**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-QSB**




**x**
              **Quarterly
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934.**
  **For
        the quarterly period ended September 30, 2006.**
 **or**
  **o**
              **Transition
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934.**






**For
      the transition period from ______to______.**




**Commission
      file number 333-123735**




**STONE
      MOUNTAIN RESOURCES, INC.**


(Exact
      name of registrant as specified in its charter)




**Delaware**
            **87-0700927**(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)




(Former
      name, former address and former fiscal year, if changed since last
      report)




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




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


Yes x No o





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of November 14, 2006: 19,961,000  shares
      of
      common stock.


















**STONE
      MOUNTAIN RESOURCES, INC.**


**FINANCIAL
      STATEMENTS**




**INDEX**




**PART
      I-- FINANCIAL INFORMATION**





Item
                1.
            Financial
                StatementsItem
                2.
            Management’s
                Discussion and Analysis of Financial ConditionItem
                3.
            Control
                and Procedures




**PART
      II-- OTHER INFORMATION**




Item
                1.
            Legal
                ProceedingsItem
                2.
            Changes
                in SecuritiesItem
                3.
            Defaults
                Upon Senior SecuritiesItem
                4.
            Submission
                of Matters to a Vote of Security HoldersItem
                5.
            Other
                InformationItem
                6.
            Exhibits
                and Reports on Form 8-K






**SIGNATURE**




**Item
      1. Financial Information**




BASIS
      OF
      PRESENTATION




The
      accompanying reviewed financial statements are presented in accordance with
      generally accepted accounting principles for interim financial information
      and
      the instructions to Form 10-QSB and item 310 under subpart A of Regulation
      S-B.
      Accordingly, they do not include all of the information and footnotes required
      by generally accepted accounting principles for complete financial statements.
      In the opinion of management, all adjustments (consisting only of normal
      occurring accruals) considered necessary in order to make the financial
      statements not misleading, have been included. Operating results for the six
      months ended September 30, 2006 are not necessarily indicative of results that
      may be expected for the year ending March 31, 2007. The financial statements
      are
      presented on the accrual basis.



















**STONE
      MOUNTAIN RESOURCES, INC.**


**(an
      exploration stage company)**




**FINANCIAL
      STATEMENTS**


**(Unaudited)**




**As
      Of September 30, 2006**








BALANCE
                SHEET
            F-1




STATEMENT
                OF OPERATIONS
            F-2




STATEMENT
                OF STOCKHOLDERS’ EQUITY
            F-3




STATEMENT
                OF CASH FLOWS
            F-4




FINANCIAL
                STATEMENT FOOTNOTES
            F-5



















**STONE
                  MOUNTAIN RESOURCES, INC.****(an
                  exploration stage company)****BALANCE
                  SHEET****(Unaudited)****As
                  of September 30, 2006 and March 31, 2006****ASSETS****CURRENT
                  ASSETS**
              
              **9/30/2006**
              
              **3/31/2006**Cash
              
              $
              441
              
              $
              486Prepaid
                  Rent
              
              
              -
              
              
              -Total
                  Current Assets
              
              
              441
              
              
              486**TOTAL
                  ASSETS**
              
              $
              441
              
              $
              486**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              -
              
              $
              -Accrued
                  expenses
              
              
              6,900
              
              
              6,200Total
                  Current Liabilities
              
              
              6,900
              
              
              6,200**LONG-TERM
                  LIABILITIES**None
              
              
              -
              
              
              -**TOTAL
                  LIABILITIES**
              
              
              6,900
              
              
              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
              
              
              (117,709
              )
              
              (116,964
              )Total
                  Stockholders' Equity
              
              
              (6,459
              )
              
              (5,714
              )**TOTAL
                  LIABILITIES AND EQUITY**
              
              $
              441
              
              $
              486
 The
          accompanying notes are an integral part of these financial
          statements.


F-1






**STONE
                  MOUNTAIN RESOURCES, INC.****(an
                  exploration stage company)****STATEMENT
                  OF OPERATIONS****(Unaudited)****For
                  the three months ending September 30, 2006 and 2005,
                  and****from
                  inception (March 31, 2004) through September 30,
                  2006****3
                  MONTHS**
              
              **3
                  MONTHS****ENDING**
              
              **ENDING**
              
              **FROM****9/30/2006**
              
              **9/30/2005**
              
              **INCEPTION****REVENUE**
              
              $
              -
              
              $
              -
              
              $
              -**COST
                  OF SERVICES**
              
              
              -
              
              
              -
              
              
              -**GROSS
                  PROFIT OR (LOSS)**
              
              
              -
              
              
              -
              
              
              -**GENERAL
                  AND ADMINISTRATIVE EXPENSES**
              
              
              372
              
              
              2,998
              
              
              41,709**GENERAL
                  EXPLORATION**
              
              
              -
              
              
              -
              
              
              76,000**OPERATING
                  INCOME**
              
              
              (372
              )
              
              (2,998
              )
              
              (117,709
              )**ACCUMULATED
                  DEFICIT**
              
              $
              (117,709
              )
              $
              (115,719
              )
              $
              (117,709
              )




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






F-2






**STONE
                  MOUNTAIN RESOURCES, INC.****(an
                  exploration stage company)****STATEMENT
                  OF OPERATIONS****(Unaudited)****For
                  the six months ending September 30, 2006 and 2005,
                  and****from
                  inception (March 31, 2004) through September 30,
                  2006****6
                  MONTHS**
              
              **6
                  MONTHS****ENDING**
              
              **ENDING**
              
              **FROM****9/30/2006**
              
              **9/30/2005**
              
              **INCEPTION****REVENUE**
              
              $
              -
              
              $
              -
              
              $
              -**COST
                  OF SERVICES**
              
              
              -
              
              
              -
              
              
              -**GROSS
                  PROFIT OR (LOSS)**
              
              
              -
              
              
              -
              
              
              -**GENERAL
                  AND ADMINISTRATIVE EXPENSES**
              
              
              745
              
              
              4,893
              
              
              41,709**GENERAL
                  EXPLORATION**
              
              
              -
              
              
              -
              
              
              76,000**OPERATING
                  INCOME**
              
              
              (745
              )
              
              (4,893
              )
              
              (117,709
              )**ACCUMULATED
                  DEFICIT**
              
              $
              (117,709
              )
              $
              (115,719
              )
              $
              (117,709
              )**Earnings
                  (loss) per share, basic**
              
              $
              (0.00
              )
              $
              (0.00
              )**Weighted
                  average number of common shares**
              
              
              19,961,000
              
              
              19,961,000(Reflects
                  retroactive application of stock returned to treasury July,
                  2005)


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




F-3






**STONE
                  MOUNTAIN RESOURCES, INC.****(an
                  exploration stage company)****(Unaudited)****STATEMENT
                  OF STOCKHOLDERS' EQUITY****As
                  of September 30, 2006****ADDITIONAL****COMMON**
              
              **PAR**
              
              **PAID
                  IN**
              
              **ACCUM.**
              
              **TOTAL****STOCK**
              
              **VALUE**
              
              **CAPITAL**
              
              **DEFICIT**
              
              **EQUITY**Common
                  stock issued as officers'compensation
                  on company formation
              
              
              23,000,000
              
              $
              23,000
              
              $
              -
              
              $
              -
              
              $
              23,000March
                  31, 2004 at $0.001 per shareNet
                  income (loss)
              
              
              
              
              
              
              
              
              
              
              
              (23,500
              )
              
              (23,500
              )Balance,
                  March 31, 2004
              
              
              23,000,000
              
              $
              23,000
              
              $
              -
              
              $
              (23,500
              )
              $
              (500
              )Common
                  stock issued for cash
              
              
              4,800,000
              
              
              4,800
              
              
              43,200
              
              
              
              
              
              48,000August
                  31, 2004 at $0.01per
                  share on private placementCommon
                  stock issued for cash
              
              
              161,000
              
              
              161
              
              
              40,089
              
              
              
              
              
              40,250February
                  28, 2005 at $0.25per
                  share on private placementNet
                  income (loss)
              
              
              
              
              
              
              
              
              
              
              
              (110,826
              )
              
              (110,826
              )Balance,
                  March 31, 2005
              
              
              27,961,000
              
              $
              27,961
              
              $
              83,289
              
              $
              (110,826
              )
              $
              424Common
                  stock returned to treasury
              
              
              (8,000,000
              )
              
              (8,000
              )
              
              8,000
              
              
              -
              
              
              -and
                  cancelled as of July 2005at
                  $0.001 per shareNet
                  income (loss)
              
              
              
              
              
              
              
              
              
              
              
              (116,964
              )
              
              (116,964
              )Balance,
                  March 31, 2006
              
              
              19,961,000
              
              $
              19,961
              
              $
              91,289
              
              $
              (116,964
              )
              $
              (5,714
              )Net
                  income (loss)
              
              
              
              
              
              
              
              
              
              
              
              (745
              )
              
              (745
              )Balance,
                  September 30, 2006
              
              
              19,961,000
              
              $
              19,961
              
              $
              91,289
              
              $
              (117,709
              )
              $
              (6,459
              )
 The
          accompanying notes are an integral part of these financial
          statements.






F-4






**STONE
                  MOUNTAIN RESOURCES, INC.****(an
                  exploration stage company)****(Unaudited)****STATEMENTS
                  OF CASH FLOWS****For
                  the six months ending September 30, 2006 and 2005,
                  and****from
                  inception (March 31, 2004) through September 30,
                  2006****FROM****CASH
                  FLOWS FROM OPERATING ACTIVITIES**
              
              **9/30/2006**
              
              **9/30/2005**
              
              **INCEPTION**Net
                  income (loss)
              
              $
              (745
              )
              $
              (4,893
              )
              $
              (117,709
              )Adjustments
                  to reconcile net income to net cashprovided
                  by (used in) operating activities:Stock
                  issued as compensation
              
              
              -
              
              
              -
              
              
              23,000(Increase)
                  Decrease in accounts receivable
              
              
              -
              
              
              -
              
              
              -(Increase)
                  Decrease in prepaid expense
              
              
              -
              
              
              823
              
              
              -Increase
                  (Decrease) in accounts payable
              
              
              -
              
              
              -
              
              
              -Increase
                  (Decrease) in accrued expenses
              
              
              700
              
              
              700
              
              
              6,900Total
                  adjustments to net income
              
              
              700
              
              
              1,523
              
              
              29,900Net
                  cash provided by (used in) operating activities
              
              
              (45
              )
              
              (3,370
              )
              
              (87,809
              )**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
              
              
              (45
              )
              
              (3,370
              )
              
              441Cash
                  - beginning balance
              
              
              486
              
              
              3,901
              
              
              -**CASH
                  BALANCE END OF PERIOD**
              
              $
              441
              
              $
              531
              
              $
              441
 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**




**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**




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**




**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, $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**


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 calls for a production royalty
      of three percent to be paid of the Net Smelter Returns from the production
      of
      minerals from the Unpatented Mining Claims as they exist at the execution date
      of the agreement and a production royalty of one percent of Net Smelter Returns
      from the production of minerals.




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**




The
      Company was incorporated in March 2004 and has not started the proposed 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
      2. Management’s Discussion and Analysis or Plan of
      Operation**




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 September 30, 2006, we had $441 cash in the bank.
        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 which has been extended to 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.




We
      have
      been unable to carry out any work on the CAB claims due to lack of funds.
      Furthermore due to winter conditions in the Nevada Mountains we do not
      anticipate to be able to carry out our site exploration program until the fall
      of 2006. We met our Option Agreement property Earning Cost requirement for
      the
      December 31, 2005 time period.




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.







We
      entered into an option agreement with Midas Mountain, Inc. (“Midas”) to acquire
      a 100% interest in the twenty-four CAB claims. The CAB claims are situated
      approximately 45 miles south southwest of the Town of Battle Mountain in Lander
      County, Nevada. The option agreement was revised on December 8, 2005. A 100%
      interest in the property can be acquired from Midas by paying over time a total
      of $125,000 option payments and incurring at least $650,000 of Earning Costs
      by
      December 31, 2008. After we have earned our 100% interest in the CAB claims,
      the
      property will be subject to a 3.0% Net Smelter Return (“NSR”) of which 1 1/2%
      can be purchased at the rate of $500,000 per 1/2% of acquired NSR.




Property
      Option Payments




We
        are
        required to pay Midas periodical Option Payments to keep our Agreement in
        good
        standing. All the Property Option Payments count towards the Earning Costs
        that
        we are required to spend in order to keep the agreement in good standing.
        We
        must pay Midas a total of $125,000 as part of our requirement to secure our
        100%
        interest in the CAB claims. Midas
        has
        granted us a one year extension on the October 15. 2006 option payment. The
        amount and timing of the periodic payments are outlined in the table that
        follows:




Periodical
                Option PaymentsPayment
            
            Amount
            
            Status/Date
                DueInitial
            
            $
            25,000
            
            
            Paid
                1-Sep-04Second
            
            $
            30,000
            
            
            Paid
                11-Feb-05Third
            
            $
            35,000
            
            
            15-Oct-07Fourth
            
            $
            35,000
            
            
            15-Oct-08Total
            
            $
            125,000




Bureau
      of
      Land Management and County Payments




The
      Bureau of Land Management (“BLM”) owns the land and rents it out at an annual
      rate of $125 per claim. In addition, the Lander County charges an annual nominal
      fee of $8.50 per claim. In order to keep the 24 claims in good order, we are
      required under our agreement to pay a total of $3,212.50 by August 31 each
      year
      to the BLM and Lander County. All BLM and County fees count towards the Earning
      Costs that we are required to incur as part of our agreement with
      Midas.




Earning
      Costs




Under
      the
      terms of our agreement with Midas, we are required to pay or incur at least
      $650,000 in specified expenditures cumulatively from August 1, 2004 to December
      31, 2008. The specified Earning Costs include Option Payments, BLM and County
      fees and exploration work to be carried out on the property. The exploration
      costs include labor, capital costs, consultants, travel, permits, assays, taxes
      and insurance. The following table summarizes the annual minimum Earning Costs
      that must be expended until we earn our 100% interest in the
      property.




Minimum
                Accumulative Earning CostsPeriod
                Ending
            
            Minimum31-Dec-05
            
            $
            75,00031-Dec-07
            
            $
            150,00031-Dec-08
            
            $
            250,00031-Dec-09
            
            $
            650,000




Exploration
      stage expenses from inception through September 30, 2006 were $76,000 for
      general exploration costs related to the mineral rights of the exploration
      property and $41,709 of general and administrative costs for a total expense
      of
      $117,709 as captioned in the financial statement’s statement of operations.
      These fees were in furtherance of Phase I to purchase and evaluate a property.
      Fees were incurred in the start-up costs of our company as well as the fees
      to
      prepare our audited financial statements. These fees were included in the
      general and administrative expense as discussed earlier in this
      paragraph.









**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
      3. Controls and Procedures**




Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we conducted an
      evaluation of our disclosure controls and procedures, as such term is defined
      under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
      Exchange Act of 1934, as amended (Exchange Act), as of September 30, 2006.
      Based
      on this evaluation, our principal executive officer and principal financial
      officer have concluded that our disclosure controls and procedures are effective
      to ensure that information required to be disclosed by us in the reports we
      file
      or submit under the Exchange Act is recorded, processed, summarized, and
      reported within the time periods specified in the Securities and Exchange
      Commission’s rules and forms and that our disclosure and controls are designed
      to ensure that information required to be disclosed by us in the reports that
      we
      file or submit under the Exchange Act is accumulated and communicated to our
      management, including our principal executive officer and principal financial
      officer, or persons performing similar functions, as appropriate to allow timely
      decisions regarding required disclosure.




There
      were no changes (including corrective actions with regard to significant
      deficiencies or material weaknesses) in our internal controls over financial
      reporting that occurred during the second quarter of fiscal 2006 that has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.




**PART
      II - OTHER INFORMATION**




**Item
      1. Legal Proceedings.**




The
      Company is currently not a party to any pending legal proceedings and no such
      action by, or to the best of its knowledge, against the Company has been
      threatened.




**Item
      2. Changes in Securities.**




None




**Item
      3. Defaults Upon Senior Securities.**




None























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




No
      matter
      was submitted during the quarter ending September 30, 2006, covered by this
      report to vote of the Company’s shareholders, through the solicitation of
      proxies or otherwise.




**Item
      5. Other Information.**




None




**Item
      6. Exhibits and Reports of Form 8-K.**




(a)  Exhibits
 
 31.1
        Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002
 
 32.1
        Certification pursuant to Section 906 of Sarbanes Oxley Act of
        2002
 
 (b)  Reports
        of Form 8-K
 
 None






**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, there unto duly
      authorized.




**STONE
                MOUNTAIN RESOURCES, INC.**Registrant




Date:
                November 15, 2006
            By:*/s/
                Peter Dodge*Peter
                DodgePresident,
                Chief Executive Officer,Chairman
                of Board of Directors