**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-KSB**




(Mark
      One)




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




**For
      the fiscal year ended March 31, 2007**




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




For
      the
      transition period from ___________ to ___________




**Commission
      file number 333-123735**




**STONE
      MOUNTAIN RESOURCES, INC.**


(Exact
      name of registrant as specified in its charter)


**Delaware**(State
                or other jurisdiction of
            (I.R.S.
                Employer Identification No.)incorporation
                or organization)**701
                North Green Valley Parkway #200 Henderson, Nevada**
            **89074**(Address
                of principal executive offices)
            (Zip
                Code)




**(702)
      990-3489**


(Registrant’s
      telephone number, including area code)




Securities
                registered under Section 12(b) of the Exchange Act:Title
                of each class registered:
            Name
                of each exchange on which registered:**None**
            **None**Securities
                registered under Section 12(g) of the Exchange Act:**Common
                Stock, par value $.001**
              (Title
                of class)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      he
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.


YesxNoo




Check
      if there is no disclosure of
      delinquent filers in response to Item 405 of Regulation S-B not contained in
      this form, and no disclosure will be contained, to the best of the 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.o





Indicate
      by check mark whether the
      registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.
      YesxNoo





Revenues
      for year ended March 31, 2007: $0





Aggregate
      market value of the voting common stock held by non-affiliates of the registrant
      as of March 31, 2007, was: $2,480,500




Number
      of
      shares of the registrant’s common stock outstanding as of June 21, 2007 was:
      19,961,000




Transitional
      Small Business Disclosure
      Format:    Yeso    Nox















**TABLE
      OF CONTENTS**




**PART
                I**
            
            1ITEM
                1.
            DESCRIPTION
                OF BUSINESS
            1ITEM
                2.
            DESCRIPTION
                OF PROPERTY
            5ITEM
                3.
            LEGAL
                PROCEEDINGS
            5ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            5**PART
                II**
            
            6ITEM
                5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            6ITEM
                6.
            MANAGEMENT’S
                DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS
            9ITEM
                7.
            FINANCIAL
                STATEMENTS AND SUPPLEMENTARY DATA
            13ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURES
            13ITEM
                8A.
            CONTROLS
                AND PROCEDURES
            13**PART
                III**
            
            14ITEM
                9.
            DIRECTORS
                AND EXECUTIVE OFFICERS OF THE REGISTRANT
            14ITEM
                10.
            EXECUTIVE
                COMPENSATION
            15ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            16ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            16**PART
                IV**
            
            17ITEM
                13.
            EXHIBITS
                LIST AND REPORTS ON FORM 8-K
            17ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            17**SIGNATURES**
            
            19






















**PART
        I**




**ITEM
                    1.**
                **DESCRIPTION
                    OF BUSINESS**


**Development
      of Business**




We
      are a
      gold exploration company that will be exploring Nevada mineral properties.
      Nevada is the top gold producing state in the United States of America and
      the
      third largest gold producer in the world according to Dr. John Dorba in a 2003
      report to the Nevada Mining Association. In addition the state has a well
      established mining culture and available mineral properties. The cost of
      exploration is generally much less and the political risk is much lower then
      other regions in the world according to the Fraser Institute in a 2004 study
      on
      64 mining jurisdictions around the world.





We
      are an
      exploration stage company. An "exploration stage corporation" is defined in
      Guide 7(a)(4)(I) to the Security Act Industry Guides as any company engaged
      in
      the search for mineral deposits (reserves) which are not in either the
      development or production stage.





Mining
      Business in Nevada





The
      State
      of Nevada has developed a modern mining industry since a revival of the industry
      in the 1980's. The swing in the price of gold has created cycles, and in spite
      of these cycles, the industry has managed to build a capital base which we
      believe is fundamentally sound and sustainable well into the next decade. We
      believe that the sustainability of this capital base is evident in the
      industrial, commercial and social infrastructure that has developed around
      the
      industry and more recently, an expansion of its reserve base as a result of
      the
      gold price recovery and increased exploration. The gold price is the most
      significant industry development from late 1996 though the last half of 2004
      has
      been the decline and recent resurgence in the gold prices. Gold prices declined
      from over $400 per ounce on early 1996 to $252 per ounce on July 1999. The
      price
      rallied in September 1999 on news of an agreement among European Central Banks
      to limit sales to 400 tons per year though 2004. Much of the recent increase
      in
      the gold price has been driven on the US dollar weakness relative to other
      currencies. Another major contributing factor in the increase on the gold price
      is related to the rise in the price of oil and other energy prices. The increase
      in energy costs increases the purchasing power of Middle Eastern countries
      who
      traditional are large consumers of gold. In the last few years major producers
      have changed their hedging strategy and they have substantially reduced hedging
      their currant production and have "unwound" their hedge positions in their
      hedge
      book. This action has increase the demand and reduced the supply of physical
      gold.





Prior
      to
      1993, the BLM had a very low maintenance requirement for companies and
      individuals to hold vast amounts of land. In October 1992, the BLM changed
      the
      rules and charged the land mineral titleholders an annual fee of $100 per claim
      (now $125). Over time, large tracts of land became available which had limited
      or no meaningful work carried out on the claims. Also, the work that was carried
      out over the many years was proprietary to the company that carried out the
      work. Modern exploration tools, gold processing techniques and geological
      advances in the past 40 years have revolutionized the success rate of finding
      successful gold mines in Nevada.





The
      precipitous fall in gold prices to the $260 to $280 range per ounce from late
      1998 to the spring of 2002, combined with the Bre-X scandal that was exposed
      in
      early 1997, dried up mining investment funds. The Bre-X scandal was particularly
      galling in that a company claimed and fooled most of the top mining analysts
      and
      mining companies with its bogus claim that over 200 million ounces of gold
      existed on its Indonesian property. Many good properties became available
      because companies were not able to raise the funds to pay the annual BLM fees.
      The mining exploration industry is now emerging from a protracted eight-year
      slump and exploration properties are being sought after by junior mining
      companies. Junior mining companies are companies carrying out exploration work
      but have not yet commenced mining a property.












While
      the
      past few years have been challenging for the Nevada mining industry, the state
      continues to offer a number of positive characteristics which should bode well
      for mining, especially gold mining, even with a modest rebound in commodity
      prices. Nevada has geologic conditions that are favorable for the occurrence
      of
      outstanding mineral deposits; the industry has developed a skilled workforce;
      infrastructure and support services are in place; the state has maintained
      a
      reasonable business environment in which responsible exploration mining can
      take
      place.





Portfolio
      Approach





We
      have
      adopted a rigorous review process to select and analyze each mineral property
      that we own or are contemplating owing. We will track and analyze many external
      elements throughout the exploration process. Of course the exploration results
      will be a big factor in the decision making though out the process.





A.   Worldview





1.   Gold
      Price





The
      price
      of gold is an absolute key element in analyzing the state of the industry.
      The
      two components in the price are the absolute price relative to average
      production costs and the perceived future trend in the gold price.





2.   Political
      Risk





Any
      proposed changes in the State laws must be monitored. A change in the state
      mining laws can affect the worth of our properties and hence our exploration
      strategy. In summary, the laws of the BLM and the State have been very stable
      and there are no planned changes in the rules or laws that could materially
      affect the attractiveness of the State.





3.   Junior
      Mining Financing





The
      financial markets are the life blood of junior exploration companies. Junior
      mining companies are companies carrying out exploration work but have not yet
      commenced mining a property. We perceive the most important trend is the
      increase in gold prices and the likelihood that the trend will continue into
      the
      future. The junior capital markets have strengthened and the ability to raise
      capital is increasing and will continue to improve if the gold price continues
      to increase. The junior capital markets which specialize in financing junior
      mining companies are located in Canada, USA, England, Australia and South
      Africa. The largest group of junior mining companies in the world is listed
      on
      the TSX Venture Exchange in Canada. We do not intend to list our company on
      the
      TSX Venture Exchange. The funding for junior mining companies listed on the
      TSX
      jumped 53 per cent from the funds raised in 2002 to the funds raised in 2004
      while the annual average price of gold increased approximately 31 per
      cent.





B.   Diversification





Our
      growth strategy depends on us acquiring additional properties. The properties
      that we will try to select will be a mix of different levels of development.
      The
      property candidates will be mining exploration properties from individuals
      and
      corporations. We believe we will need a rounded portfolio of exploration
      properties. The company can move the properties though the exploration process.
      The capital markets will look more favorable on a company that has
      diversification. Also the company will make annual decisions to explore, option
      an interest in a property, sell or drop a property.





C.  Financing





We
      will
      finance the properties by paying cash, issuing shares of our company or a
      combination. Also we option a property in order to earn an interest by carrying
      out work on the property. We are expecting to raise funds to carry out our
      plans
      by selling corporate shares or loans. Presently we do not have any arrangements
      to acquire additional funds.












North
      Central Nevada





The
      Northern Shoshone mountain range consists of primarily sedimentary and volcanic
      rocks overlain by volcanics and minor sediments.





Tertiary
      volcanic rocks of the region include the Caetano tuff, which is a series of
      ash-flow units. These units were deposited over large areas of north-central
      Nevada from a source in the Cortez Mountains located to the east of the Shoshone
      Range. Caetano tuff deposition was followed by eruption of a series of ash-flow
      tuffs derived from a source in the Fish Creek Mountains located approximately
      12.5 miles west of the CAB claims.





During
      the Miocene, Basin and Range development began, with sediments filling the
      north-and northeast-trending intermountain basins.





The
      CAB
      claims are located approximately 16 miles southwest of the Battle
      Mountain/Eureka gold trend which consists of a linear northwest-trending series
      of gold deposits hosted by upper and lower plate sedimentary rocks and Tertiary
      volcanics. The Carlin Gold Trend, the most productive gold producing area in
      North America, is located approximately 70 miles to the northeast.





Deposits
      that are located within 35 miles of the subject property include Mule Canyon
      (Santa Fe Gold), Robertson (Coral Gold), Hilltop, Pipeline and South Pipeline,
      Gold Acres, Cortez, Horse Canyon (all Placer Dome), and Buckhorn (Cominco).
      The
      Gold Acres, Mule Canyon, Pipeline and South Pipeline deposits are in production.
      During the 1930's, barite and mercury deposits were discovered in the Northern
      Shoshone mountain range. Mercury was produced sporadically until the 1950's.
      Barite has been mined continuously to present.





CAB
      Claims





We
      have
      selected the CAB claims because of promising geology and the geophysics
      signatures. The property is located approximately 45 miles south-southeast
      of
      the town of Battle Mountain, Lander County, Nevada, centered at a latitude
      40(0)06' N and longitude 116(0)59' W. The property is situated within the
      Shoshone Range and is located approximately 16 miles southwest of the Battle
      Mountain/Eureka Trend which hosts several major gold deposits and mines. The
      property comprises 24 unpatented lode mining claims totaling approximately
      480
      acres. The claims are accessible by road using four-wheel drive vehicles. The
      property has no known reserves and no part of the property had been placed
      into
      production.





The
      property had successful past exploration work which we obtained as part of
      our
      purchase. The previous work on the CAB claims was carried out by Chevron,
      Cameco, Pallaum Mineral, D.W. Blake and J.M. Thornton. Work up to 1997 consisted
      of geological mapping, rock and soil geochemical surveys, magnetic, gravity
      and
      CSAMT surveys. The adjoining mineral claims to the east received 1,225 metres
      of
      reverse circulation and rotary drilling in 12 holes.





Geochemical
      sampling returned gold values up to 0.348 g/mt. Drill chips sampled from hole
      95-4 returned 0.156 g/mt over an interval of 50 feet, including 5 feet of 0.964
      g/mt Au.  In 1997, a geological mapping and geochemical sampling, grid
      establishment, and a magnetic/VLT-EM survey was undertaken. The Very Low
      Frequency Electromagnetic (VLF-EM) method is based on the spread of
      electromagnetic continuous waves in the ground, which in presence of
      conductivity variations induce electric currents in the ground. Results from
      all
      programs have identified mineralized zones occurring along fault contacts.
      No
      part of the property had been placed into production.





Mineral
      Property Agreement





We
      entered into an Option Agreement (“Agreement”) with Midas Mountain, Inc.
      ("Midas") to acquire a 100% interest in the twenty-four CAB claim. We amended
      the Agreement on December 8, 2005 to amend the schedule of the option payments
      and subsequently terminated the agreement on May 30, 2007.  Pursuant
      to the termination agreement, each of the parties agreed to terminate the Option
      Agreement and the respective rights and obligations contained
      therein.  Midas specifically waived any further required payments or
      obligations that may have existed with us following the termination of the
      Option Agreement.














Property
      Option Payments





Pursuant
      to the Option Agreement we were required to pay Midas periodical Option Payments
      to keep the Agreement in good standing. All the Property Option Payments counted
      towards the Earning Costs that we were required to spend in order to keep the
      agreement in good standing. The payments made are outlined in the table that
      follows:





Periodical
      Option Payments





**Payment**
            **Amount**
            **Status/Date
                Due**Initial
            $25,000.00
            Paid
                September 1, 2004Second
            $30,000.00
            Paid
                February 11, 2005**TOTAL**
            **$55,000.00**




**Subsequent
      Events**





We
      entered into an Option Agreement (“Agreement”) with Midas Mountain, Inc.
      ("Midas") to acquire a 100% interest in the twenty-four CAB claim. We amended
      the Agreement on December 8, 2005 to amend the schedule of the option payments
      and subsequently terminated the agreement on May 30, 2007.  Pursuant
      to the termination agreement, each of the parties agreed to terminate the Option
      Agreement and the respective rights and obligations contained
      therein.  Midas specifically waived any further required payments or
      obligations that may have existed with us following the termination of the
      Option Agreement.





We
      have
      recently begun negotiating a Share Exchange Agreement, by and between ourselves,
      Continental Development Limited, a Hong Kong Corporation (“Continental”), and
      Excelvantage Group Limited, a British Virgin Islands Corporation which owns
      100%
      of Continental.  Upon completion of same, Continental is proposed to
      become the Company’s wholly owned subsidiary.  Additionally, the
      business of the Company shall be that of Continental’s wholly owned subsidiary,
      Zhejiang Kandi Vehicle Co., Ltd. (“Kandi”).





Excelvantage
      Group Ltd., a British Virgin Islands Company, is 100% owner of Continental
      Development Ltd., a Hong Kong company.  Continental conducts its
      business through its wholly owned operating subsidiary, Kandi, which is
      principally engaged in machinery manufacturing, with special purpose vehicles
      and Go-Karts as its leading products.  Kandi’s principal offices are
      located at Jinhua City Industrial Zone, Jinhua City, Zhejiang Province, the
      People’s Republic of China.





**ITEM
                  2.**
              **DESCRIPTION
                  OF PROPERTY**




Our
      corporate offices are located at 701 North Green Valley Parkway #200, Greenwood
      Village, Colorado 90111. Our telephone number is (702) 990-3489. We believe
      that
      this space is sufficient and adequate for our current business needs and as
      business warrants we may expand into a different location. Currently, the only
      business engaged in at such office is daily administration, sales and
      management.





**ITEM
                3.**
            **LEGAL
                PROCEEDINGS**




We
      are
      not presently parties to any litigation, nor to our knowledge and belief is
      any
      litigation threatened or contemplated against us.




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




No
      matters were submitted to a vote of our security holders during the fourth
      quarter of the fiscal year ended March 31, 2007.














**PART
      II**




**ITEM
                5.**
            **MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS**





Our
      shares of common stock are currently approved for trading on the OTC Electronic
      Bulletin Board under the symbol “SMOU.” However, no liquid market exists yet for
      our common stock. There is no assurance that an active trading market will
      develop which will provide liquidity for our existing shareholders.





As
      of
      June 21, 2007, we have 53 shareholders of record of our common
      stock.





Dividends





Since
      inception we have not paid any dividends on our common stock. We currently
      do
      not anticipate paying any cash dividends in the foreseeable future on our common
      stock, when issued pursuant to this offering. Although we intend to retain
      our
      earnings, if any, to finance the exploration and growth of our business, our
      Board of Directors will have the discretion to declare and pay dividends in
      the
      future.




Payment
      of dividends in the future will depend upon our earnings, capital requirements,
      and other factors, which our Board of Directors may deem relevant.




**ITEM
                  6.**
              **MANAGEMENT’S
                  DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF
                  OPERATIONS**


The
      following discussion and analysis provides information which management believes
      is relevant to an assessment and understanding of our financial condition.
      The
      discussion should be read in conjunction with our financial statements and
      notes
      thereto appearing in this prospectus. The following discussion and analysis
      contains forward-looking statements, which involve risks and uncertainties.
      Our
      actual results may differ significantly from the results, expectations and
      plans
      discussed in these forward- looking statements.






**Plan
      of Operations**





The
      following discussion and analysis provides information which management believes
      is relevant to an assessment and understanding of our results of operations
      and
      financial condition.  On March 31, 2007, we had $396 cash on hand. We
      estimate that in order to carry forward to the next 12 months we will need
      $42,200 to pay for office expenses, exploration program and property option
      payment due on October 15, 2007.  Based upon our present capital, we
      do not have sufficient capital to pay our remaining offering
      expenses.  In addition, we do not currently have sufficient capital
      pay the additional amounts owed under our property option agreement or the
      earning costs mandated by the Midas Agreement.





Therefore,
      if we are unable to obtain financing on reasonable terms or negotiate an
      extension for the option payments and Earning Costs from the Vendor we will
      lose
      the CAB claims. We will need to raise additional funds though public or private
      debt or the sale of equities to pay our remaining offering expenses, to make
      the
      payments required under existing agreements and to complete exploration on
      our
      property. We have no present loans or arrangements for these additional funds.
      If we are unable to obtain the additional funding, we will not be able to pay
      the remaining offering expenses owed or the additional amounts owed under our
      property option agreement or the earning costs mandated by the Midas Agreement,
      and we may not be able to implement our business plan.




The
      accompanying financial statements have been prepared assuming that the company
      will continue as a going concern. As discussed in the notes to the financial
      statements, the Company has experienced losses from inception. The Company’s
      financial position and operating results raise substantial doubt about its
      ability to continue as a going concern. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.















The
      following discussion and analysis contains forward-looking statements, which
      involve risks and uncertainties. Our actual results may differ significantly
      from the results, expectations and plans discussed in these forward-looking
      statements.




Organization




We
      were
      organized as a Delaware Corporation on March 31, 2004 for the purpose of
      locating and developing gold exploration properties in Nevada.




Overview




We
      searched for many months for available gold mineral exploration properties
      in
      the Battle Mountain/ Eureka Gold trend in north central Nevada. The price of
      gold increased from $380 per ounce when we started our property search to $410
      per ounce in August. It was apparent that we were working in a seller’s property
      market. We could not find a property with encouraging previous exploration
      work
      at a reasonable option price. In July 2004, we requested International Royalties
      Corp. to aid us to find an appropriate available gold exploration property.
      International Royalties approached their contacts and found a property that
      matched our expectations.





Mineral
      Property Agreement





We
      entered into an Option Agreement (“Agreement”) with Midas Mountain, Inc.
      ("Midas") to acquire a 100% interest in the twenty-four CAB claim. We amended
      the Agreement on December 8, 2005 to amend the schedule of the option payments
      and subsequently terminated the agreement on May 30, 2007.  Pursuant
      to the termination agreement, each of the parties agreed to terminate the Option
      Agreement and the respective rights and obligations contained
      therein.  Midas specifically waived any further required payments or
      obligations that may have existed with us following the termination of the
      Option Agreement.





Property
      Option Payments





Pursuant
      to the Option Agreement we were required to pay Midas periodical Option Payments
      to keep the Agreement in good standing. All the Property Option Payments counted
      towards the Earning Costs that we were required to spend in order to keep the
      agreement in good standing. The payments made are outlined in the table that
      follows:





Periodical
      Option Payments





**Payment**
            **Amount**
            **Status/Date
                Due**Initial
            $25,000.00
            Paid
                September 1, 2004Second
            $30,000.00
            Paid
                February 11, 2005**TOTAL**
            **$55,000.00**





**Subsequent
      Events**





We
      entered into an Option Agreement (“Agreement”) with Midas Mountain, Inc.
      ("Midas") to acquire a 100% interest in the twenty-four CAB claim. We amended
      the Agreement on December 8, 2005 to amend the schedule of the option payments
      and subsequently terminated the agreement on May 30, 2007.  Pursuant
      to the termination agreement, each of the parties agreed to terminate the Option
      Agreement and the respective rights and obligations contained
      therein.  Midas specifically waived any further required payments or
      obligations that may have existed with us following the termination of the
      Option Agreement.














We
      have
      recently begun negotiating a Share Exchange Agreement, by and between ourselves,
      Continental Development Limited, a Hong Kong Corporation (“Continental”), and
      Excelvantage Group Limited, a British Virgin Islands Corporation which owns
      100%
      of Continental.  Upon completion of same, Continental is proposed to
      become the Company’s wholly owned subsidiary.  Additionally, the
      business of the Company shall be that of Continental’s wholly owned subsidiary,
      Zhejiang Kandi Vehicle Co., Ltd. (“Kandi”).





Excelvantage
      Group Ltd., a British Virgin Islands Company, is 100% owner of Continental
      Development Ltd., a Hong Kong company.  Continental conducts its
      business through its wholly owned operating subsidiary, Kandi, which is
      principally engaged in machinery manufacturing, with special purpose vehicles
      and Go-Karts as its leading products.  Kandi’s principal offices are
      located at Jinhua City Industrial Zone, Jinhua City, Zhejiang Province, the
      People’s Republic of China.





**Critical
      Accounting Policies**




Our
      financial statements and related public financial information are based on
      the
      application of accounting principles generally accepted in the United States
      (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
      subjective interpretations of accounting principles that have an impact on
      the
      assets, liabilities, revenue and expense amounts reported. These estimates
      can
      also affect supplemental information contained in our external disclosures
      including information regarding contingencies, risk and financial condition.
      We
      believe our use if estimates and underlying accounting assumptions adhere to
      GAAP and are consistently and conservatively applied. We base our estimates
      on
      historical experience and on various other assumptions that we believe to be
      reasonable under the circumstances. Actual results may differ materially from
      these estimates under different assumptions or conditions. We continue to
      monitor significant estimates made during the preparation of our financial
      statements.




Our
      significant accounting policies are summarized in Note 1 of our financial
      statements. While all these significant accounting policies impact our financial
      condition and results of operations, we view certain of these policies as
      critical. Policies determined to be critical are those policies that have the
      most significant impact on our financial statements and require management
      to
      use a greater degree of judgment and estimates. Actual results may differ from
      those estimates. Our management believes that given current facts and
      circumstances, it is unlikely that applying any other reasonable judgments
      or
      estimate methodologies would cause effect on our consolidated results of
      operations, financial position or liquidity for the periods presented in this
      report.













**ITEM
                    7.**
                **FINANCIAL
                    STATEMENTS AND SUPPLEMENTARY
                    DATA**






**STONE
        MOUNTAIN RESOURCES, INC.**
 **(an
        exploration stage company)**
 
 **FINANCIAL
        STATEMENTS**
 
 **As
        Of March 31, 2007**
 
 
 
 
 INDEPENDENT
                  AUDITORS REPORT
              F-1BALANCE
                  SHEET
              F-2STATEMENT
                  OF OPERATIONS
              F-3STATEMENT
                  OF STOCKHOLDERS' EQUITY
              F-4STATEMENT
                  OF CASH FLOWS
              F-5FINANCIAL
                  STATEMENT FOOTNOTES
              F-6
 
 
 
 
 
 
 
 
 
  
 Gately
        & Associates, LLC
 Altamonte
        Springs, FL
 
 
 
  **REPORT
        OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT**
   The
        Board
        of Directors and Shareholder
  Stone
        Mountain Resources, Inc.
    Gentlemen:
   We
        have audited the accompanying balance sheet Stone Mountain Resources, Inc..
        (an
        exploration stage company) as of March 31, 2007and 2006 and the related
        statements of operations, stockholder’s equity and cash flows for the twelve
        months ending March 31, 2007 and 2006, and from inception (March 31, 2004)
        through March 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 the audit.
  We
        conducted the audit in accordance with U.S. generally accepted auditing
        standards. These standards require that we plan and perform the audit 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 the audit provides 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 stone Mountain Resources, Inc.
        as
        of March 31, 2007 and 2006, and the statement of operations and cash flows
        for
        the twelve months ending March 31, 2007 and from inception (March 31, 2004)
        through December, 2007, in conformity with U.S. generally accepted accounting
        principles.
  The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern.  As discussed in Note 1 to the
        financial statements, the Company has suffered losses from operations and
        has a
        net capital deficiency that raise substantial doubt about its ability to
        continue as a going concern.  The financial statements do not include
        any adjustments that might result from the outcome of this
        uncertainty.
   Gately
        & Associates, LLC
   May
        30,
        2007


F-1








**STONE
                  MOUNTAIN RESOURCES, INC.****(an
                  exploration stage company)****BALANCE
                  SHEET****As
                  of March 31, 2007 and March 31, 2006****ASSETS****CURRENT
                  ASSETS**
              
              **3/31/2007**
              
              
              **3/31/2006**Cash
              
              $
              396
              
              
              $
              486Total
                  Current Assets
              
              
              396
              
              
              
              486**TOTAL
                  ASSETS**
              
              $
              396
              
              
              $
              486**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Accrued
                  expenses
              
              $
              8,100
              
              
              $
              6,200Total
                  Current Liabilities
              
              
              8,100
              
              
              
              6,200**LONG-TERM
                  LIABILITIES**None
              
              
              -
              
              
              
              -**TOTAL
                  LIABILITIES**
              
              
              8,100
              
              
              
              6,200**STOCKHOLDERS'
                  EQUITY**Preferred
                  stock, $.001 par valueAuthorized: 10,000,000  Issued: None
              
              
              -
              
              
              
              -Common
                  Stock, $.001 par valueAuthorized: 100,000,000Issued: 27,961,000 and 27,961,000, respectively
              
              
              27,961
              
              
              
              27,961Less:  Treasury
                  Stock
              
              
              (8,000
              )
              
              
              (8,000
              )Additional
                  paid
                  in capital
              
              
              91,289
              
              
              
              91,289Accumulated
                  deficit during development stage
              
              
              (118,954
              )
              
              
              (116,964
              )Total
                  Stockholders' Equity
              
              
              (7,704
              )
              
              
              (5,714
              )**TOTAL
                  LIABILITIES AND EQUITY**
              
              $
              396
              
              
              $
              486






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




F-2






**STONE
                  MOUNTAIN RESOURCES, INC.****(an
                  exploration stage company)****STATEMENT
                  OF OPERATIONS****For
                  the twelve months ending March 31, 2007 and 2006,
                  and****from
                  inception (March 31, 2004) through March 31, 2007****FROM****3/31/2007**
              
              
              **3/31/2006**
              
              
              **INCEPTION****REVENUE**
              
              $
              -
              
              
              $
              -
              
              
              $
              -**COST
                  OF SERVICES**
              
              
              -
              
              
              
              -
              
              
              
              -**GROSS
                  PROFIT OR (LOSS)**
              
              
              -
              
              
              
              -
              
              
              
              -**GENERAL
                  AND ADMINISTRATIVE EXPENSES**
              
              
              1,990
              
              
              
              6,138
              
              
              
              42,954**GENERAL
                  EXPLORATION**
              
              
              -
              
              
              
              -
              
              
              
              76,000**OPERATING
                  INCOME (LOSS)**
              
              
              (1,990
              )
              
              
              (6,138
              )
              
              
              (118,954
              )**BEGINNING
                  ACCUMULATRD DEFICIT****ACCUMULATED
                  DEFICIT**
              
              $
              (118,954
              )
              
              $
              (116,964
              )
              
              $
              (118,954
              )**Earnings
                  (loss) per share, basic**
              
              $
              (0.00
              )
              
              $
              (0.00
              )**Weighted
                  average number of common shares**
              
              
              19,961,000
              
              
              
              19,961,000




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








F-3






**STONE
                  MOUNTAIN RESOURCES, INC.****(an
                  exploration stage company)****STATEMENT
                  OF STOCKHOLDERS' EQUITY****As
                  of March 31, 2007****ADDITIONAL****COMMON**
              
              
              **PAID
                  IN**
              
              
              **ACCUM.**
              
              
              **TOTAL****STOCK**
              
              
              **CAPITAL**
              
              
              **DEFICIT**
              
              
              **EQUITY**Common
                  stock issued as officers'compensation
                  on company formation
              
              
              23,000,000
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -March
                  31, 2004 at $0.001 per shareNet
                  income (loss)
              
              
              
              
              
              
              
              
              
              
              (23,500
              )
              
              $
              (23,500
              )Balance,
                  March 31, 2004
              
              
              23,000,000
              
              
              
              -
              
              
              
              (23,500
              )
              
              
              (23,500
              )Common
                  stock issued for cash
              
              
              4,800,000
              
              
              
              43,200
              
              
              
              
              
              
              
              43,200August
                  31, 2004 at $0.01per
                  share on private placementNet
                  income (loss)
              
              
              
              
              
              
              
              
              
              
              (50,330
              )
              
              
              (50,330
              )Balance,
                  December 31, 2004
              
              
              27,800,000
              
              
              
              43,200
              
              
              
              (73,830
              )
              
              
              (30,630
              )Common
                  stock issued for cash
              
              
              161,000
              
              
              
              40,089
              
              
              
              
              
              
              
              40,089February
                  28, 2005 at $0.25per
                  share on private placementNet
                  income (loss)
              
              
              
              
              
              
              
              
              
              
              (36,996
              )
              
              
              (36,996
              )Balance,
                  March 31, 2005
              
              
              27,961,000
              
              
              
              83,289
              
              
              
              (110,826
              )
              
              
              (27,537
              )Common
                  stock returned to treasury
              
              
              (8,000,000
              )
              
              
              8,000
              
              
              
              -and
                  cancelled as of July 2005at
                  $0.001 per shareNet
                  income (loss)
              
              
              
              
              
              
              
              
              
              
              (6,138
              )
              
              
              (6,138
              )Balance,
                  March 31, 2006
              
              
              19,961,000
              
              
              
              91,289
              
              
              
              (116,964
              )
              
              
              (33,675
              )Net
                  Income (loss)
              
              
              
              
              
              
              
              
              
              
              (1,990
              )
              
              
              (1,990
              )Balance,
                  March 31, 2007
              
              
              19,961,000
              
              
              $
              91,289
              
              
              $
              (118,954
              )
              
              $
              (35,665
              )


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






F-4




**STONE
                  MOUNTAIN RESOURCES, INC.****(an
                  exploration stage company)****STATEMENTS
                  OF CASH FLOWS****For
                  the twelve months ending March 31, 2007 and 2006,
                  and****from
                  inception (March 31, 2004) through March 31, 2007****FROM****CASH
                  FLOWS FROM OPERATING ACTIVITIES**
              
              **3/31/2007**
              
              
              **3/31/2006**
              
              
              **INCEPTION**Net
                  income (loss)
              
              
              (1,990
              )
              
              $
              (6,138
              )
              
              $
              (118,954
              )Adjustments
                  to
                  reconcile net income to net cashprovided
                  by  (used in) operating activities:Stock
                  issued as compensation
              
              
              -
              
              
              
              -
              
              
              
              23,000(Increase)
                  Decrease in prepaid expense
              
              
              -
              
              
              
              823
              
              
              
              -Increase
                  (Decrease) in accrued expenses
              
              
              1,900
              
              
              
              1,900
              
              
              
              8,100Total
                  adjustments to net income
              
              
              1,900
              
              
              
              2,723
              
              
              
              31,100Net
                  cash provided by (used in) operating activities
              
              
              (90
              )
              
              
              (3,415
              )
              
              
              (87,854
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**None
              
              
              -
              
              
              
              -
              
              
              
              -Net
                  cash flows provided by (used in) investing activities
              
              
              -
              
              
              
              -
              
              
              
              -**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from
                  stock issuance
              
              
              -
              
              
              
              -
              
              
              
              88,250Net
                  cash provided by (used in) financing activities
              
              
              -
              
              
              
              -
              
              
              
              88,250**CASH
                  RECONCILIATION**Net
                  increase (decrease) in cash
              
              
              (90
              )
              
              
              (3,415
              )
              
              
              396Cash
                  -
                  beginning balance
              
              
              486
              
              
              
              3,901
              
              
              
              -CASH
                  BALANCE END OF PERIOD
              
              $
              396
              
              
              $
              486
              
              
              $
              396






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






F-5


**STONE
          MOUNTAIN RESOURCES, INC.**
 **(an
          exploration stage company)**
 
 **NOTES
          TO FINANCIAL STATEMENTS**
 
 **As
          Of March 31, 2007**
 
 **NOTE  1  -  OPERATIONS  AND  BASIS  OF  PRESENTATION**
 
 Stone
          Mountain Resources, Inc. (the Company), an exploration stage company, was
          incorporated on March 31, 2004 in the State of Delaware. The Company is
          an
          exploration stage mining company. On October 11, 2004 the Company became
          actively engaged in acquiring mineral properties, raising capital, and
          preparing
          properties for production.  The Company did not have any significant
          mining operations or activities from inception; accordingly, the Company
          is
          deemed to be in the exploration stage.
 
 The
          Company's financial statements have been presented on the basis that it
          is a
          going concern, which contemplates the realization of the mineral properties
          and
          other assets and the satisfaction of liabilities in the normal course of
          business. The Company has incurred losses of from inception.  These
          factors raise substantial doubt about the Company's ability to continue
          as a
          going concern. Management continues to actively seek additional sources
          of
          capital to fund current and future operations. There is no assurance that
          the
          Company will be successful in continuing to raise additional capital,
          establishing probable or proven reserves, or determining if the mineral
          properties can be mined economically. These financial statements do not
          include
          any adjustments that might result from the outcome of these
          uncertainties.
 
 The
          fiscal year end of the Company is March 31.
 
 **NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES**
 
 Revenue
          and Cost Recognition
 
 The
          Company uses the accrual basis of accounting for financial statement reporting.
          Revenues and expenses are recognized in accordance with Generally Accepted
          Accounting Principles for the industry. Certain period expenses are recorded
          when obligations are incurred.
 
 Use  of  Estimates
 
 The
          preparation of the financial statements in conformity with generally accepted
          accounting principles requires management to make estimates and assumptions
          that
          affect the reported amount of assets and liabilities, and disclosure of
          contingent liabilities at the date of the financial statements, and the
          reported
          amount of revenues and expenses during the reporting period. Actual results
          could differ from those results.
 
 Accounts
          Receivable, deposits, Accounts Payable and accrued Expenses
 
 Accounts
          receivable have historically been immaterial and therefore no allowance
          for
          doubtful accounts has been established. Normal operating refundable Company
          deposits are listed as Other Assets. Accounts payable and accrued expenses
          consist of trade payables created from the normal course of
          business.
 
 Non-mining
          Property and Equipment
 
 Property
          and equipment purchased by the Company are recorded at cost. Depreciation
          is
          computed by the straight-line method based upon the estimated useful lives
          of
          the respective assets. Expenditures for repairs and maintenance are charged
          to
          expense as incurred as are any items purchased which are below the Company's
          capitalization threshold of $1,000.
 
 For
          assets sold or otherwise disposed of, the cost and related accumulated
          depreciation are removed from accounts, and any related gain or loss is
          reflected in income for the period.
   
 F-6
  **STONE
          MOUNTAIN RESOURCES, INC.**
 **(an
          exploration stage company)**
 
 **NOTES
          TO FINANCIAL STATEMENTS**
 
 **As
          Of March 31, 2007**
 
 Income  Taxes
 
 The
          Company accounts for income taxes using the liability method which requires
          recognition of deferred tax liabilities and assets for the expected future
          tax
          consequences of events that have been included in the financial statements
          or
          tax returns. Deferred tax assets and liabilities are determined based on
          the
          difference between the financial statements and tax basis of assets and
          liabilities using enacted tax rates in effect for the year in which the
          differences are expected to reverse.
 
 The
          Company's management determines if a valuation allowance is necessary to
          reduce
          any tax benefits when the available benefits are more likely than not to
          expire
          before they can be used.
 
 Stock  Based  Compensation
 
 In
          October 1995, the Financial Accounting Standards Board issued Statement
          of
          Financial Accounting Standards No. 123, "Accounting for Stock-Based
          Compensation," (SFAS 123), which is effective for periods beginning after
          December 15, 1995. SFAS 123 requires that companies either recognize
          compensation expense for grants of stock, stock options, and other equity
          instruments based on fair value or provide pro-forma disclosure of the
          effect on
          net income and earnings per share in the Notes to the Financial Statements.
          The
          Company has adopted SFAS 123 in accounting for stock-based
          compensation.
 
 Cash  and  Cash  Equivalents,
          and Credit Risk
 
 For
          purposes of reporting cash flows, the Company considers all cash accounts
          with
          maturities of 90 days or less and which are not subject to withdrawal
          restrictions or penalties, as cash and cash equivalents in the accompanying
          balance sheet.
 
 The
          portion of deposits in a financial institution that insures its deposits
          with
          the FDIC up to $100,000 per depositor in excess of such insured amounts
          are not
          subject to insurance and represent a credit risk to the Company.
 
 Foreign
          Currency Translation and Transactions
 
 The
          Company's functional currency is the US dollar. No material translations
          or
          transactions have occurred. Upon the occurrence of such material transactions
          or
          the need for translation adjustments, the Company will adopt Financial
          Accounting Standard No. 52 and other methods in conformity with Generally
          Accepted Accounting Principles.
 
 Earnings
          Per Share
 
 In
          February 1997, the Financial Accounting Standards Board (FASB) issued Statement
          of Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share".
          SFAS
          128 replaces the presentation of primary earnings per share with a presentation
          of basic earnings per share based upon the weighted average number of common
          shares for the period.
 
 
 **NOTE  3  -  AFFILIATES  AND  RELATED  PARTIES**
 
 Significant
          relationships with (1) companies affiliated through common ownership and/or
          management, and (2) other related parties are as follows:
 
 The
          Company has compensated officers of the Company with compensation in the
          form of
          stock as described in the equity footnote.
   F-7
 
 **STONE
          MOUNTAIN RESOURCES, INC.**
 **(an
          exploration stage company)**
 
 **NOTES
          TO FINANCIAL STATEMENTS**
 
 **As
          Of March 31, 2007**
 
 **NOTE  4
          -  INCOME  TAXES**
 
 The
          Company has available net operating loss carryforwards for financial statement
          and federal income tax purposes. These loss carryforwards expire if not
          used
          within 20 years from the year generated. The Company's management has decided
          a
          valuation allowance is necessary to reduce any tax benefits because the
          available benefits are more likely than not to expire before they can be
          used.  These net operating losses expire as the following: $1,990 at
          2027, $6,138 at 2026, $5,266 at 2025 and $73,830 at 2024.
 
 **NOTE
          5 - LONG-TERM DEBT**
 
 The
          Company has no long-term debt.
 
 **NOTE  6
          -  SHAREHOLDERS'  EQUITY**
 
 Preferred
          Stock
 
 The
          Company has authorized ten million (10,000,000) shares of preferred stock
          with a
          par value of $.001, none of which have been issued.
 
 Common
          Stock
 
 The
          Company has authorized one hundred million (100,000,000) shares of common
          Stock
          with a par value of $.001.  The Company has 19,961,000 shares of
          common stock issued and outstanding.
 
 On
          March
          31, 2004 the Company issued 15,000,000 shares of common stock to the Company
          President, Peter Dodge, as compensation for the formation of the corporation
          and
          services rendered for a value of $15,000 or $0.001 per share.
 
 On
          March
          31, 2004 the Company issued 8,000,000 shares of common stock to the Company
          Secretary, Scott Young, as compensation for services rendered for a value
          of
          $8,000 or $0.001 per share.
 
 On
          August
          31, 2004 the Company issued 4,800,000 shares of common stock at a price
          of $.01
          per share in an offering exempt from registration at Section 4 (2) of the
          Securities Act of 1933 for a total value of $48,000.
 
 On
          February 28, 2005 the Company issued 161,000 shares of common stock at
          a price
          of $.25 per share in an offering exempt from registration at Section 4
          (2) of
          the Securities Act of 1933 for a total value of $40,250.
 
 During
          July of 2005 the Company accepted the resignation of a Company officer
          with the
          return of 8,000,000 shares of stock to treasury at $0.001 per
          share.
 
 Common
          Stock Recorded as Compensation
 
 The
          Company does not have an employee stock compensation package set up at
          this
          time. The stock compensation that has been granted falls under Rule 144.
          Compliance with Rule 144 is discussed in the following paragraph.
 
 In
          general, under Rule 144 as currently in effect, a person who has beneficially
          owned shares of a company's common stock for at least one year is entitled
          to
          sell within any three month period a number of shares that does not exceed
          the
          greater of:
    F-8
   **STONE
          MOUNTAIN RESOURCES, INC.**
 **(an
          exploration stage company)**
 
 **NOTES
          TO FINANCIAL STATEMENTS**
 
 **As
          Of March 31, 2007**
 
 1.
                1%
                    of the number of shares of the company's common stock then
                    outstanding.
 
 2.
                The
                    average weekly trading volume of the company's common stock during
                    the
 four
          calendar weeks preceding the filing of a notice on form 144 with
 respect
          to the sale.
 
 Sales
          under Rule 144 are also subject to manner of sale provisions and notice
          requirements and to the availability of current public information about
          the
          company.
 
 **NOTE  7
          – CONTRACTS AND AGREEMENTS**
 
 On
          October 11, 2004 the Company entered into a CAB property option agreement
          with
          Midas Mountain, Inc. whereby unpatented mineral claim options located in
          sections 22, 23, 26 & 27, T26N, R44E in Lander County, Nevada were purchased
          for an initial investment of $25,000 and then three succeeding annual payments
          of $30,000 commencing on February 15, 2005.  The Company has satisfied
          the initial payment and the February 15, 2005 payment.  On December 8,
          2005, the agreement was amended to change the payments to an initial payment
          of
          $25,000 and then $30,000 on or before February 15, 2005 with payments of
          $35,000
          on or before October 15, 2006 and 2007.  The agreement was
          subsequently terminated the agreement on May 30, 2007.  Pursuant to
          the termination agreement, each of the parties agreed to terminate the
          Option
          Agreement and the respective rights and obligations contained
          therein.  Midas specifically waived any further required payments or
          obligations that may have existed with us following the termination of
          the
          Option Agreement
 
 The
          Company entered into an agreement with its securities attorney whereby
          the
          Company would pay $7,500 upon execution of the agreement for services related
          to
          private placements, Form SB-2 and Form 15c211 and a payment of $30,000
          when
          these filings have been accepted.
 
 **NOTE  8
          -  COMMITMENTS  AND  CONTINGENCIES**
 
 Commitments
          of the Company include the responsibility to the registration costs of
          the
          proposed filing.
 
 Management
          is not aware of any contingent matters that could have a material adverse
          effect
          on the Company’s financial condition, results of operations, or
 liquidity.
 
 **NOTE  9
          -  LITIGATION, CLAIMS AND ASSESSMENTS**
 
 From
          time
          to time in the normal course of business the Company will be involved in
          litigation. The Company’s management has determined any asserted or unasserted
          claims to be immaterial to the financial statements.
 
 **NOTE  10
          – GOING CONCERN**
 
 The
          accompanying financial statements have been prepared assuming that the
          company
          will continue as a going concern. As discussed in the notes to the financial
          statements, the Company has experienced losses from inception. The Company’s
          financial position and operating results raise substantial doubt about
          its
          ability to continue as a going concern. The financial statements do not
          include
          any adjustments that might result from the outcome of this
          uncertainty.
 
 The
          Company lacks an operating history and has losses which we expect to continue
          into the future.
 
 
 F-9
 
 **STONE
          MOUNTAIN RESOURCES, INC.**
 **(an
          exploration stage company)**
 
 **NOTES
          TO FINANCIAL STATEMENTS**
 
 **As
          Of March 31, 2007**
 
 
 The
          Company was incorporated in March 2004 and has not started the propose
          business
          operations or realized any revenues. The Company has no operating history
          upon
          which an evaluation of our future success or failure can be made. The ability
          to
          achieve and maintain profitability and positive cash flow is dependent
          upon:
 
 -
                ability
                    to locate a profitable mineral
                    property
 -
                ability
                    to generate revenues
 -
                ability
                    to raise the capital necessary to continue exploration of  the
                    property.
 
 Based
          upon current plans, the Company expects to incur operating losses in future
          periods.  This will happen because there are expenses associated with
          the research and exploration of mineral properties. The Company cannot
          guarantee
          that it will be successful in generating revenues in the future. Failure
          to
          generate revenues may cause the Company to go out of business.
 
 The
          company intends to generate additional capital from the public markets
          to
          increase its ability to locate profitable mineral property and generate
          revenues. The Company may also consider public or private debt transactions
          and/or private placement, but has no such actions in place at this
          time.
     F-10
   **ITEM
                  8.**
              **CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE**




None




**ITEM
                    8A.**
                **CONTROLS
                    AND PROCEDURES**


Evaluation
      of disclosure controls and procedures





Our
      principal executive officer and principal financial officer evaluated our
      disclosure controls and procedures (as defined in rule 13a-14(c) and 15d-14(c)
      under the Securities Exchange Act of 1934, as amended) as of a date within
      90
      days before the filing of this annual report (the Evaluation Date). Based on
      that evaluation, our principal executive officer and principal financial officer
      concluded that, as of the Evaluation Date, the disclosure controls and
      procedures in place were adequate to ensure that information required to be
      disclosed by us, including our consolidated subsidiaries, in reports that we
      file or submit under the Exchange Act, is recorded, processed, summarized and
      reported on a timely basis in accordance with applicable rules and
      regulations.





Although
      our principal executive officer and principal financial officer believes our
      existing disclosure controls and procedures are adequate to enable us to comply
      with our disclosure obligations, we intend to formalize and document the
      procedures already in place and establish a disclosure committee.





Changes
      in internal controls





We
      have
      not made any significant changes to our internal controls subsequent to the
      Evaluation Date. We have not identified any significant deficiencies or material
      weaknesses or other factors that could significantly affect these controls,
      and
      therefore, no corrective action was taken.













**PART
      III**









**ITEM
                    9.**
                **DIRECTORS
                    AND EXECUTIVE OFFICERS OF THE
                    REGISTRANT**


The
      directors and executive officers of the Company are:





**Name**
            **Age**
            **Title**Peter
                Dodge
            53
            Chief
                Executive Officer, Chief Financial Officer, President, Treasure and
                Director





**PETER
      DODGE, 53,** is our founder, and has been our Chief Executive Officer,
      President, Treasurer, and Director since the company's inception. Mr. Peter
      Dodge has been involved with start-up companies for the last 18 years. Mr.
      Dodge's training as a Land Surveyor and his role as Chief Surveyor in the
      British Columbia Government Land Title Office has placed him with dealing with
      many land and title issues. The land title office is a government office which
      registers land titles. His studies have included the relationship of various
      geological formations with mineral deposits and mine reclamation plans. Mr.
      Dodge's career has been diverse and mainly focused on the development,
      promotion, financing, marketing, and sales of start-up companies. Since he
      has
      dealt mainly with start-up companies he has had to face the challenge of
      creating maximum results with minimum resources. Since 2004, Mr. Dodge who
      is
      the founding Director of Aboriginal Literacy Enterprise Inc. has been working
      on
      developing the company's programs and arranging corporate financing. Aboriginal
      Literacy Enterprise is a private company that is providing telecommunications,
      K
      to 12 education, high speed internet service, and governance to Aboriginal
      communities throughout North America.





Mr.
      Dodge
      has also worked with the following companies since 2000. From 2000 t0 2004,
      he
      was a marketing associate for Enterprise Environmental, which is in the business
      of recycling technology implementation. From 2001 to 2003, he was a marketing
      associate for Vickers and Associates, a company in the business of joint
      ventures project development with Aboriginals. From 2000 to 2004, he was a
      marketing and finance director for Touchstone Gold Corporation which has placer
      gold deposits in California. From 2002 to 2003, he was a marketing director
      for
      Cashable Vouchers which markets consumer loyalty awards programs. From 2003
      to
      2004, he was a marketing and finance associate for Battery Recycling which
      operates a battery recycling operation. From 2003 to 2004, he was a marketing
      associate for Cedar Hills Medical Complex which develops medical oriented real
      estate projects. Additionally, from 2003 to 2004, he was a marketing associate
      for HotSportsNetworks.com, a sports coaching franchise.





Mr.
      Dodge
      is involved in developing product markets and marketing start-up businesses.
      He
      often takes an equity position and sometimes takes on the role of director
      of a
      company. When the project and the market are clearly defined, Mr. Dodge brings
      additional management to take the company to the next level.





**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.




All
      officers and directors listed above will remain in office until the next annual
      meeting of our stockholders, and until their successors have been duly elected
      and qualified. There are no agreements with respect to the election of
      Directors. We have not compensated our Directors for service on our Board of
      Directors, any committee thereof, or reimbursed for expenses incurred for
      attendance at meetings of our Board of Directors and/or any committee of our
      Board of Directors. Officers are appointed annually by our Board of Directors
      and each Executive Officer serves at the discretion of our Board of Directors.
      We do not have any standing committees. Our Board of Directors may in the future
      determine to pay Directors’ fees and reimburse Directors for expenses related to
      their activities.














None
      of our Officers and/or Directors have filed any bankruptcy petition, been
      convicted of or been the subject of any criminal proceedings or the subject
      of
      any order, judgment or decree involving the violation of any state or federal
      securities laws within the past five (5) years.




BOARD
      COMMITTEES





In
      June
      2004, our Board of Directors created the Compensation Committee, which is
      comprised of Peter Dodge. The Compensation Committee has the authority to review
      all compensation matters relating to us.





The
      Compensation Committee has not yet formulated compensation policies for senior
      management and executive officers. However, it is anticipated that the
      Compensation Committee will develop a company-wide program covering all
      employees and that the goals of such program will be to attract, maintain,
      and
      motivate our employees.





It
      is
      further anticipated that one of the aspects of the program will be to link
      an
      employee's compensation to his or her performance, and that the grant of stock
      options or other awards related to the price of the Common Shares will be used
      in order to make an employee's compensation consistent with shareholders'
      gains.





It
      is
      expected that salaries will be set competitively relative to the mineral
      exploration industry and that individual experience and performance will be
      considered in setting salaries.





In
      June
      2004, our Board of Directors created an Audit Committee, which is comprised
      of
      Peter Dodge. The Audit Committee is charged with reviewing the following matters
      and advising and consulting with the entire Board of Directors with respect
      thereto:





1.
            the
                preparation of our annual financial statements in collaboration with
                our
                independent accountants;


2.
            annual
                review of our financial statements and annual report;
                and


3.
            all
                contracts between us and our officers, directors and other affiliates.
                The
                Audit Committee, like most independent committees of public companies,
                does not have explicit authority to veto any actions of the entire
                Board
                of Directors relating to the foregoing or other matters; however,
                our
                senior management, recognizing their own fiduciary duty to us and
                our
                stockholders, is committed not to take any action contrary to the
                recommendation of the Audit Committee in any matter within the scope
                of
                its review.




**Certain
      Legal Proceedings**




No
      director, nominee for director, or executive officer of the Company has appeared
      as a party in any legal proceeding material to an evaluation of his ability
      or
      integrity during the past five years.




**Compliance
      With Section 16(A) Of The Exchange Act.**




Section
      16(a) of the Exchange Act requires the Company’s officers and directors, and
      persons who beneficially own more than 10% of a registered class of the
      Company’s equity securities, to file reports of ownership and changes in
      ownership with the Securities and Exchange Commission and are required to
      furnish copies to the Company. To the best of the Company’s knowledge, no
      reports required to be filed were timely filed in fiscal year ended March 31,
      2007.




**Code
      Of Ethics**




The
      company has adopted a Code of Ethics applicable to its Chief Executive Officer
      and Principal Financial Officer. This Code of Ethics is filed herewith as an
      exhibit.

















**ITEM
                      10.**
                  **EXECUTIVE
                      COMPENSATION**
 ****


**Compensation
      of Executive Officers**




**Summary
      Compensation Table.**The following summary compensation table sets forth
      all compensation paid by us during the fiscal years ended March 31, 2007 and
      2006 in all capacities for the accounts of the Chief Executive Officer (CEO)
      and
      Chief Financial Officer (CFO).




ANNUAL
      COMPENSATION LONG TERM COMPENSATION





**ANNUAL
      COMPENSATION                          LONG
      TERM COMPENSATION**





**Name
                and Principal Position**
            **Year**
            **Salary**
              **($)**
            **Bonus**
              **($)**
            **Stock
                Awards**
              **($)**
            **Option**
              **Awards**
              **($)**
            **Non-Equity
                Incentive**
              **Plan
                Compensation**
            **Change
                in Pension value and Nonqualified deferred compensation
                earnings**
              **($)**
            **All
                Other Compensation**
              **($)**
            **Total**
              **($)**PETER
                DODGE, President, CEO, CFO
            2007
            0
            0
            0
            0
            0
            0
            0
            02006
            0
            0
            15,000,000(1)
            0
            0
            0
            0
            0





(1)
            Mr.
                Dodge received 15,000,000 founders' shares for services rendered
                to
                us.   He will not receive such compensation in the
                future.





**As
      of as of December 31, 2006, the Company did not have any “Grants of Plan-Based
      Awards”, “Outstanding Equity Awards at Fiscal Year-End”, “Option Exercises and
      Stock Vested”, “Pension Benefits”, or “Nonqualified Deferred
      Compensation”.  Nor did the Company have any “Post-Employment
      Payments” to report.**




**There
      was no officer whose salary and bonus for the period exceeded
      $100,000.**




**Compensation
      of Directors**




Directors
      are permitted to receive fixed fees and other compensation for their services
      as
      directors. The Board of Directors has the authority to fix the compensation
      of
      directors. No amounts have been paid to, or accrued to, directors in such
      capacity.




**Employment
      Agreements**




We
      do not
      have written employment agreements with Peter Dodge. In the future, we will
      determine on an annual basis how much compensation our officers and director
      will receive.




**ITEM
                        11.**
                    **SECURITY
                        OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                        MANAGEMENT**


The
      following table sets forth the number and percentage of shares of our common
      stock owned as of June 21, 2007 by all persons (i) known to us who own more
      than
      5% of the outstanding number of such shares, (ii) by all of our directors,
      and
      (iii) by all officers and directors of us as a group. Unless otherwise
      indicated, each of the stockholders has sole voting and investment power with
      respect to the shares beneficially owned.














**Name
                and Address of Beneficial Owner (1)**
            **Amount
                and Nature of Beneficial Ownership**
            **Percent
                of Outstanding Shares**Peter
                Dodge
              701
                North Green Valley Parkway #200
              Henderson,
                NV 89074
            15,000,000
            75.15%Officers
                and Directors as a Group
            15,000,000
            75.15%




(1)
      Under
      the rules of the SEC, a person is deemed to be the beneficial owner of a
      security if such person has or shares the power to vote or direct the voting
      of
      such security or the power to dispose or direct the disposition of such
      security. A person is also deemed to be a beneficial owner of any securities
      if
      that person has the right to acquire beneficial ownership within 60 days of
      the
      date hereof. Unless otherwise indicated by footnote, the named entities or
      individuals have sole voting and investment power with respect to the shares
      of
      common stock beneficially owned.





(2)
      This
      table is based upon information obtained from our stock records. Unless
      otherwise indicated in the footnotes to the above table and subject to community
      property laws where applicable, we believe that each shareholder named in the
      above table has sole or shared voting and investment power with respect to
      the


shares
      indicated as beneficially owned.





Stock
      Option Grants





We
      have
      not granted any stock options to our executive officers since our
      incorporation.




**ITEM
                          12.**
                      **CERTAIN
                          RELATIONSHIPS AND RELATED
                          TRANSACTIONS**


We
      currently use approximately 200 square feet of leased office space at 701 North
      Green Valley Parkway #200, Henderson, Nevada 89074. We lease such space from
      Peter Dodge, our President for $200 month which covers the use of the telephone,
      office equipment and furniture.





**PART
      IV**






**ITEM
                            13.**
                        **EXHIBITS
                            AND REPORTS ON FORM 8-K**


a)   The
      following documents are filed as part of this report:





1.   Financial
      statements; see index to financial statement and schedules in Item 7
      herein.





2.   Financial
      statement schedules; see index to financial statements and schedules in Item
      7
      herein.





3.   Exhibits:
      None





(b)  Reports
      on Form 8-K.





None













**ITEM
                              14.**
                          **PRINCIPAL
                              ACCOUNTANT FEES AND
                              SERVICES**


**Audit
      Fees**




For
      the
      Company’s fiscal years ended March 31, 2007 the Company was billed approximately
      $2,500 respectively for professional services rendered for the audit and review
      of its financial statements.




**Tax
      Fees**




For
      the
      Company’s fiscal years ended March 31, 2007, the Company incurred no expenses
      for preparation of its corporate income tax returns.




**All
      Other Fees**




The
      Company did not incur any other fees related to other services rendered by
      its
      principal accountant for the fiscal years ended March 31, 2007.




**SIGNATURES**








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




**STONE
                MOUNTAIN RESOURCES, INC.**By:
            */s/
                Peter Dodge***PETER
                DODGE**Chief
                Executive Officer
              Principal
                Financial Officer,
              Principal
                Accounting OfficerDated:
            June
                25, 2007




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




**Name**
            **Title**
            **Date*****/s/
                Peter Dodge***
              **Peter
                Dodge**
            Chief
                Executive Officer
              Principal
                Financial Officer,
              Principal
                Accounting Officer, and Director
            June
                25, 2007