15

Item 5. Other Information. 15

Item 6. Exhibits and Reports on Form 8-K. 16

Signatures. 19

FALCON RIDGE DEVELOPMENT, INC,
(FORMERLY POCKETSPEC TECHNOLOGIES, INC.)
Index to Financial Statements
(Unaudited)
Page
----

Balance Sheet at September 30, 2005 .................................. F-1

Statements of Operations, for the three and nine months
ended September 30, 2005 and 2004 ............................... F-2

Statements of Shareholders' Equity for the for the
period from January 1, 2005 through September 30, 2005 .......... F-3

Statements of Cash Flows, for the nine months ended September
30, 2005 and 2004 ............................................... F-4

Notes to Financial Statements ........................................ F-5

FALCON RIDGE DEVELOPMENT, INC.
(FORMERLY POCKETSPEC TECHNOLOGIES, INC.)
Balance Sheet
September 30, 2005
(Unaudited)

Assets
Current Assets:

Cash and cash equivalents .................................... $ 323,505
Land and development costs (Note 4) .......................... 1,440,052
------------
Total current assets .......................... 1,763,557
Equipment, net of accumulated depreciation ....................... 7,577
Other assets ..................................................... 20,000
-----------
Total assets .................................. $ 1,791,134
===========

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued liabilities ..................... $ 168,385
Indebtedness to related party ................................ 366,522
Deferred revenue ............................................. 196,500
Notes payable, current portion ............................... 100,387
Retainage payable ............................................ 206,962
-----------

Total Current Liabilities ..................... 1,038,756

Long Term Liabilities:
Notes payable, net of current portion ........................ 370,311
-----------

Total liabilities ............................. 1,409,067
-----------

Shareholders' equity:
Preferred stock, no par value, 400,000 shares
authorized, 160,000 shares issued and
outstanding ............................................... 400,000
Common stock, $0.001 par value, 900,000,000 shares
authorized, 752,147,441 shares issued and
outstanding ............................................... 752,147
Additional paid-in capital ................................... 38,418
Accumulated equity .......................................... (808,498)

Total shareholders' equity ................... 382,067
-----------

Total liabilities and shareholders' equity ... $ 1,791,134
===========

See accompanying notes to financial statements

F-1

FALCON RIDGE DEVELOPMENT, INC.
(FORMERLY POCKETSPEC TECHNOLOGIES, INC.)
Statements of Operations
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------

Real estate sales:
Net sales ............................... $ 988,199 $ 680,217 $ 6,813,144 $ 2,040,650
Costs of sales .......................... (1,027,978) (698,435) (6,289,947) (2,095,304)
------------- ------------- ------------- -------------

Gross profit (loss) .......... (39,779) (18,218) 523,197 (54,654)

General and administrative expenses
paid to related party ................... 15,000 -- 15,000 --

Selling, general and administrative expenses 175,676 11,066 367,165 33,197
------------- ------------- ------------- -------------

Operating income (loss) ...... (230,455) (29,284) 141,032 (87,851)
------------- ------------- ------------- -------------

Net income (loss) ............ (230,455) (29,284) 141,032 (87,851)
------------- ------------- ------------- -------------
Pro forma adjustments:
Members' distributions .................. -- 30,000 -- --
------------- ------------- ------------- -------------
Net income (loss) ............ $ (230,455) $ (59,284) $ 111,032 $ (87,851)
============= ============= ============= =============

Net income (loss) per share ................. $ (0.00) $ (0.00) $ 0.00 $ (0.00)
============= ============= ============= =============
Pro forma net income (loss) per share ....... $ (0.00) $ (0.00) $ 0.00 $ (0.00)
============= ============= ============= =============

Weighted average number of shares outstanding 752,147,441 100,000,000 194,406,067 100,000,000
============= ============= ============= =============

See accompanying notes to financial statements

F-2

FALCON RIDGE DEVELOPMENT, INC.
(FORMERLY POCKETSPEC TECHNOLOGIES, INC.)
Statement of Changes in Shareholders' Equity
(Unaudited)

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

Balance at
January 1, 2005 ................... -- -- 100,000,000 100,000 210,644 (882,289) (571,645)

Dividend distribution ................ -- -- -- -- -- (30,000) (30,000)
Merger with PocketSpec
Technologies, Inc (Note 1) ........ -- -- 37,265,372 37,265 -- (37,241) 24
Stock issuance for
Spanish Trails, LLC (Note 2) ...... -- -- 614,882,069 614,882 (172,226) -- 442,656
Stock issuance for Cash .............. 160,000 $ 400,000 -- -- -- -- $ 400,000
Net income ........................... -- -- -- -- -- 141,032 --
--------- --------- ------------ ---------- ------------ --------- ---------

Balance at
September 30, 2005 ................ 160,000 $ 400,000 752,147,441 $ 752,147 $ 38,418 $(808,498) $ 382,067
========= ========= ============ ========== ============ ========= =========

See accompanying notes to financial statements

F-3

FALCON RIDGE DEVELOPMENT, INC.
(FORMERLY POCKETSPEC TECHNOLOGIES, INC.)
Statements of Cash Flows
(Unaudited)

Nine Months Ended
September 30,
--------------------------
2005 2004
----------- -----------

Net cash used in
operating activities .................... $ (644,574) $ 392,855
----------- -----------

Cash flows from investing activities:

Acquisition of equipment and leasehold improvements .......... (7,577) --
----------- -----------

Net cash used in
investing activities .................... (7,577) --
----------- -----------

Cash flows from financing activities:
Proceeds from related party loan ............................. 456,687 170,000
Proceeds from the sale of Preferred Stock .................... 400,000 --
Proceeds from lines of credit, notes payable
and long-term debt ........................................ 604,171 1,040,348
Repayments of related party indebtedness ..................... (117,000) (170,000)
Repayments of notes payable .................................. (497,036) (1,040,348)
Dividend paid ................................................ (30,000) (332,000)
----------- -----------
Net cash provided by
financing activities ................... 816,822 (332,000)
----------- -----------

Net change in cash and
cash equivalents ........................ 164,671 60,855

Cash and cash equivalents:
Beginning of period .......................................... 158,834 27,589
----------- -----------

End of period ................................................ $ 323,505 $ 88,444
=========== ===========

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes .............................................. $ -- $ --
=========== ===========
Interest .................................................. $ 118,788 $ 43,246
=========== ===========

See accompanying notes to financial statements

F-4

FALCON RIDGE DEVELOPMENT, INC.
(FORMERLY POCKETSPEC TECHNOLOGIES, INC.)

Notes to Condensed Financial Statements
(Unaudited)

Note 1: Basis of presentation

The condensed financial statements presented herein have been prepared by the
Company in accordance with the accounting policies in its Form 8-K with
financial statements dated August 24, 2005, and should be read in conjunction
with the notes thereto.

In management's opinion, all adjustments (consisting only of normal recurring
adjustments) which are necessary to provide a fair presentation of operating
results for the interim period presented have been made. The results of
operations for the periods presented are not necessarily indicative of the
results to be expected for the year.

Financial data presented herein are unaudited.

The financial results during the three and nine months ended September 30, 2005
and 2004 presents the result of operations of Falcon Ridge Development, Inc.
(formerly Sierra Norte, LLC) and does not include the financial results of
PocketSpec Technologies, Inc.

Note 2: Related Party Transactions

During the nine months ended September 30, 2005, an officer of the Company
advanced the Company $431,165 for working capital purposes and the Company
repaid $ 117,000. At September 30, 2005, the balance of $366,522 remained
outstanding and is included as indebtedness to related party in the accompanying
financial statements.

During the nine months ended September 30, 2005, a family member of an affiliate
of the Company purchased a property lot from the Company valued at approximately
$5,000. This person also paid associated fees of approximately $3,000.

The Company conducts its operations, along with other affiliated entities, in a
building owned by two of the Company's officers/shareholders, whereby it uses
the office facility and shared employees. On January 1, 2005, the estimated cost
of the use of the Company's office facility was $60,000 per year and its
estimated cost of shared employees was $215,000 per year.

F-5

FALCON RIDGE DEVELOPMENT, INC.
(FORMERLY POCKETSPEC TECHNOLOGIES, INC.)

Notes to Condensed Financial Statements
(Unaudited)

September
30, 2005
-----------
(unaudited)

Notes payable to related party, interest at 8.50%, payable in annual
installments of $17,000, with payment due June 01, 2006

Total financing under agreement is $200,000.................. $ 191,000

Notes payable to related party, interest at 8.50%,
payable with payment due May 25, 2006,
Total financing under the agreement is
$150,000................................................. 150,000

Related party advance...................................... 25,522
-----------
$ 366,522
===========

During the nine months ended September, 2005, a shareholder controlled by the
Company's executive officers advanced the Company $25,522 for working capital.

Acquisition of Spanish Trails, LLC

On July 6, 2005, the Company entered into an exchange of securities whereby it
acquired 100% of the ownership of Spanish Trails, LLC ("STLLC"), a New Mexico
limited liability company, in exchange for the issuance of a total of
614,882,069 common shares. As a result, 752,137,441 shares of common stock were
issued and outstanding after the exchange. STLLC is a newly formed New Mexico
limited liability company incorporated to develop approximately 2,300 acres in
central New Mexico into a residential community. The transfer is recorded at the
transferor's historical cost as the transaction was between entities under
common control. The accompanying financial statements report the financial
position at September 30, 2005 and results of operations for the nine months
ended September 30, 2005 as if the Company and STLLC had been combined from
January 1, 2005 to July 6, 2005 and combined operations from July 6, 2005
through September 30, 2005. Since STLLC was formed in 2005, the financial
statements and financial information presented for the nine months ended
September 30, 2004 has not been restated. Accordingly, pro forma financial
information is not provided.

Note 3: Pro Forma Provision for Salary Distributions and Income Taxes

The accompanying statements of operations include pro forma adjustments to
reflect as salaries distributions to officers/shareholders that were made while
the Company operated as an LLC, and to reflect an estimated provision for income
taxes. Prior to the reverse acquisition, the Company was organized as a limited
liability company and, consequently, was not subject to income tax. The
effective income tax rate used on the pro forma adjustments is that estimated
had the Company been a C corporation.

F-6

FALCON RIDGE DEVELOPMENT, INC.
(FORMERLY POCKETSPEC TECHNOLOGIES, INC.)

Notes to Condensed Financial Statements
(Unaudited)

Note 4: Land Development Costs

Land and development costs consist of the following:
September 30,
2005
-------------
Land acquisition cost ....................... $ 607,281
Land development cost........................ 764,023
Capitalized interest......................... 68,748
$ 1,440,052

Note 5: Reverse Merger and Sale of Subsidiary

On May 20, 2005, Sierra Norte, LLC exchanged certificates representing 100
percent of its equity securities for 100,000,000 shares of the common stock of
PocketSpec Technologies, Inc. ("PTI"). The acquisition has been treated as a
recapitalization of Sierra Norte, LLC, a New Mexico limited liability company,
with PTI the surviving legal entity. Since PTI had, after the sale of its color
comparison devices business, minimal assets, (consisting of cash) and no
operations, the recapitalization has been accounted for as the sale of
37,265,372 shares of common stock for the net assets of PTI. Costs of the
transaction have been charged to the period. After the closing of the
acquisition, there were 137,265,372 shares of common stock of the Company issued
and outstanding.

Sierra Norte, LLC is deemed to be the acquirer in the reverse merger and,
consequently, the assets and liabilities and historical operations that are
reflected in the accompanying financial statements are those of Sierra Norte,
LLC and are recorded at the historical cost basis of Sierra Norte, LLC.

Immediately following the closing, PTI sold to a group of its shareholders PTI's
color comparison devices business in exchange for an indemnification from
liabilities by these investors. These shareholders assumed the color comparison
devices business including its liabilities. The sale was consummated between
related parties. Accordingly, the sale was booked as a capital transaction and
no gain or loss on the transaction was recorded.

F-7

FALCON RIDGE DEVELOPMENT, INC.
(FORMERLY POCKETSPEC TECHNOLOGIES, INC.)

Notes to Condensed Financial Statements
(Unaudited)

Note 6: Notes Payable
September 30,
2005
---------
Notes payable to seller, interest at 7%, interest
only payable monthly, with a payment due October 2007.
Total financing under the agreement is $871,000 $ 81,645

Notes payable to seller, interest at 6.50%, payable in
semi-annual installments of $21,862.
Total financing under the agreement is $415,000 389,053
---------
470,698
Less current portion (100,387)
---------
$370,311
=========

Aggregate maturities required on long -term debt at September 30, 2005 are as
follows:

Year
2006 $ 100,387
2007 19,975
2008 21,294
2009 22,702
2010 and thereafter 306,340
---------
470,698

Note 7: Issuance of Preferred Stock

During August 2005, the Company sold 160,000 shares of its convertible preferred
stock for $400,000. The preferred shares are convertible into common stock on
the basis of 100 common shares for each preferred share. No dividends have been
declared by the Board of Directors.

Note 8: Subsequent Events

Sale Agreement with Developer

In October, 2005 a contract was executed with a national homebuilder to sell
approximately 30 percent of the initial lots in the Spanish Trails project for $
3,000,000. This amount is receivable in cash on completion of lots and other
conditions.

F-8

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

The following discussion of our financial condition and results of
operations should be read in conjunction with, and is qualified in its entirety
by, the consolidated financial statements and notes thereto included in Item 1
in this Quarterly Report on Form 10-QSB. This item contains forward-looking
statements that involve risks and uncertainties. Actual results may differ
materially from those indicated in such forward-looking statements.

Forward-Looking Statements

This Quarterly Report on Form 10-QSB 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-KSB 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 2006 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.

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 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 there was not a change
of control of us, as the owners of a majority of Spanish Trails were the
executive officers of the Company. After the exchange, 752,137,441 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.

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 by mid-2006. When our platting plan receives
final approval, we will be able to begin construction of the first phase of
development of approximately 500 lots for single family homes. 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. As disclosed in our Form 8-K filed on October 25, 2005,
we have an executed contract with DR Horton under which it will purchase
approximately 150 designated completed lots in Phase II of our Spanish Trails
project. When the lot development has been completed and accepted by the
Valencia County, New Mexico, engineers and construction of the lots completed,
the sale of those lots will be funded and closed. It is also our intention to
initiate a home building division with remaining developed Spanish Trails
project lots. We expect to have initial models open in the Spring of 2006. The
sale of homes and, consequently, the pace of construction, will be determined by
the rate of market absorption. Simultaneously, we will be processing other
parcels that are currently under purchase contracts in preparation for seeking
entitlements and final plat approval from Valencia County authorities.

Since our master plan for the Spanish Trails project has many facets and
the development includes not only residential lots but retail, industrial and
recreational areas, our time frames and the order in which we begin various
projects is highly dependent upon the market for the area and the need for
specific areas to be completed and other uncontrollable items such as financing.

Results of Operations

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30,
2004
- --------------------------------------------------------------------------------

We achieved revenues for the nine months ended September 30, 2005 of
$6,813,144, compared to revenues of $2,040,650 for the nine months ended
September 30, 2004 or a 233.9% increase. This increase was primarily
attributable to significantly increased lot closings by Sierra Norte. In 2004,
we were finishing phase one on the Sierra Norte project and were about midway
through phase two and only receiving revenue from phase one on the Sierra Norte
project lot closings. In 2005, we had sold out phase one and began receiving
revenue from phase two lot sales. Lot closings are tied to construction and
completion or partial completion of the lots for the community and closings take
place only after completion.

Our costs of sales for the nine months ended September 30, 2005 were
$6,289,947 compared to costs of sales of $2,095,304 for the like period in 2004,
or a 200.2% increase. This increase was due to significantly greater lot sales
during the 2005 period compared to the 2004 period.

Our selling, general and administrative expenses for the nine months ended
September 30, 2005 increased significantly to $387,165, compared to selling,
general and administrative expenses of $33,197 for the nine months ended
September 30, 2004. The major components of these expenses are salaries, payroll
taxes and professional fees. We have significantly expanded our operations as a
public company in 2005. This is reflected in the increased overhead. We expect
that our costs of being a public company will lead to increased general and
administrative expenses. However, we do not expect to incur acquisition costs of
the magnitude of the Sierra Norte acquisition ($150,000) in the future.

Due primarily to increased lot sales volume, partially offset by increased
general and administrative expenses as a result of being a public company, we
achieved net income of $141,032, or $0.00 per share, for the nine months ended
September 30, 2005 compared to a net loss of $87,891, or $0.00 per share, for
the nine months ended September 30, 2004.

Our principal source of revenue at this time is the sales of lots in our
Sierra Norte project. In addition, we control approximately 2,300 acres in the
Spanish Trails project, which are being developed as discussed above. In this
development, we plan to be a homebuilder as well as a land developer. We may in
the future acquire other real estate development projects which are owned
primarily by our executive officers but no such arrangements or understandings
have been reached at this time. We also search on an ongoing basis for
additional real estate development projects.

Three Months Ended September 30, 2005 Compared to Three Months Ended September
30, 2004
- --------------------------------------------------------------------------------

We achieved revenues for the three months ended September 30, 2005 of
$988,199 compared to revenues of $680,217 for the same period in 2004, or a
45.3% increase. The increase was primarily attributable to increased lot
closings by our subsidiary Sierra Norte. However, cost of sales increased from
$698,435 for the three months ended September 30, 2004 to $1,027,978 for the
same period in 2005 or a 48.1% increase. Costs of sales increased
proportionately more than revenues due to a more difficult to improve project
site that required more dirt work due to terrain more extensive walls, both
retaining and garden walls, as well as more expensive infrastructure costs as a
result necessitating more drainage system requirements. Greater expense was also
incurred by the need to remain in compliance with EPA enforcement of the Storm
Water Stormwater Prevention Plan which is site specific. Inspections and
enforcement has increased substantially in New Mexico recently. As a result it
has been necessary to retain more subcontractors to assure compliance and timely
response to inquiries from EPA as well as weekly inspections of job sites. Also,
due to the terrain of the site, stabilizing soil on hills and ground cover added
expense as did the necessity to remove clay from the site and replace it with
compacted dirt to make the site buildable. Our general and administrative costs
increased by nearly 1,700%. A significant part of the increase was due to
increased accounting and legal fees of being a public, SEC reporting company and
increased staff needed for greater operating activity.

Liquidity and Capital Resources

At September 30, 2005 our cash position was $323,505, and we had working
capital at that date of about $382,000.

Our net cash used in operating activities was $644,574 for the nine months
ended September 30, 2005, compared to net cash provided by operating activities
of $392,855 for the nine months ended September 30, 2004.

Our net cash provided by financing activities was $1,216,822 for the nine
months ended September 30, 2005, compared to $332,000 of net cash used by
financing activities for the nine months ended September 30, 2004.

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 nine
months ended September 30, 2005 our chief financial officer has loaned us funds
($416,000) for us to meet our obligations and to continue working on platting
and preparing lots for home building. We cannot assure that such funding will be
available in the future. In August 2005 we raised $400,000 from the sale of
convertible preferred stock, which has helped us with our working capital needs
and allowed us to continue to use capital in seeking to develop our Spanish
Trails project.

The timing of the completion of the platting of our Spanish Trails project
is not certain, so we cannot assure that our cash flow from lot sales,
particularly relating to the DR Horton proposed purchase and other lots closings
relating to Sierra Norte will occur in the near future. Thus, we may be faced
with a working capital shortage. In such event 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.

In addition, we expect to begin building homes on our Spanish Trails
project in early 2006. This initiative will require working capital which we
cannot assure will be available. We have begun negotiating with banks to seek
debt financing for this endeavor.

Most of our costs are incurred in the initial phases of our real estate
projects. We are in the latter stages of the Sierra Norte project and expect it
to be profitable. In the September 30, 2005 quarter we incurred significant
development costs on our Spanish Trails project. Our 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.

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 bad debts, impairment of intangible assets and
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.

ITEM 3. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of 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 not 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 not been able to timely file our Form 10-QSBs and we
missed deadlines for filing some Form 8-Ks due to non recognition of the events
requiring the Form 8-Ks. Specifically, an advance made to Sierra Norte by our
chief financial officer was not recorded on the books of the Company and three
other lending arrangements to us by related parties were not reported in a
timely manner on Form 8-K. Also, we recently determined, in consultation with
our independent accountant, that historical financial statements and pro forma
financial statements will be required for our Spanish Trails acquisition which
we completed in July 2005. We have begun the preparation of such financial
statements and pro forma financial information and expect to file the required
information as soon as practicable. As discussed in Item 5 herein, "Other
Information," as a result of the failure to record the advance of $150,000 to
one of our subsidiaries prior to the time such subsidiary was acquired by us,
the Form 10-QSB for the quarter ended June 30, 2005 contained an error by
understating liabilities of $150,000 and did not include expenses of $150,000.
The Form 10-QSB for the quarter ended June 30, 2005 is being amended to reflect
these adjustments on or about the time of the filing of this Form 10-QSB, and
the information in the Form 8-Ks that were delinquent on or about the time of
this filing has been or is being filed as well. Management is in the process of
analyzing and adopting new policies and procedures to remedy the design and
operations of our disclosure controls, including review and education concerning
Form 8-K requirements, and we recently hired an internal accountant that has
prior experience in SEC filings and preparing financial statements. 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.

PART II. OTHER INFORMATION

ITEM 1. 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.

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

In August 2005, we sold 160,000 shares of our Convertible Preferred Stock
for $400,000 to four investors. Each share of Convertible Preferred Stock is
convertible at the option of the holder into 100 shares of our common stock. The
Convertible Preferred Stock was sold pursuant to an exemption from registration
under Section 4(2) of the Securities Act of 1933 and all of the four persons who
purchased the Convertible Preferred Stock were "accredited investors" as defined
in Regulation D promulgated under that Act. The Convertible Preferred Stock does
not have a dividend but has a preference in liquidation over our common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

We held our annual Shareholders' Meeting on July 6, 2005. A total of
100,200,000 shares out of 137,265,372 shares were present in person or by proxy.
Our shareholders voted to amend our Articles of Incorporation to change our name
to Falcon Ridge Development Inc., to change our domicile to the State of Nevada,
to reincorporate through a merger with Falcon Ridge Development Inc., a Nevada
company, and to ratify and approve the appointment of Cordovano and Honeck, LLP
as our independent registered public accounting firm for the fiscal year end. A
total of 100,200,000 shares voted in favor of the measure.

ITEM 5. OTHER INFORMATION

As part of this Form 10-QSB we are including information under Item 4.02 of
Form 8-K as follows:

Item 4.02(a) Non-Reliance on Previously Issued Financial Statements

(1) On December 21, 2005, our executive officers determined that the
financial statements included in our Form 10-QSB for the quarter ended June 30,
2005 should not be relied upon as a result of an accounting error as described
in (2) below. The corrected financial statements are included in an amended Form
10-QSB for such quarter.

(2) We determined that a $150,000 loan made to us on or about May 20, 2005,
by our chief financial officer had not been properly booked. The $150,000 loan
proceeds were used for payments of investment banking fees, legal fees and a fee
to an affiliate of PocketSpec Technologies, Inc., in connection with the Sierra
Norte acquisition. The reason for this oversight was that our chief financial
officer was out of town at the time of the closing of the Sierra Norte
acquisition and forwarded the funds from a personal account directly to one
service provider who dispersed all of the fees, and thus the advances did not
pass through any of our cash accounts. Consequently, expenses of $150,000 for
the three months and six months ended June 30, 2005 were understated, and
related party indebtedness on our balance sheet as of June 30, 2005 was
understated by $150,000. These expenses should have been included in selling,
general and administrative expenses, and in addition, the $150,000 should have
been reflected in the statements of cash flows in our financial statements for
such quarter. The $150,000 loan has been documented by an interest bearing
promissory note payable to our chief financial officer, and accordingly, the
corrected financial statements in the amended Form 10-QSB include an immaterial
amount of interest accrued on this loan from the time this loan was made to the
end of the quarter on June 30, 2005. Accordingly, our financial statements in
the Form 10-QSB for the period ended June 30, 2005 as filed on August 24, 2005
should not be relied on.

(3) Our executive officers have discussed the discovery of the foregoing
misstatements with our independent accountant, who performed the interim review
of the financial statements included in our June 30, 2005 Form 10-QSB. The
accountant concurs with the restatement of our financial statements, including
the increase in both expenses and related party indebtedness by the $150,000.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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)

4.1 Articles of Amendment - Establishment of Series of Preferred Stock

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.)

10.2 Promissory Note - Karen Y. Duran - Sierra Norte, LLC - May 20, 2005 -
$150,000*

10.3 Promissory Note - Karen Y. Duran - Sierra Norte, LLC - June 1, 2005 -
$200,000*

10.4 Promissory Note - Karen Y. Duran - Sierra Norte, LLC - June 19, 2005 -
$66,000*

11 Statement re: computation of per share earnings - N/A

15 Letter on unaudited interim financial information - N/A

16 Letter on change in accounting principles - N/A

17 Reports furnished to security holders - N/A

19 Published report regarding matters submitted to vote of security
holders - N/A

23 Consents of experts and counsel - N/A

24 Power of attorney - N/A

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

- ----------------

* Filed herewith.

(a) Filed on May 25, 2005 as Exhibit 2.1 with the Registrant's Current Report
on Form 8-K and incorporated herein by reference.

(b) Filed on July 8, 2005 as Exhibit 10.19 with the Registrant's Current Report
on Form 8-K and incorporated herein by reference.

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.

Falcon Ridge Development, Inc.

Dated: December 22, 2005 By: /s/ Fred M. Montano
-------------------------------
Fred M. Montano
President, Chief Executive
Officer, and Director

Dated: December 22, 2005 By: /s/ Karen Y. Duran
-------------------------------
Karen Y. Duran
Vice President, Treasurer and
Chief Financial Officer

EXHIBIT INDEX

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)

4.1 Articles of Amendment - Establishment of Series of Preferred Stock

10.2 Promissory Note - Karen Y. Duran - Sierra Norte, LLC - May 20, 2005 -
$150,000*

10.3 Promissory Note - Karen Y. Duran - Sierra Norte, LLC - June 1, 2005 -
$200,000*

10.4 Promissory Note - Karen Y. Duran - Sierra Norte, LLC - June 19, 2005 -
$66,000*

11 Statement re: computation of per share earnings - N/A

15 Letter on unaudited interim financial information - N/A

16 Letter on change in accounting principles - N/A

17 Reports furnished to security holders - N/A

19 Published report regarding matters submitted to vote of security
holders - N/A

23 Consents of experts and counsel - N/A

24 Power of attorney - N/A

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
- ----------------

* Filed herewith.

(a) Filed on May 25, 2005 as Exhibit 2.1 with the Registrant's Current Report
on Form 8-K and incorporated herein by reference.

(b) Filed on July 8, 2005 as Exhibit 10.19 with the Registrant's Current Report
on Form 8-K and incorporated herein by reference.