MAIL STOP 3561
November 29, 2005
Peter Dodge, President
Stone Mountain Resources, Inc.
701 North Green Valley Parkway #200
Henderson, Nevada 89074
Re: Stone Mountain Resources, Inc.
Amendment No. 4 to Registration Statement on Form SB-2
Filed October 27, 2005
File No. 333-123735
Dear Mr. Dodge:
We have reviewed your amended filing and have the following
comments. Where indicated, we think you should revise your
document
in response to these comments.
General
1. We request that you disclose in the Management section and in
the
Certain Relationships and Related Transactions section the facts
and
circumstances surrounding Chubasco Resources Corp. and Scott
Young.
Such disclosure should highlight the fact that you were unaware
Chubasco was a public entity, that Chubasco had affirmatively
disclosed in its prospectus that it did not consider itself a
blank
check, Chubasco`s recent merger with an entity in an unrelated
industry, Mr. Young`s affiliation with Chubasco, the full
consideration received by Mr. Young in the merger transaction, and
the reasons why Mr. Young is no longer an officer, director or
shareholder of Stone Mountain. Such disclosure should also
highlight
the fact that you chose not to pursue legal action against Mr.
Young
in consideration for his resignation as an officer and director
and
for surrendering his shares.
About Our Company
2. Disclose both here and in MD&A your available cash balance as
of
the most recent practical date.
3. We note the disclosure that you do not have sufficient capital
to
pay (1) the remaining offering expenses, (2) the additional
amounts
owed under your property option or (3) the earning costs mandated
by
the Midas Agreement. Quantify the amount of each and the date
that
each is due. Highlight the repercussions to the company,
including
its plan to mine the CAB claims, and to investors in this offering
should you fail to make payment under the property option and
Midas
Agreement by the date the next payment is due. Provide similar
disclosure in MD&A.
4. Given that you do not have sufficient capital to pay the
remaining
offering expenses, the additional amounts owed under your property
option or the earning costs mandated by the Midas Agreement, we
are
confused by the disclosure that you will need to raise additional
capital to continue your operations beyond a "twelve month
period."
You do not appear to have sufficient capital to continue your
operations beyond the present. Revise and provide similar
disclosure
in MD&A.
5. Explain in the Summary Financial Data section the reason why no
research and exploration amounts were expended during the three
months ended June 30, 2005, the impact this will have on your plan
of
operations, when you anticipate recommencing such activities, and
how
they will be funded. Provide similar disclosure in MD&A, which
currently suggests that research and exploration amounts were
expended through and including the three months ended June 30.
Risk Factors, page 3
6. Reference is made to the second paragraph of risk factor one
where
you state that if you are unable to obtain financing on reasonable
terms, you could be forced "to delay, scale back or eliminate
certain
product and service exploration programs." This disclosure is
vague
and ambiguous. First, we believe that if you are unable to pay
the
amounts owed under the property option agreement or the earnings
costs mandated by the Midas Agreement, you will lose your option
and
right to mine the CAB claims and will therefore have no property
to
mine. Given that your business plan is to mine the CAB claims,
this
result would seem to represent something more than just a delay or
scaling back. Second, it is not all clear what is meant by
"certain
product and service exploration programs." The only exploration
programs discussed in the prospectus relate to the CAB claims.
Website, page 15
7. The disclosure in this section is not clear. Please revise.
Management, page 15
8. Scott Young is no longer an officer or director. The first
sentence of the final paragraph on page 16 should be revised
accordingly.
Experts, page 24
9. The $7,500 in legal fees paid to Anslow & Jaclin appears to
have
been for services related to prior private placements, this
offering
and a Form 15(c)(2)(11). Allocate this fee to each. In addition,
allocate the $30,000 payment that Anslow & Jaclin will receive
when
the filings are accepted, identify the filings you are referring
to,
disclose this $30,000 commitment in MD&A, and revise the
disclosure
regarding your liquidity as appropriate. Finally, reconcile the
amount of such fees with Item 25 of Part II of the registration
statement as requested in prior comment 13 to our letter dated
August
17, 2005.
10. Clarify the time-frame for payment to counsel of the $30,000;
i.e., "when the company is approved to quote on the Over The
Counter
Bulletin Board" as stated in the retainer agreement filed as
exhibit
10.4.
Financial Statements
11. Please revise to provide updated interim financial statements
as
required by Item 310(g) of Regulation S-B.
Part II
Item 26. Recent Sales of Unregistered Securities
12. In each instance where you set forth the facts supporting your
reliance on Rule 506 of Regulation D, you disclose that each
investor
"complete a questionnaire to confirm that there were
`sophisticated`
investors." We request that you revise this disclosure, if true,
to
state that the company made a reasonable investigation to
determine
and confirm that all investors were sophisticated.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
Any questions regarding the financial statements may be
directed
to Don Wiland at (202) 551-3392. Questions on other disclosure
issues may be directed to William Bennett at (202) 551-3389.
Sincerely,
John Reynolds
Assistant Director
cc: Gregg E. Jaclin, Esq.
Fax: (732) 577-1188
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Stone Mountain Resources, Inc.
Mr. Peter Dodge
November 29, 2005
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