Pacific Blue Energy Corp. – ‘10KSB’ for 12/31/07

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Annual Report by a Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report for the Year Ended 12-31-07             33    114K 
 2: EX-31.1     CEO Section 302 Certification                          2±     9K 
 3: EX-31.2     CFO Section 302 Certification                          2±     9K 
 4: EX-32.1     CEO & CFO Section 906 Certification                    1      6K 

10KSB   —   Annual Report for the Year Ended 12-31-07
Document Table of Contents

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 U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-KSB

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934

 For the Fiscal Year Ended December 31, 2007

 Commission File Number 333-145876

 Descanso Agency, Inc.
(Exact name of Registrant as specified in its charter)

                                                        [Enlarge/Download Table]

                                                                                               
           Nevada                            4724                        20-8766002            
 (State or jurisdiction of        (Primary Standard Industrial        (I.R.S.  Employee        
incorporation or organization)     Classification Code Number)       Identification No.)       

4203 Genesee Ave., Suite 103-510, San Diego, CA 92117                    775-352-4084          
      (Address of principal executive offices)                  (Registrant's telephone number,
                                                                      including area code)     

                                               With copies to:
    Raul Getino, CEO                            Joseph I. Emas, Esq.
4203 Genessee Avenue, Suite 103-510                  1224 Washington Ave.     
      San Diego, CA 92117                       Miami Beach, Florida 33139
      Phone: 775-352-4084                        Telephone: (305) 531-1174
    Fax: 775-201-2790                            Fax: (305) 531-1274
(Name, address and telephone number                                           
of agent for service)                                             

Check whether the issuer is not required to file reports pursuant to Section 13 
or 15(d) of the Exchange Act. [ ]                                               

Check whether the issuer (1) filed all reports required to be filed by Section  
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such  
shorter period that the registrant was required to file such reports), and (2)  
has been subject to such filing requirements for the past 90 days.              
Yes [X] No [ ]                                                                  

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-KSB or any     
amendment to this Form 10-KSB. [X]                                              

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

For the fiscal year ended December 31, 2007 the company had no revenue. As of   
December 31, 2007, the registrant had 9,250,000 shares of common stock issued   
and outstanding. No market value has been computed based upon the fact that no  
active trading market had been established as of December 31, 2007.             

DOCUMENTS INCORPORATED BY REFERENCE                                             

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 TABLE OF CONTENTS

PART I                                                                          
Item 1.  Description of Business                                             3  
       Risk Factors                                                        6
Item 2.  Description of Property                                             9  
Item 3.  Legal Proceedings                                                   9  
Item 4.  Submission of Matters to a Vote of Securities Holders               9  

PART II                                                                         
Item 5.  Market for Common Equity, Related Stockholder Matters and              
        Small Business Issuer Purchases of Equity Securities              10
Item 6.  Management's Discussion and Analysis or Plan of Operation          12  
Item 7.  Financial Statements                                               17  
Item 8.  Changes in and Disagreements with Accountants on                       
        Accounting and Financial Disclosure                               28
Item 8A. Controls and Procedures                                            28  

PART III                                                                        
Item 9.  Directors, Executive Officers, Promoters and Control Persons       28  
Item 10. Executive Compensation                                             30  
Item 11. Security Ownership of Certain Beneficial Owners and                    
        Management and Related Stockholder Matters                        31
Item 12. Certain Relationships and Related Transactions                     31  
Item 13. Exhibits                                                           32  
Item 14. Principal Accountant Fees and Services                             32  

Signatures                                                                  33  

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PART I

ITEM 1 - DESCRIPTION OF BUSINESS                                                

BACKGROUND                                                                      

We were incorporated for the purpose of entering the travel industry and        
establishing a Mexican specialized travel service company focusing on the       
fastest growing segment of the travel industry: wedding and party destination   
travel. This type of destination travel is defined as taking the common wedding 
or party and transporting the entire event and its hosts and guests to a foreign
location. Our specialty will include two types of destination travelers: small  
and large travel parties seeking stimulating and entertaining bachelor and      
bachelorette locations at larger hotels, and travelers seeking quiet romantic   
weddings and holiday getaway short trips at small boutique hotels. We are a     
development stage travel company. Our development period is planned to be       
executed in three stages. During Stage I we accomplished the following: the     
formation of our corporation, initial funding from our founder (sole director   
and officer) Mr. Raul Getino, additional funding from two investors,            
determination of our business plan, determination that we desire to be a        
publicly trading company in the United States, retention of experts in the legal
and public accounting professions, and filing of our registration statement with
the United States Securities and Exchange Commission. We are currently in Stage 
II during which we raised additional capital through a public offering and began
work on our business plan. Following the successful completion of Stage II, in  
Stage III we plan to focus our resources on completing and implementing our     
business plan by adding travel-experienced management personnel, knowledgeable  
in destination travel and having experience and contacts with existing travel   
providers in Canada, the United States, and Mexico. We will then focus on       
creating and expanding our marketing efforts and strategic relationships with   
wedding planners and travel companies that specialize in destination weddings,  
destination bachelor and bachelorette trips, and destination romantic get-away  
trips, as well as marketing our own travel packages, using the Internet,        
directly to travelers interested in destination travel.                         

OUR TRAVEL AGENCY MODEL                                                         

We plan to go beyond the typical travel agency model. We intend to specialize in
and serve the "romantic destinations" growing travel market. We are interested  
in providing our clients with direct access to the romantic hotels, restaurants,
exclusive secluded beaches and other services that we are familiar with. We do  
not intend to act as a general merchant travel company, handling every type of  
travel transaction. We intend to serve our niche clients through wedding        
planners and other specialty travel companies, and directly to our future       
individual travel clients seeking what we can deliver in Mexico: romantic       
destinations. We will handle all of the arrangements in Mexico for our clients. 

We intend to receive negotiated commissions and fees from the wedding planners, 
travel companies, and travel suppliers in Mexico such as transportation         
providers, hotels, entertainment brokers, and rental car agencies. We intend to 
bundle the destination travel groups and individuals seeking our niche          

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destination travel services in order to allow us to negotiate directly with     
those lodging, entertainment, and rental companies seeking our destination      
travel clients. Our founder has experience in negotiating prices for destination
travel clients that include additional revenue for a travel company due to large
volume client traffic. We intend to utilize his experience in negotiating prices
for our niche destination travel clients which will include additional revenue  
for our planned volume travel services.                                         

TARGET MARKET                                                                   

Our target market is wedding planners, other travel companies, and individuals  
seeking to find unique romantic travel destinations in Mexico. As our founder   
has worked in the past with wedding planners and travel agents in Canada, the   
United States, and Mexico, we intend to market our proposed services directly to
his connections. In addition, we intend to utilize his experience with marketing
to the general traveling public to setup "800" style toll free telephone numbers
and an Internet destination travel site with a web based marketing program.     

PRODUCTS AND SERVICES                                                           

Our business plan is to focus on the rapidly expanding niche market of romantic 
destinations. This market is now a very large trend in Western Europe and       
growing in the United States. With the high cost of weddings and hotels in      
Western Europe, the Western Europeans now find it less expensive to utilize     
specialized niche travel companies to arrange for a complete wedding party,     
bachelor or bachelorette party, or romantic getaway to other countries. As an   
example, in England it is less expensive to pay to take an entire wedding party 
from London, fly everyone to Greece, and pay for their hotels, meals, beverages,
ground transportation, and entertainment than it is to hold the wedding in      
England.                                                                        

The news media are now regularly reporting on the growing trend in destination  
travel. CBS news (also cbsnews.com) aired a segment on June 30, 2006 describing 
the destination travel trend for bachelor and bachelorette parties from England 
and Western Europe to take entire groups to hold these parties in Eastern       
Europe, where low costs make it less expensive to travel to a party destination 
than to hold the same style of party at home. At "dateculture.com", they        
describe the growing trend of "stag weekends" for bachelor and bachelorette     
parties that involve entire parties traveling from the United Kingdom to Eastern
Europe, and even to the United States and Canada for their "stag" parties. The  
International Herald Tribune published articles on July 31, 2007 and August 6,  
2007 regarding the growing trend for Japanese to take their entire wedding      
parties to the United States and Western Europe as destination travel sites for 
their weddings. "PressMediaWire.Com" has numerous articles about the increase in
destination weddings and related destination wedding party attire. Other        
articles about the growing trend for Mexican destination weddings describe the  
unique experience of Mexico's small boutique hotels and the Hispanic interest in
destination wedding packages may be found at "centredaily.com",                 
"lovetripper.com", "theopenpress.com". One can also find on the Internet,       
numerous destination wedding sites, such as the "bahamabeachclub.com" describing
typical all-inclusive wedding packages in the Caribbean.                        

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We plan to use our management's background, knowledge, and contacts to market in
the United States, Canada, and large cities in Mexico, similar types of         
destination travel bachelor and bachelorette parties at larger hotels, and niche
wedding packages and specialized romantic getaways to boutique hotel            
destinations in Mexico. We intend to market these specialized travel trips to   
travel companies and wedding planners in Mexico and the United States.          

We plan to use our management's extensive past working relationships and current
knowledge of numerous large hotels in Mexico's scenic inland and coastal tourist
locations for bachelor and bachelorette parties. For those destination travelers
seeking unique quieter, romantic stays, we will offer boutique hotel            
destinations for weddings, and specialized romantic weekend getaways. These     
boutique hotels include prime destinations such as the Flor de Maria in         
Ensenada, Casa Natalia in San Jose del Cabo, the Maroma in Cancun, Blue Sky     
Hotel in Tankah, and the Posada de las Flores in Loreto. All of these smaller   
hotels, and many more, are actively seeking to provide services to the niche    
market of romantic destination travelers.                                       

MARKETING                                                                       

We plan to use primarily interactive marketing media with a mix of traditional  
methods to be rolled out at various stages of our development and as marketing  
funds are made available. Marketing resources will be designed to attract       
customers to our site, convert potential buyers to a sale, and develop a return 
customer. In our first stage of development, marketing is planned to primarily  
be direct contact with travel companies and wedding planners known to our       
founder and by email campaigns to travel agencies and individual existing       
destination travels personally known by our founder.                            

AGREEMENTS/SUPPLIERS                                                            

As of the date of this filing, we have no agreements with any travel suppliers, 
consolidators, or travel-related software providers.                            

COMPETITION                                                                     

We do not intend to directly compete in the general travel industry market. We  
intend to stay in the niche market of destination travel, a rapidly growing     
travel area in which our founder has numerous years of experience. He also has  
direct contacts with many large and boutique Mexican hotels and Mexican service 
providers, as well as contacts with wedding planners, travel companies, and     
numerous individual destination travelers who have all used our founder's       
services in the past.                                                           

Although the United States and Canada have many small and large travel companies
as well as the Internet-dominating big players such as Expedia, Priceline,      
Orbitz, and Travelocity, we intend to seek niche opportunities in the market for
individualized upscale personalized destination travel services making us a     
one-stop-shop destination travel company for Mexico. We believe we will be able 

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to compete with our personalized service, and our founders experience and       
network of contacts in this market segment. We also plan to utilize Internet web
technology for marketing and links to our founder's existing travel contacts. We
intend to make our travel website easy to find, easy to use, and supported by   
knowledgeable destination travel professionals in Mexico.                       

EMPLOYEES                                                                       

Mr. Getino is currently our only employee, and we will depend on his ability to 
execute our plan through our initial development stage. Specifically, no        
salaried employees will be engaged during this period. Moreover, no salary is   
planned to be paid to the founding principal or any other employees or contract 
agents until Stage III of our business plan. We plan to begin paying our        
director $300 per month near the end of our first four month period of Stage    
III, and add two contract agents at the end of the second four month period of  
State III of our business plan.                                                 

In our Stage III development phase, for customer service and marketing calls, we
plan to contract with two travel agents who will be compensated initially on a  
monthly fee of $500 each, and once revenues commence, with an additional        
contract fee basis from bookings generated exclusively by the agent on an equal 
commission split. Revenues are expected to be minimal during the first twelve   
months of our business plan.                                                    

REPORTS TO SECURITIES HOLDERS                                                   

We will file annual, quarterly and special reports, proxy statements and other  
information with the Securities and Exchange Commission. You may read and copy  
any reports, statement or other information that we file with the Commission at 
the Commission's public reference rooms in Washington, D.C. Please call the     
Commission at 1-800-SEC-0330 for further information on the public reference    
rooms. These Commission filings are also available to the public from commercial
document retrieval services and at the Internet site maintained by the          
Commission at http://www.sec.gov. We do not intend to distribute annual reports 
or audited financial statements to our shareholders. This information may be    
found in our filings with the Securities and Exchange Commission.               

RISK FACTORS                                                                    

WE HAVE A LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE    
LIKELIHOOD OF OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES,
DIFFICULTIES, COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL        
DEVELOPING COMPANY.                                                             

We were incorporated in Nevada on April 3, 2007. We have no significant assets, 
limited financial resources and no revenues to date. The likelihood of our      
success must be considered in light of the problems, expenses, difficulties,    
complications and delays frequently encountered by a small developing company   
starting a new business enterprise and the highly competitive environment in    
which we will operate. Since we have a limited operating history, we cannot     

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assure you that our business will be profitable or that we will ever generate   
sufficient revenues to meet our expenses and support our anticipated activities.

OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED      
SERVICE OF RAUL GETINO, OUR SOLE OFFICER AND DIRECTOR. WITHOUT HIS CONTINUED    
SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS.      

We are presently dependent to a great extent upon the experience, abilities and 
continued services of Raul Getino, our sole officer and director. We currently  
do not have an employment agreement with Mr. Getino. The loss of his services   
could have a material adverse effect on our business, financial condition or    
results of operation.                                                           

OUR REVENUES AND EARNINGS ARE ESPECIALLY SENSITIVE TO GLOBAL EVENTS THAT ARE OUT
OF OUR CONTROL.                                                                 

Our results of operations are dependent upon factors generally affecting the    
travel industry. Our revenues and earnings are especially sensitive to events   
that affect domestic and international air travel,, tours, and vacations. A     
number of factors could result in an overall decline in demand for travel,      
including political instability, armed hostilities, international terrorism,    
extreme weather conditions, a rise in fuel prices, labor disturbances, excessive
inflation, a general weakening in economic activity and reduced employment.     
These types of events could have a material adverse effect on our business,     
financial condition and results of operations.                                  

THE DOMESTIC AND INTERNATIONAL LEISURE TRAVEL INDUSTRY IS SEASONAL AND SUBJECT  
TO QUARTERLY FLUCTUATIONS CAUSED PRIMARILY BY THE SEASONAL VARIATIONS IN THE    
TRAVEL INDUSTRY WHICH COULD HAVE A NEGATIVE EFFECT ON OUR QUARTERLY RESULTS OF  
OPERATIONS.                                                                     

The domestic and international leisure travel industry is seasonal. Our results 
may be subject to quarterly fluctuations caused primarily by the seasonal       
variations in the travel industry. It is anticipated that net revenues and net  
income will generally be higher in the first and second quarters. Our quarterly 
results of operations may also be subject to fluctuations as a result of changes
in the mix of services we offer as a result of internal growth rates, fare wars 
by travel providers, changes in relationships with certain travel providers, the
timing of the payment of commissions by travel providers, extreme weather       
conditions or other factors affecting travel. Unexpected variations in quarterly
results could also adversely affect the price of the common stock, which in turn
could limit our ability to expand.                                              

THE TRAVEL SERVICE INDUSTRY IS EXTREMELY COMPETITIVE AND HAS LOW BARRIERS TO    
ENTRY.                                                                          

The travel service industry is extremely competitive and has low barriers to    
entry. We will compete with other distributors of travel services, travel       
providers, travel agents, tour operators and central reservation service        

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providers, some of which have greater experience and/or financial resources than
we do. Other distributors may have relationships with certain travel providers  
providing better availability or more competitive pricing than that offered by  
us. Furthermore, some travel agents have a strong presence in their geographic  
area which may make it difficult for us to attract customers in those areas.    

RAUL GETINO'S CONTROL MAY PREVENT YOU FROM CAUSING A CHANGE IN THE COURSE OF OUR
OPERATIONS AND MAY AFFECT THE PRICE OF OUR COMMON STOCK.                        

Raul Getino beneficially owns approximately 40% of our common stock. Due to his 
controlling ownership, he will be able to elect our entire board of directors,  
control all matters that require a stockholder vote and exercise a significant  
amount of influence over our management and operations. This concentration of   
ownership could result in a reduction in value to the common shares you own     
because of the ineffective voting power, and could have the effect of preventing
us from undergoing a change of control in the future.                           

THERE IS NO ASSURANCE OF AN ACTIVE TRADING MARKET FOR OUR COMMON STOCK,         
THEREFORE, INVESTORS MAY BE UNABLE TO LIQUIDATE ANY INVESTMENT THEY MAKE IN OUR 
STOCK.                                                                          

There is no established public trading market for our common stock. Our shares  
are listed on the OTC Electronic Bulletin Board, however no active trading      
market exists and there is no assurance that one will develop or that if        
developed, will be sustained. In the absence of a trading market, an investor   
may be unable to liquidate their investment.                                    

OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH IS SUBJECT TO RESTRICTIONS  
ON MARKETABILITY. Our shares are subject to the penny stock rules adopted by the
Securities and Exchange Commission that require brokers to provide extensive    
disclosure to their customers prior to executing trades in penny stocks. These  
disclosure requirements may cause a reduction in the trading activity of our    
common stock, which in all likelihood would make it difficult for our           
shareholders to sell their securities.                                          

WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND COMPLIANCE,      
WITHOUT REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE, MAKING IT DIFFICULT 
FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL.                                  

To be eligible for quotation on the OTC Bulletin Board, issuers must remain     
current in their filings with the SEC. In order for us to remain in compliance  
we will require future revenues to cover the cost of these filings, which could 
comprise a substantial portion of our available cash resources. If we are unable

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to generate sufficient revenues to remain in compliance it may be difficult for 
investors to resell any shares they purchase, if at all.                        

ITEM 2 - DESCRIPTION OF PROPERTY                                                

Our property consists of office space located at 4203 Genesee, Suite 103 #510,  
San Diego, CA 92117. We use such space for no charge from our president.        
Currently, this space is sufficient to meet our needs; however, once we expand  
our business to a significant degree, we will have to find a larger space.      

We currently have no investment policies as they pertain to real estate, real   
estate interests or real estate mortgages.                                      

ITEM 3 - LEGAL PROCEEDINGS                                                      

We are not currently involved in any legal proceedings nor do we have any       
knowledge of any threatened litigation.                                         

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS                  

No matters were submitted to a vote of security holders during the year ended   
December 31, 2007.                                                              

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 PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS               

On January 11, 2008 we received our listing for quotation on the                
Over-the-Counter Bulletin Board under the symbol "DSAY". To date there has not  
been an active trading market.                                                  

PENNY STOCK RULES                                                               

The Securities and Exchange Commission has also adopted rules that regulate     
broker-dealer practices in connection with transactions in penny stocks. Penny  
stocks are generally equity securities with a price of less than $5.00 (other   
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with      
respect to transactions in such securities is provided by the exchange or       
system).                                                                        

Our shares are considered penny stock under the Securities and Exchange Act. The
shares will remain penny stocks for the foreseeable future. The classification  
of penny stock makes it more difficult for a broker-dealer to sell the stock    
into a secondary market, which makes it more difficult for a purchaser to       
liquidate his/her investment. Any broker-dealer engaged by the purchaser for the
purpose of selling his or her shares in us will be subject to Rules 15g-1       
through 15g-10 of the Securities and Exchange Act. Rather than creating a need  
to comply with those rules, some broker-dealers will refuse to attempt to sell  
penny stock.                                                                    

The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to deliver a standardized risk     
disclosure document, which:                                                     

   -    contains a description of the nature and level of risk in the market
   for penny stock in both public offerings and secondary trading;

-    contains a description of the broker's or dealer's duties to the 
          customer and of the rights and remedies available to the customer with
      respect to a violation of such duties or other requirements of the
Securities Act of 1934, as amended;                         

 -    contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" price for the penny stock and the 
significance of the spread between the bid and ask price;   

  -    contains a toll-free telephone number for inquiries on disciplinary
actions;                                                    

     -    defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and                                

-    contains such other information and is in such form (including   
   language, type, size and format) as the Securities and Exchange
Commission shall require by rule or regulation;             

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The broker-dealer also must provide, prior to effecting any transaction in a    
penny stock, to the customer:                                                   

-    the bid and offer quotations for the penny stock;                

-    the compensation of the broker-dealer and its salesperson in the 
transaction;                                                

    -    the number of shares to which such bid and ask prices apply, or other
     comparable information relating to the depth and liquidity of the
market for such stock; and                                  

-    monthly account statements showing the market value of each penny
stock held in the customer's account.                       

In addition, the penny stock rules require that prior to a transaction in a     
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for 
the purchaser and receive the purchaser's written acknowledgment of the receipt 
of a risk disclosure statement, a written agreement to transactions involving   
penny stocks, and a signed and dated copy of a written suitability statement.   
These disclosure requirements will have the effect of reducing the trading      
activity in the secondary market for our stock because it will be subject to    
these penny stock rules. Therefore, stockholders may have difficulty selling    
their securities.                                                               

SHARES AVAILABLE UNDER RULE 144                                                 

There are currently 3,750,000 shares of common stock that are considered        
restricted securities under Rule 144 of the Securities Act of 1933. All         
3,750,000 shares are held by our officer and director. Under Rule 144, such     
shares can be publicly sold, subject to volume restrictions and certain         
restrictions on the manner of sale, commencing six months after their           
acquisition.                                                                    

HOLDERS                                                                         

As of December 31, 2007, we have 9,250,000 Shares of $0.001 par value common    
stock issued and outstanding held by 39 shareholders of record.                 

Island Stock Transfer is our transfer agent.                                    

DIVIDENDS                                                                       

We have never declared or paid any cash dividends on our common stock. For the  
foreseeable future, we intend to retain any earnings to finance the development 
and expansion of our business, and we do not anticipate paying any cash         
dividends on our common stock. Any future determination to pay dividends will be
at the discretion of the Board of Directors and will be dependent upon then     
existing conditions, including our financial condition and results of           

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operations, capital requirements, contractual restrictions, business prospects, 
and other factors that the board of directors considers relevant.               

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS             

RESULTS OF OPERATIONS                                                           

We have generated no revenues since inception and have incurred $11,142 in      
expenses through December 31, 2007.                                             

The following table provides selected financial data about our company for the  
year ended December 31, 2007.                                                   

Balance Sheet Data:           12/31/07
-------------------           --------

Cash                          $27,948 
Total assets                  $27,948 
Total liabilities             $ 2,090 
Shareholders' equity          $25,858 

There was $39,090 cash provided by financing activities for the year ended      
December 31, 2007, this consisted of $15,000 from the sale of shares to our     
director, $22,000 resulting from the sale of our common stock to 38 independent 
investors and $2,090 in a loan from our director.                               

CAPITAL RESOURCES AND LIQUIDITY                                                 

As of December 31, 2007 we had $27,948 in cash. Our general and administrative  
expenses are expected to average less than $1,500 per month for the next 12     
months.                                                                         

We anticipate that our operational, and general & administrative expenses for   
the next 12 months will total approximately $18,000. We do not anticipate the   
purchase or sale of any significant equipment. We also do not expect any        
significant changes in the number of employees, we plan to add two contract     
staff personnel. At this time we have not entered into any agreements or        
negotiations with a sales and marketing entity to undertake marketing for us.   
The foregoing represents our best estimate of our cash needs based on current   
planning and business conditions. The exact allocation, purposes and timing of  
any expenditures may vary significantly depending upon our progress with the    
execution of our business plan.                                                 

In the event we are not successful in reaching our initial revenue targets,     
additional funds may be required, and we may not be able to proceed with our    
business plan for the development and marketing of our core services. Should    
this occur, we would likely seek additional financing to support the continued  
operation of our business. We anticipate that depending on market conditions and
our plan of operations, we would incur operating losses in the foreseeable      

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future. We base this expectation, in part, on the fact that we may not be able  
to generate enough gross profit from the sale of our travel products and        
services to cover our operating expenses.                                       

PLAN OF OPERATION                                                               

Statements contained herein which are not historical facts are forward-looking  
statements as that term is defined by the Private Securities Litigation Reform  
Act of 1995. Although the Company believes that the expectations reflected in   
such forward-looking statements are reasonable, forward-looking statements are  
subject to risks and uncertainties that could cause actual results to differ    
from those projected. The Company cautions investors that any forward-looking   
statements made by the Company are not guarantees of future performance and     
actual results may differ materially from those in the forward-looking          
statements. Such risks and uncertainties include, without limitation:           
established competitors who have substantially greater financial resources and  
operating histories, regulatory delays or denials, ability to compete as a      
start-up company in a highly competitive market, and access to sources of       
capital.                                                                        

The following discussion and analysis should be read in conjunction with our    
financial statements and notes thereto included elsewhere in this Form 10-KSB.  
Except for the historical information contained herein, the discussion in this  
Form 10-KSB contains certain forward-looking statements that involve risks and  
uncertainties, such as statements of our plans, objectives, expectations and    
intentions. The cautionary statements made in this Form 10-KSB should be read as
being applicable to all related forward-looking statements wherever they appear 
in this Form 10-KSB. The Company's actual results could differ materially from  
those discussed here.                                                           

OVERVIEW                                                                        

Our core business will be establishing a Mexican specialized travel service     
company focusing on the fastest growing segment of the travel industry: wedding 
and party destination travel. This type of destination travel is defined as     
taking the common wedding or party and transporting the entire event and its    
hosts and guests to a foreign location. Our specialty will include two types of 
destination travelers: small and large travel parties seeking stimulating and   
entertaining bachelor and bachelorette locations at larger hotels, and travelers
seeking quiet romantic weddings and holiday getaway short trips at small        
boutique hotels. We plan to utilize the extensive operational background in the 
travel business of Raul Getino, our founding principal and sole officer and     
director, with over eighteen years experience in travel companies, in order to  
complete this stage and expand our business plan. Our director has designed and 
implemented marketing campaigns for other travel companies utilizing his        
extensive knowledge in providing upscale weddings, and specialized romantic     
getaways to boutique hotel destinations in Mexico. He has successfully marketed 
these specialized wedding and romantic tour packages to travel companies and    
wedding planners in Mexico and the United States prior to our incorporation.    

During the next twelve months, we expect to take the following steps in         
connection with the further development of our business and the implementation  
of our plan of operations:                                                      

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STAGE I - CORPORATE FORMATION                                                   

We have completed our initial stage, Stage I. During this time, we established  
our corporate existence, completed the required steps to become a publicly held 
corporation, raised founder capital, raised investor capital, and outlined our  
business plan stages. We had no revenues in Stage I of our operations.          

Office space, equipment, and administrative services were provided by our sole  
founding principal. No salaried employees were engaged during this period. Our  
founding principal was the Company's only officer, and he provided the resources
to execute our plans in this phase of operation. No salary was paid to the      
founding principal or any other employees and will not be paid until Stage III  
of our planned development stages and cash flow from operations allow it.       

STAGE II - FUNDING AND COMPLETION OF BUSINESS PLAN                              

We are currently in Stage II. During this stage we have worked to complete our  
registration filings and recently secured funding from our public offering. We  
continue to develop our business plan through this funding stage.               

STAGE III - RENT SPACE, HIRE EMPLOYEES, BEGIN MARKETING                         

Following the completion of Stage I and Stage II, we plan to implement our      
twelve month business plan in Stage III by utilizing our capital to fund the    
following:                                                                      

MONTHS 1 THROUGH 4                                                              

Pay a rent deposit for an office - $400, pay first director's fee -$300,        
purchase furniture, equipment, and computer system - $4,500. Total $5,200.      

MONTHS 5 THROUGH 8                                                              

Pay office rent - $1,200, pay director's fee - $1,200, begin Internet website   
-$500, begin marketing - $500. Total $3,400                                     

MONTHS 9 THROUGH 12                                                             

Pay office rent - $1,200, pay director's fee - $1,200, pay contract travel      
agents - $4,000, Internet website development and expense -$2,000, marketing    
expense - $1,000. Total $9,400.                                                 

TWELVE MONTH TOTAL - $18,000                                                    

We expect to operate at a loss during our initial development/operating period. 

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For customer service and call in sales, we plan to utilize the services of our  
founder and two contract agents who will be compensated on a contract basis from
any bookings created exclusively by the agent on an equal commission split. We  
will provide our home-based agents with an 800 phone line and internet service  
to access our website for sales to the agent's customers and be available to all
customers for customer service. Customer service is expected to be minimal      
during this stage due to the automated nature of the website and the anticipated
low level of site usage.                                                        

OFF-BALANCE SHEET ARRANGEMENTS                                                  

We do not have any off-balance sheet arrangements that have or are reasonably   
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,    
capital expenditures or capital resources that is material to investors.        

CRITICAL ACCOUNTING POLICY AND ESTIMATES                                        

Our Management's Discussion and Analysis of Financial Condition and Results of  
Operations section discusses our financial statements, which have been prepared 
in accordance with accounting principles generally accepted in the United States
of America. The preparation of the financial statements requires management to  
make estimates and assumptions that affect the reported amounts of assets and   
liabilities at the date of the financial statements and the reported amounts of 
revenues and expenses during the reporting period. Actual results may differ    
from these estimates.                                                           

CASH AND CASH EQUIVALENTS                                                       

The Company considers all highly liquid debt instruments purchased with maturity
of three months or less to be cash equivalents.                                 

REVENUE RECOGNITION                                                             

The Company considers revenue to be recognized at the time the service is       
performed.                                                                      

USE OF ESTIMATES                                                                

The preparation of the Company's financial statements requires management to    
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from these       
estimates.                                                                      

FAIR VALUE OF FINANCIAL INSTRUMENTS                                             

The Company's short-term financial instruments consist of cash and cash         
equivalents and accounts payable. The carrying amounts of these financial       
instruments approximate fair value because of their short-term maturities.      

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Financial instruments that potentially subject the Company to a concentration of
credit risk consist principally of cash. During the year the Company did not    
maintain cash deposits at financial institution in excess of the $100,000 limit 
covered by the Federal Deposit Insurance Corporation. The Company does not hold 
or issue financial instruments for trading purposes nor does it hold or issue   
interest rate or leveraged derivative financial instruments.                    

EARNINGS PER SHARE                                                              

Basic Earnings per Share ("EPS") is computed by dividing net income available to
common stockholders by the weighted average number of common stock shares       
outstanding during the year. Diluted EPS is computed by dividing net income     
available to common stockholders by the weighted-average number of common stock 
shares outstanding during the year plus potential dilutive instruments such as  
stock options and warrant. The effect of stock options on diluted EPS is        
determined through the application of the treasury stock method, whereby        
proceeds received by the Company based on assumed exercises are hypothetically  
used to repurchase the Company's common stock at the average market price during
the period. Loss per share is unchanged on a diluted basis since the assumed    
exercise of common stock equivalents would have an anti-dilutive effect.        

INCOME TAXES                                                                    

The Company uses the asset and liability method of accounting for income taxes  
as required by SFAS No. 109 "Accounting for Income Taxes". SFAS 109 requires the
recognition of deferred tax assets and liabilities for the expected future tax  
consequences of temporary differences between the carrying amounts and the tax  
basis of certain assets and liabilities. Deferred income tax assets and         
liabilities are computed annually for the difference between the financial      
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future, based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.  
Valuation allowances are established when necessary to reduce deferred tax      
assets to the amount expected to be realized. Income tax expense is the tax     
payable or refundable for the period, plus or minus the change during the period
in deferred tax assets and liabilities.                                         

Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in         
different periods. Deferred taxes are classified as current or non-current,     
depending on the classification of the assets and liabilities to which they     
relate. Deferred taxes arising from temporary differences that are not related  
to an asset or liability are classified as current or non-current depending on  
the periods in which the temporary differences are expected to reverse. The     
Company had no significant deferred tax items arise during any of the periods   
presented.                                                                      

CONCENTRATION OF CREDIT RISK                                                    

The Company does not have any concentration of related financial credit risk.   

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RECENT ACCOUNTING PRONOUNCEMENTS                                                

The Company does not expect that the adoption of other recent accounting        
pronouncements will have a material impact to its financial statements.         

ITEM 7 - FINANCIAL STATEMENTS                                                   

The audited financial statements for the year ended December 31, 2007           
immediately follow.                                                             

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MOORE & ASSOCIATES, CHARTERED                                                   
ACCOUNTANTS AND ADVISORS                                                    
PCAOB REGISTERED                                                    

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors                                                       
Descanso Agency, Inc. (A Development Stage Company)                             
San Diego, California                                                           

We have  audited  the  accompanying  balance  sheet of  Descanso  Agency  Inc (A
Development  Stage Company) as of December 31, 2007, and the related  statements
of  operations,  stockholders'  equity and cash flows from inception on April 3,
2007  through   December  31,  2007.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.                      

We conducted  our audits 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 financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of  Descanso  Agency  Inc (A
Development  Stage  Company)  as of  December  31,  2007 and the  results of its
operations and its cash flows from  inception on April 3, 2007 through  December
31, 2007, in conformity with  accounting  principles  generally  accepted in the
United States of America.                                                       

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 5 to the
financial  statements,  the  Company  has  incurred a net loss of $11,142  since
inception and has had no sales which raise  substantial  doubt about its ability
to continue as a going concern.  Management's plans concerning these matters are
also  described  in  Note  5.  The  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                                                               
February 8, 2008                                                                

2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146
(702) 253-7499 Fax (702) 253-7501 

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DESCANSO AGENCY, INC. 
(A Development Stage Company) 
Balance Sheet 
Stated in U.S. Dollars
Audited 

                                                               Audited
                                                               December 31, 2007
                                                               -----------------
ASSETS                                                                          

CURRENT ASSETS                                                                  
Cash                                                             $ 27,948   
                                                              --------
Total Current Assets                                                 27,948     
                                                              --------

 TOTAL ASSETS                                                 $ 27,948
                                                              ========

LIABILITIES & STOCKHOLDERS' EQUITY                                              

LIABILITIES                                                                     
Loan Payable (From Director)                                     $  2,090   
                                                              --------

 TOTAL LIABILITIES                                            $  2,090
                                                              ========

STOCKHOLDERS' EQUITY                                                            
50,000,000 shares Common Stock                                              
Authorized at $0.001/par value                                          
9,250,000 shares issued and                                             
outstanding @ Dec 31, 2007                                     $  9,250 
Additional Paid-in Capital                                         27,750   
Deficit accumulated                                               (11,142)  
                                                              --------
TOTAL STOCKHOLDERS' EQUITY                                           25,858     
                                                              --------

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $ 27,948
                                                              ========

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

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DESCANSO AGENCY, INC. 
(A Development Stage Company) 
Statement of Operations 
Stated in U.S. Dollars
Audited 

                             Inception
                             (April 3, 2007)
                             Through
                             December 31, 2007
                             -----------------

REVENUES                                                                        
Revenues                                       $       --                   
                            ----------
TOTAL REVENUES                                           --                     

OPERATING EXPENSE                                                               
Administrative Expense                             11,142                   
                            ----------

NET (LOSS)                                       $  (11,142)                    
                            ==========

Basic earnings per share                         $    (0.00)                    

Weighted average number of                                                      
common shares outstanding                        6,275,000                    

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

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DESCANSO AGENCY, INC. 
(A Development Stage Company) 
Changes in Stockholders' Equity 
 (April 3, 2007 - June 30, 2007)
Stated in U.S. Dollars
Audited 

                                                        [Enlarge/Download Table]

                                                   Common   Additional  Deficit Accum          
                                        Common     Stock      Paid-in      During              
                                        Stock      Amount     Capital     Dev Stage      Total 
                                        -----      ------     -------     ---------      ----- 
                                                                                               
Stock issued for cash June 29, 2007    4,750,000  $  4,750   $ 14,250                  $ 19,000

Stock issued for cash Nov. 2, 2007     4,500,000     4,500     13,500                    18,000

Net (loss) December 31, 2007                                              $ (11,142)           
                                     -----------  --------   --------     ---------    --------

BALANCE DECEMBER 31, 2007              9,250,000  $  9,250   $ 27,750     $ (11,142)   $ 25,858
                                     ===========  ========   ========     =========    ========

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

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DESCANSO AGENCY, INC. 
(A Development Stage Company) 
Statement of Cash Flow
Stated in U.S. Dollars
Audited 

                                                        [Enlarge/Download Table]

                                                                                   Inception     
                                                                                (April 3, 2007)  
                                                                                    Through      
                                                             December 31, 2007  December 31, 2007
                                                             -----------------  -----------------
                                                                                                 
CASH FLOW FROM OPERATING ACTIVITIES                                                              
  Net income (loss)                                              $ (2,668)           $(11,142)   
  Loan Payable                                                      2,090               2,090    
                                                                 --------            --------    
      Total cash provided by (used in) operating activities          (578)             (9,052)   
                                                                 ========            ========    

CASH FLOW FROM INVESTING ACTIVITIES                                                              
  Net cash provided by (used in) investing activities                  --                  --    
                                                                 --------            --------    
      Total cash provided by (used in) investing activities            --                  --    
                                                                 ========            ========    

CASH FLOW FROM FINANCING ACTIVITIES                                                              
  Issuance of Common Stock                                         18,000              37,000    
                                                                 --------            --------    
      Total cash provided by (used in) financing activities        18,000              37,000    
                                                                 ========            ========    

Net increase (decrease) in cash                                    34,844              55,896    

Cash at beginning of period                                            --                  --    
                                                                 --------            --------    

Cash at end of period                                            $ 27,948            $ 27,948    
                                                                 ========            ========    

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

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 DESCANSO AGENCY, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 As at December 31, 2007

NOTE 1 - NATURE AND PURPOSE OF BUSINESS                                         

Descanso  Agency,  Inc. (the "Company") was  incorporated  under the laws of the
State of Nevada on April 3, 2007. The Company is "a  development  stage company"
that  intends to open  travel  agencies  specializing  in Mexican  tourism.  Its
activities  to date have been  limited to capital  formation,  organization  and
development of its business plan and limited operations.                        

NOTE 2 - NATURE OF SIGNIFICANT ACCOUNTING POLICIES                              

CASH AND CASH EQUIVALENTS                                                       

The Company considers all highly liquid debt instruments purchased with maturity
of three months or less to be cash equivalents.                                 

REVENUE RECOGNITION                                                             

The  Company  considers  revenue  to be  recognized  at the time the  service is
performed.                                                                      

USE OF ESTIMATES                                                                

The preparation of the Company's  financial  statements  requires  management to
make estimates and assumptions that affect the amounts reported in the financial
statements  and  accompanying  notes.  Actual  results  could  differ from these
estimates.                                                                      

FAIR VALUE OF FINANCIAL INSTRUMENTS                                             

The  Company's  short-term  financial  instruments  consist  of  cash  and  cash
equivalents  and  accounts  payable.  The  carrying  amounts of these  financial
instruments  approximate  fair  value  because of their  short-term  maturities.
Financial instruments that potentially subject the Company to a concentration of
credit risk  consist  principally  of cash.  During the year the Company did not
maintain cash deposits at financial  institution in excess of the $100,000 limit
covered by the Federal Deposit Insurance Corporation.  The Company does not hold
or issue financial  instruments  for trading  purposes nor does it hold or issue
interest rate or leveraged derivative financial instruments.                    

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 DESCANSO AGENCY, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 As at December 31, 2007

NOTE 2 - NATURE OF SIGNIFICANT ACCOUNTING POLICIES (continued)                  

EARNINGS PER SHARE                                                              

Basic Earnings per Share ("EPS") is computed by dividing net income available to
common  stockholders  by the  weighted  average  number of common  stock  shares
outstanding  during the year.  Diluted EPS is  computed  by dividing  net income
available to common stockholders by the weighted-average  number of common stock
shares outstanding  during the year plus potential dilutive  instruments such as
stock  options  and  warrant.  The effect of stock  options  on  diluted  EPS is
determined  through  the  application  of the  treasury  stock  method,  whereby
proceeds received by the Company based on assumed  exercises are  hypothetically
used to repurchase the Company's common stock at the average market price during
the period.  Loss per share is  unchanged  on a diluted  basis since the assumed
exercise of common stock equivalents would have an anti-dilutive effect.        

INCOME TAXES                                                                    

The Company uses the asset and liability  method of accounting  for income taxes
as required by SFAS No. 109 "Accounting for Income Taxes". SFAS 109 requires the
recognition of deferred tax assets and  liabilities  for the expected future tax
consequences of temporary  differences  between the carrying amounts and the tax
basis of  certain  assets  and  liabilities.  Deferred  income  tax  assets  and
liabilities  are computed  annually  for the  difference  between the  financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future, based on enacted tax laws and rates applicable
to the periods in which the  differences  are expected to affect taxable income.
Valuation  allowances  are  established  when  necessary to reduce  deferred tax
assets to the amount  expected  to be  realized.  Income tax  expense is the tax
payable or refundable for the period, plus or minus the change during the period
in deferred tax assets and liabilities.                                         

Deferred income taxes may arise from temporary differences resulting from income
and  expense  items  reported  for  financial  accounting  and tax  purposes  in
different  periods.  Deferred  taxes are  classified as current or  non-current,
depending  on the  classification  of the assets and  liabilities  to which they
relate.  Deferred taxes arising from temporary  differences that are not related

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 DESCANSO AGENCY, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 As at December 31, 2007

NOTE 2 - NATURE OF SIGNIFICANT ACCOUNTING POLICIES (continued)                  

to an asset or liability are classified as current or  non-current  depending on
the periods in which the  temporary  differences  are  expected to reverse.  The
Company had no  significant  deferred  tax items arise during any of the periods
presented.                                                                      

CONCENTRATION OF CREDIT RISK                                                    

The Company does not have any concentration of related financial credit risk.   

RECENT ACCOUNTING PRONOUNCEMENTS                                                

In June 2006, the FASB issued  Interpretation  No. 48 ("FIN No 48"),  Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement 109, which
clarifies  the  accounting  for  uncertainty  in income taxes  recognized  in an
enterprise's  financial  statements in accordance with SFAS No. 109,  Accounting
for Income  Taxes:  The  Interpretation  provides a  recognition  threshold  and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return.  Under FIN No. 48,
the Company may recognize the tax benefit from an uncertain tax position only if
it is  more  likely  than  not  that  the tax  position  will  be  sustained  on
examination  by the taxing  authorities,  based on the  technical  merits of the
position.  The tax benefits  recognized in the financial  statements from such a
position  should be  measured  based on the largest  benefit  that has a greater
likelihood of being realized upon ultimate settlement.  FIN No. 48 also provides
guidance on de-recognition,  classification,  interest and penalties, accounting
in interim periods,  disclosure,  and transition. FIN No. 48 is effective for us
beginning July 1, 2007. We do not expect FIN No. 48 to have a material impact on
our financial statements.                                                       

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements,  which
defines fair value,  establishes a framework for measuring fair value  generally
accepted  accounting  principles,  and  expands  disclosures  about  fair  value
measurements. SFAS No. 157 does not require any new fair value measurements, but
provides  guidance  on how to  measure  fair  value by  providing  a fair  value
hierarchy  used to classify  the source of the  information.  This  statement is

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 DESCANSO AGENCY, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 As at December 31, 2007

effective for us beginning May 1, 2008. We are currently assessing the potential
impact that adoption of SFAS No. 157 would have on our financial statements.    

In  February  2007,  the FASB issued  SFAS No.  159,  The Fair Value  Option for
Financial  Assets  and  Financial  Liabilities.   SFAS  No.  159  gives  us  the
irrevocable  option to carry  many  financial  assets  and  liabilities  at fair
values,  with  changes in fair value  recognized  in  earnings.  SFAS No. 159 is
effective for us beginning  July 1, 2008,  although early adoption is permitted.
We are currently  assessing  the potential  impact that adoption of SFAS No. 159
will have on our financial statement.                                           

The FASB has replaced SFAS No. 141 with a new statement on Business Combinations
that  changes the way  minority  interest is recorded and modified as a parent's
interest in a  subsidiary  changes.  Currently,  this will have no effect on our
financial statements.                                                           

NOTE 3 - COMMON STOCK                                                           

Transactions,  other than  employees'  stock  issuance,  are in accordance  with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration received. Transactions with employees' stock issuance
are in accordance with paragraphs  (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration  received or the fair
value  of  the  equity   instruments   issued,  or  whichever  is  more  readily
determinable.                                                                   

On June 28,  2007 the Company  issued  3,750,000  shares of common  stock to the
Company's sole officer and director,  for cash in the amount of $0.004 per share
for a total of $15,000.                                                         

On June 29, 2007 the Company sold 1,000,000 shares of its common stock at $0.004
per share to 2 independent investors for proceeds of $4,000.                    

On October 22, 2007 the  Company's  offering  pursuant to the SB-2  Registration
Statement  filed by the company on September 4, 2007, and declared  effective on
September 17, 2007, was completed  selling  4,500,000 shares to 36 un-affiliated
investors for total proceeds to the company of $18,000.                         

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 DESCANSO AGENCY, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 As at December 31, 2007

NOTE 4 - RELATED PARTY TRANSACTIONS                                             

The sole officer and director of the Company may, in the future, become involved
in other business  opportunities  as they become  available,  thus he may face a
conflict in selecting between the Company and his other business  opportunities.
The Company has not formulated a policy for the resolution of such conflicts.   

The director  was not paid for any  underwriting  services  that he performed on
behalf of the Company with respect to the Company's SB-2 offering.  He will also
not  receive  any  interest  on any funds that he may advance to the Company for
offering  expenses  prior to the offering being closed which will be repaid from
the proceeds of the offering.                                                   

While the company is seeking  additional  capital,  the  president  has advanced
funds to the company to pay for organizational  costs incurred.  These funds are
interest  free with no  specific  terms of  repayment.  The  balance  due to the
president on December 31, 2007 was $2,090.                                      

NOTE 5 - GOING CONCERN                                                          

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  shown  in the  accompanying  financial
statements,  the  Company  has no sales and has  incurred  a net loss of $11,142
since  inception.  The future of the  Company is  dependent  upon its ability to
obtain financing and upon future  profitable  operations form the development of
its travel  agencies.  The financial  statements do not include any  adjustments
relating to the  recoverability  and  classifications of recorded assets, or the
amounts of and  classification  of  liabilities  that might be  necessary in the
event the Company cannot continue in existence.                                 

Management has raised funds through an equity offering pursuant to the Company's
SB-2 registration  statement with the U.S.  Securities and Exchange  Commission.
There is no guarantee  that the capital  raised will be  sufficient  or that any
future offerings, if necessary, would be successful.                            

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ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND        
FINANCIAL DISCLOSURE                                          

None.                                                                           

ITEM 8A - CONTROLS AND PROCEDURES                                               

Under the supervision and with the participation of our management, including   
our principal executive officer and principal financial officer, we have        
conducted an evaluation of the effectiveness of the design and operation of our 
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) 
under the Securities Exchange Act of 1934, as of the end of the period covered  
by this report. Based on this evaluation, our principal executive officer and   
principal financial officer concluded as of the evaluation date that our        
disclosure controls and procedures were effective such that the material        
information required to be included in our Securities and Exchange Commission   
reports is recorded, processed, summarized and reported within the time periods 
specified in SEC rules and forms relating to our company, including any         
consolidating subsidiaries, and was made known to us by others within those     
entities, particularly during the period when this report was being prepared.   

Additionally, there were no significant changes in our internal controls or in  
other factors that could significantly affect these controls subsequent to the  
evaluation date. We have not identified any significant deficiencies or material
weaknesses in our internal controls, and therefore there were no corrective     
actions taken.                                                                  

PART III

ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS           

TERM OF OFFICE                                                                  

Our directors are appointed for a one-year term to hold office until the next   
annual general meeting of our shareholders or until removed from office in      
accordance with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.                                     

Our sole executive officer and director and his age as of the date of this      
annual report is as follows:                                                    

Name          Age                             Position                  
----          ---                             --------                  

Raul Getino        45        President, Chief Executive Officer, Chief Financial
                     Officer, Chairman of the Board of Directors

Set forth below is a brief description of the background and business experience
of our executive officer and director.                                          

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RAUL GETINO. Raul Getino, our President, Chief Executive Officer, Chief         
Financial Officer and Chairman of the Board of Directors.                       

BUSINESS BACKGROUND                                                             

Paradise Weddings and Hotels, Baja California 1989-2007                         
Travel & Special Event Coordinator                                              
Responsible for wedding and special travel event promotions for resorts in Baja 
California. In charge of managing senior staff personnel and all marketing and  
advertising.                                                                    

Costa Azul Travel 1988-1989                                                     
Travel Agent                                                                    
Responsible for marketing and promotions to United State travel agencies.       

EDUCATION                                                                       

Middle Education (Preparatoria): Colegio De Barchilleres, Tijuana, Mexico,      
Graduated 1988.                                                                 

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS                                        

To the best of our knowledge, during the past five years, none of the following 
occurred with respect to a present or former director or executive officer of   
the Company: (1) any bankruptcy petition filed by or against any business of    
which such person was a general partner or executive officer either at the time 
of the bankruptcy or within two years prior to that time; (2) any conviction in 
a criminal proceeding or being subject to a pending criminal proceeding         
(excluding traffic violations and other minor offenses); (3) being subject to   
any order, judgment or decree, not subsequently reversed, suspended or vacated, 
of any court of any competent jurisdiction, permanently or temporarily          
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities or banking activities; and (4) being found by a court of
competent jurisdiction (in a civil action), the Securities and Exchange         
Commission or the commodities futures trading commission to have violated a     
Federal or state securities or commodities law, and the judgment has not been   
reversed, suspended or vacated.                                                 

CODE OF ETHICS                                                                  

We do not currently have a code of ethics. Because we have only limited business
operations and one officer and director, we believe a code of ethics would have 
limited utility. We intend to adopt a code of ethics as our business operations 
expand and we have additional directors, officers and employees.                

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ITEM 10 - EXECUTIVE COMPENSATION                                                

We plan to begin paying our officer a monthly salary of $300 for his services   
during Stage III of our plan of operations. He is reimbursed for any            
out-of-pocket expenses he incurs on our behalf. We do not currently have any    
benefits, such as health insurance, life insurance or any other benefits        
available to our employee.                                                      

Our officer and director is not party to any employment agreements.             

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                Change in                   
                                                                 Pension                    
                                                                Value and                   
                                                   Non-Equity  Nonqualified                 
                                                   Incentive    Deferred      All           
 Name and                                            Plan        Compen-     Other          
 Principal                         Stock   Option   Compen-      sation      Compen-        
 Position     Year  Salary  Bonus  Awards  Awards   sation      Earnings     sation   Totals
------------  ----  ------  -----  ------  ------   ------      --------     ------   ------
                                                                                            
Raul Getino,  2007    0      0       0        0        0           0            0       0   
President,                                                                                  
CEO and                                                                                     
Director                                                                                    

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

                                                        [Enlarge/Download Table]

                                    Option Awards                                             Stock Awards                
        -----------------------------------------------------------------   ----------------------------------------------
                                                                                                                  Equity  
                                                                                                                 Incentive
                                                                                                     Equity        Plan   
                                                                                                    Incentive     Awards: 
                                                                                                      Plan       Market or
                                                                                                     Awards:      Payout  
                                        Equity                                                      Number of    Value of 
                                       Incentive                            Number                  Unearned     Unearned 
                                      Plan Awards;                            of         Market      Shares,      Shares, 
         Number of      Number of      Number of                            Shares      Value of    Units or     Units or 
        Securities     Securities     Securities                           or Units    Shares or     Other         Other  
        Underlying     Underlying     Underlying                           of Stock     Units of     Rights       Rights  
        Unexercised    Unexercised    Unexercised   Option      Option       That      Stock That     That         That   
        Options (#)    Options (#)     Unearned     Exercise  Expiration   Have Not     Have Not    Have Not     Have Not 
Name    Exercisable   Unexercisable   Options (#)    Price       Date      Vested(#)     Vested      Vested       Vested  
----    -----------   -------------   -----------    -----       ----      ---------     ------      ------       ------  
                                                                                                                          
Raul         0              0              0           0           0           0            0           0            0    
Getino                                                                                                                    

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 DIRECTOR COMPENSATION

                                                        [Enlarge/Download Table]

                                                      Change in                       
                                                       Pension                        
                                                      Value and                       
               Fees                   Non-Equity     Nonqualified                     
              Earned                   Incentive      Deferred                        
             Paid in   Stock  Option     Plan       Compensation    All Other         
    Name       Cash   Awards  Awards  Compensation    Earnings     Compensation  Total
    ----       ----   ------  ------  ------------    --------     ------------  -----
                                                                                      
Raul Getino      0      0        0         0              0              0         0  

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND    
RELATED STOCKHOLDER MATTERS                                 

The following table provides the names and addresses of each person known to us 
to own more than 5% of our outstanding shares of common stock as of December 31,
2007 and by the officer and director, individually and as a group. Except as    
otherwise indicated, all shares are owned directly.                             

                                                                [Download Table]

                      Name and Address             Amount and Nature    Percent    
Title of Class      of Beneficial Owner           of Beneficial Owner  of Class (1)
--------------      -------------------           -------------------  ------------
                                                                                   
Common Stock    Raul Getino                            3,750,000           40%     
                4203 Genesee Ave, Suite 103 #510                                   
                San Diego, CA  92117                                               
                                                       3,750,000           40%     
Common Stock    All executive officers                                             
                 and directors as a group                                          

----------                                                                      
(1)  The percent of class is based on 9,250,000 shares of our common stock      
issued and outstanding as of December 31, 2007.                       

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

The principal executive office and telephone number are provided by Mr. Getino, 
the officer of the corporation at no charge until we occupy the property for our
first travel agency.                                                            

Mr. Getino purchased 3,750,000 shares of the company's common stock for cash in 
the amount of $15,000. The stock was valued at $0.004 per share.                

As of December 31, 2007 our director had loaned the company $2,090 for          
organizational costs. The loan is non-interest bearing and has no specific terms
of repayment.                                                                   

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ITEM 13 - EXHIBITS                                                              

The following exhibits are included with this filing:                           

Exhibit                                                               
Number                     Description                                
------                     -----------                                

3(i)           Articles of Incorporation*                       
3(ii)          Bylaws*                                          
31.1            Sec. 302 Certification of CEO                     
31.2            Sec. 302 Certification of CFO                     
32.1            Sec. 906 Certification of CEO and CFO             

----------                                                                      
*    Included in our original SB-2 filed with the Securities & Exchange         
Commission on September 4, 2007 under File Number 333-145876.         

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES                                

For the year ended December 31, 2007, the total fees charged to the company for 
audit services, including quarterly reviews were $4,000, for audit-related      
services were $Nil, for tax services were $Nil and for other services were $Nil.

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SIGNATURES

In accordance with the requirements of the Securities Act of 1934, the          
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form 10K-SB and authorized this annual report 
to be signed on its behalf by the undersigned, in the City of San Diego, State  
of California on March 15, 2008.                                                

By: /s/ Raul Getino                                                             
---------------------------------------------------------------           
RAUL GETINO                                                               
President, Sole Director and Chairman of the Board of Directors           

By: /s/ Raul Getino                                                             
---------------------------------------------------------------           
RAUL GETINO                                                               
Chief Executive Officer, Chief Financial Officer and Principal            
Accounting Officer                                                        

33

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		7/1/08		26
		5/1/08		26
Filed on:		3/19/08
		3/15/08		33
		2/8/08		18
		1/11/08		10
For Period End:		12/31/07		1		32
		10/22/07		26
		9/17/07		26
		9/4/07		26		32			SB-2
		8/6/07		4
		7/31/07		4
		7/1/07		25
		6/30/07		21
		6/29/07		26
		6/28/07		26
		4/3/07		6		23
		6/30/06		4
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