10QSB 1 g1262.txt QTRLY REPORT FOR THE QTR ENDED 6/30/06 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15 (d) of Securities Exchange Act of 1934 For the Period ended June 30, 2006 Commission File Number 333-126674 WALLACE MOUNTAIN RESOURCES CORP. (Name of small business issuer in its charter) Nevada 20-2597168 (State of incorporation) (IRS Employer ID Number) #29B Ebony Tower, President Park 99 Sukhumvit 24 Road Bangkok 10110 Thailand +(662)262-9347 (Address and telephone number of principal executive offices) Check 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 the 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. Yes [X] No [ ] Check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] Check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] There were 3,400,000 shares of Common Stock outstanding as of June 30, 2006. ITEM 1. FINANCIAL STATEMENTS The un-audited quarterly financial statements for the 3 months ended June 30, 2006, prepared by the company, immediately follow. 1 WALLACE MOUNTAIN RESOURCES CORP. (AN EXPLORATORY STAGE COMPANY) BALANCE SHEET
Unaudited Audited As of As of June 30, 2006 March 31, 2006 ------------- -------------- ASSETS Current assets Cash $ 26,937 $ 30,494 Prepaid expenses -- 3,000 -------- -------- Total current assets 26,937 33,494 Total assets $ 26,937 $ 33,494 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 2,170 $ 125 Loan payable to a director $ 1,123 1,123 -------- -------- Total current liabilities 3,293 1,248 -------- -------- Total liabilities 3,293 1,248 Stockholders' equity Common stock; $.001 par value; 75,000,000 shares authorized, 3,400,000 shares issued and outstanding as of June 30, 2006 and March 31, 2006 3,400 3,400 Additional paid-in capital 49,600 49,600 Accumulated deficit (29,356) (20,754) -------- -------- Total stockholders' equity 23,644 32,246 -------- -------- Total liabilities and stockholders' equity $ 26,937 $ 33,494 ======== ========
See Accompanying Notes to Financial Statements 2 WALLACE MOUNTAIN RESOURCES CORP. (AN EXPLORATORY STAGE COMPANY) STATEMENT OF OPERATIONS
Unaudited Period from Unaudited Unaudited March 30, 2005 April 1, 2006 April 1, 2005 (Date of inception) through through through June 30, 2006 June 30, 2005 June 30, 2006 ------------- ------------- ------------- Revenue $ -- $ -- $ -- Operating expenses Professional fees 3,000 2,350 9,272 General and administrative 5,602 9,879 20,084 ----------- ----------- ----------- Total operating expenses 8,602 12,229 29,356 ----------- ----------- ----------- Loss from operations (8,602) (12,229) (29,356) Other income (expenses): Other expense -- -- -- Interest expense -- -- -- ----------- ----------- ----------- Total other income (expenses) -- -- -- ----------- ----------- ----------- Loss before provision for income taxes (8,602) (12,229) (29,356) Provision for income taxes -- -- -- ----------- ----------- ----------- Net loss $ (8,602) $ (12,229) $ (29,356) ----------- ----------- ----------- Basic and diluted loss per common share $ (0.00) $ (0.00) $ (0.01) =========== =========== =========== Basic and diluted weighted average common shares outstanding 3,400,000 2,529,670 2,949,345 =========== =========== ===========
See Accompanying Notes to Financial Statements 3 WALLACE MOUNTAIN RESOURCES CORP. (AN EXPLORATORY STAGE COMPANY) STATEMENT OF CASH FLOWS
Unaudited Period from Unaudited Unaudited March 30, 2005 April 1, 2006 April 1, 2005 (Date of inception) through through through June 30, 2006 June 30, 2005 June 30, 2006 ------------- ------------- ------------- Cash flows from operating activities: Net loss $ (8,602) $(12,229) $(29,356) Adjustments to reconcile net loss to Changes in operating assets and liabilities: Change in prepaid expenses 3,000 -- -- Change in accounts payable 2,045 -- 2,170 Change in loan payable to a director -- -- 1,123 -------- -------- -------- Net cash used by operating activities (3,557) (12,229) (26,063) Cash flows from investing activities: Purchase of property and equipment -- -- -- -------- -------- -------- Net cash used by investing activities -- -- -- Cash flows from financing activities: Proceeds from issuance of common stock -- 8,000 53,000 -------- -------- -------- Net cash provided by financing activities -- 8,000 53,000 -------- -------- -------- Net increase in cash (3,557) (4,229) 26,937 Cash, beginning of period 30,494 5,000 -- -------- -------- -------- Cash, end of period $ 26,937 $ 771 $ 26,937 ======== ======== ======== Supplementary cash flow information: Cash payments for income taxes $ -- $ -- $ -- ======== ======== ======== Cash payments for interest $ -- $ -- $ -- ======== ======== ========
See Accompanying Notes to Financial Statements 4 WALLACE MOUNTAIN RESOURCES CORP. (AN EXPLORATORY STAGE COMPANY) STATEMENT OF STOCKHOLDERS' EQUITY
Common Stock Additional Total -------------------- Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity ------ ------ ------- ------- ------ Balance at March 30, 2005 (Date of inception) -- $ -- $ -- $ -- $ -- Common Stock Issued for Cash 1,000,000 1,000 4,000 -- 5,000 Net loss -- -- -- -- -- --------- ------ ------- -------- -------- Balance, March 31, 2005 1,000,000 $1,000 $ 4,000 $ -- $ 5,000 --------- ------ ------- -------- -------- Common Stock Issued for Mining Claims 1,600,000 1,600 6,400 -- 8,000 Common Stock Issued for Cash December 1, 2005 800,000 800 39,200 -- 40,000 Net loss -- -- -- (20,754) (20,754) --------- ------ ------- -------- -------- Balance, March 31, 2006 3,400,000 3,400 $49,600 $(20,754) $ 32,246 --------- ------ ------- -------- -------- Net loss -- -- -- (8,602) (8,602) --------- ------ ------- -------- -------- Balance, June 30, 2006 3,400,000 $3,400 $49,600 $(29,356) $ 23,644 ========= ====== ======= ======== ========
See Accompanying Notes to Financial Statements 5 WALLACE MOUNTAIN RESOURCES CORP. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES DESCRIPTION OF BUSINESS AND HISTORY - Wallace Mountain Resources Corp., a Nevada corporation, (hereinafter referred to as the "Company" or "Wallace Mountain") was incorporated in the State of Nevada on March 30, 2005. The Company was formed to engage in the acquisition, exploration and development of natural resource properties of merit. The Company operations have been limited to general administrative operations and is considered a (An Exploration Stage Company) company in accordance with Statement of Financial Accounting Standards No. 7. MANAGEMENT OF COMPANY - The company filed its articles of incorporation with the Nevada Secretary of State on March 30, 2005, indicating Sandra L. Miller on behalf of Resident Agents of Nevada , Inc. as the sole incorporator. The list of officers filed with the Nevada Secretary of State on March 9, 2006 indicate Robert Gelfand as the President, Secretary, and Treasurer and sole Director. GOING CONCERN - The Company incurred net losses of approximately $29,356 from the period of March 30, 2005 (Date of Inception) through June 30, 2006 and has commenced limited operations, rather, still in the exploration stages, raising substantial doubt about the Company's ability to continue as a going concern. The Company will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives. The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. YEAR END - The Company's year end is March 31. USE OF ESTIMATES - The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. NET LOSS PER COMMON SHARE - The Company computes net loss per share in accordance with SFAS No. 128, Earnings per Share (SFAS 128) and SEC Staff Accounting Bulletin No. 98 (SAB 98). Under the provisions of SFAS 128 and SAB 98, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is antidilutive. For the period from March 30, 2005 (Date of Inception) through June 30, 2006, no options and warrants were excluded from the computation of diluted earnings per share because their effect would be antidilutive. See Note 7 Subsequent Events. REVENUE RECOGNITION - The Company has no revenues to date from its operations. LEGAL PROCEDURES - The Company is not aware of, nor is it involved in any pending legal proceedings. STOCK-BASED COMPENSATION - The Company applies Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and Related Interpretations, in accounting for stock options issued to employees. Under APB No. 25, employee compensation cost is recognized when estimated fair value of the underlying stock on date of the grant exceeds exercise price of the stock option. For stock options and warrants issued to non-employees, the Company applies SFAS No. 123, Accounting for Stock-Based Compensation, which requires the recognition of compensation cost based upon the fair value of stock options at the grant date using the Black-Scholes option pricing model. 6 WALLACE MOUNTAIN RESOURCES CORP. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (cont) The following table represents the effect on net loss and loss per share if the Company had applied the fair value based method and recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation", to stock-based employee compensation for the period ended June 30, 2006: 2006 --------- Net loss, as reported $ (8,602) Add: Stock-based employee compensation expense included in reported loss, net of related tax effects -- Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax effects -- --------- Pro forma net loss $ (8,602) ========= Net loss per common share: Basic and fully diluted loss per share, as reported $ (0.00) ========= Basic and fully diluted loss per share, pro forma $ (0.00) ========= There were no stock options granted for the period ended June 30, 2006. As of June 30, 2006 there are a total of 800,000 Common Stock Purchase Warrants with each Warrant entitling the holder to purchase one additional share of Common Stock at a price of $.10 per Share expiring March 22, 2008. There are additionally no other written or verbal agreements related to the sale of any stock, option or warrants of the Company's common stock as of June 30, 2006. See Note 7 Subsequent Events. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure". SFAS No. 148 amends the transition and disclosure provisions of SFAS No. 123. The Company is currently evaluating SFAS No. 148 to determine if it will adopt SFAS No. 123 to account for employee stock options using the fair value method and, if so, when to begin transition to that method. In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections" ("SFAS 154"). SFAS 154 replaces Accounting Principles Board Opinion No. 20 "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements-An Amendment of APB Opinion No. 28." SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. SFAS 154 requires "retrospective application" of the direct effect of a voluntary change in accounting principle to prior periods' financial statements where it is practicable to do so. SFAS 154 also redefines the term "restatement" to mean the correction of an error by revising previously issued financial statements. SFAS 154 is effective for accounting changes and error corrections made in fiscal years beginning after December 15, 2005 unless adopted early. We do not expect the adoption of SFAS 154 to have a material impact on its consolidated financial position, results of operations or cash flows, except to the extent that the statement subsequently requires retrospective application of a future item. In February 2006, the FASB issued Statement of Financial Accounting Standards No. 155, ACCOUNTING FOR CERTAIN HYBRID FINANCIAL INSTRUMENTS ("SFAS No. 155"), which amends Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS No. 133") and Statement of Financial Accounting Standards No. 140, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES ("SFAS No. 140"). SFAS No. 155 permits fair value measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or hybrid financial instruments containing embedded derivatives. We expect the adoption of SFAS 155 to have a material impact on its consolidated financial position, results of operations or cash flows. 7 WALLACE MOUNTAIN RESOURCES CORP. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (cont) In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156, ACCOUNTING FOR SERVICING OF FINANCIAL ASSETS ("SFAS No. 156"), which amends FASB Statement No. 140 ("SFAS No. 140"). SFAS 156 may be adopted as early as January 1, 2006, for calendar year-end entities, provided that no interim financial statements have been issued. Those not choosing to early adopt are required to apply the provisions as of the beginning of the first fiscal year that begins after September 15, 2006 (e.g., January 1, 2007, for calendar year-end entities). The intention of the new statement is to simplify accounting for separately recognized servicing assets and liabilities, such as those common with mortgage securitization activities, as well as to simplify efforts to obtain hedge-like accounting. Specifically, the FASB said FAS No. 156 permits a service using derivative financial instruments to report both the derivative financial instrument and related servicing asset or liability by using a consistent measurement attribute, or fair value. We do not expect the adoption of SFAS 155 to have a material impact on its consolidated financial position, results of operations or cash flows. 2. PROPERTY AND EQUIPMENT As of June 30, 2006, the Company does not own any property and/or equipment. 3. STOCKHOLDER'S EQUITY The Company has 75,000,000 shares authorized and 3,400,000 issued and outstanding as of June 30, 2006. The issued and outstanding shares were issued as follows: 1,000,000 common shares were issued to Robert Gelfand on March 30, 2005 in exchange for cash in the amount of $5,000 U.S. 1,600,000 common shares were issued to Robert Gelfand on April 5, 2005 in exchange for mining claims transferred to the Company at his cost of $8,000 U.S. 800,000 units were issued to 26 investors in the Company's SB-2 offering for the aggregate sum of $40,000 in cash. The Regulation SB-2 offering was declared effective by the Securities and Exchange Commission on September 27, 2005 and completed on December 1, 2005. Each Unit consists of one share of Common Stock and one Common Stock Purchase Warrant. Each one whole Common Stock Purchase Warrant will entitle the holder to purchase one additional share of Common Stock at a price of $.10 per Share expiring March 22, 2008. 4. RELATED PARTY TRANSACTIONS As of June 30, 2006, a loan payable in the amount of $1,123 was due Robert Gelfand, an officer and director. As of June 30, 2006, the Company had not established any specific repayment terms and it is a non-interest bearing loan. As of June 30, 2006, there are no other related party transactions between the Company and any officers, other than those mentioned above and in Note 3 - Stockholder's Equity. 5. STOCK OPTIONS As of June 30, 2006, the Company does not have any stock options outstanding, nor does it have any written or verbal agreements for the issuance or distribution of stock options at any point in the future. 6. LITIGATION As of June 30, 2006, the Company is not aware of any current or pending litigation which may affect the Company's operations. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS We are still in our exploration stage and have generated no revenues to date. We incurred operating expenses of $8,602 and $12,229 for the three month periods ended June 30, 2006 and 2005, respectively. These expenses consisted of general operating expenses and professional fees incurred in connection with the day to day operation of our business and the preparation and filing of our periodic reports. As of June 30, 2006 the officer and director had loaned the company $1,123, for which there is no specific terms of repayment. We have generated no revenues and our net loss for the three months ended June 30, 2006 and 2005 was $8,602 and $12,229, respectively. LIQUIDITY AND CAPITAL RESOURCES Wallace Mountain's current cash balance is $26,937. We believe our cash balance is sufficient to fund current operations. If we experience a shortage of funds our director has informally agreed to advance funds the company to allow us to remain current in our required filings and cover any costs incurred corresponding with our shareholders, however our director has no formal commitment, arrangement or legal obligation to advance or loan funds to Wallace Mountain. We are an exploration stage company and have generated no revenue to date. We have sold $45,000 in equity securities to pay for our business operations. OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements. PLAN OF OPERATION We have completed the field work of the first phase of the exploration program on the South Wallace Mountain Project claims. We are currently waiting for the geologist to complete his analysis and draft his report. PHASE I The Phase I program consisted of grid emplacement, soil sampling as well as testing the effectiveness of MMI and Biogeochemical methods. The geologist is now completing his analysis of samples, data compilation and interpretation, drafting and report writing. We expect his report to be delivered to us during the month of August 2006. Results gained from the program will lead to a better understanding of, the location of and controls of, mineralization at known showings as at any new showings and/or anomalous areas discovered as a result of the Phase I program.
PERSONNEL: Senior Geologist 3 days @ $325.00 $ 975.00 Project Geologists 15 days @ $225.00 ea 6,750.00 Prospector & Field Assistant 15 days @ $160.00 ea 4,800.00 9 FIELD COSTS: Field Camp and Supplies 30 man/days @ $40.00/m/d (including camp rental, GPS rental, food, prospecting and sampling equipment, first aid and chain saw) 1,200.00 Field Communications Long Distance charges Motorola 2 way field radios 300.00 Survey Consumables Sample bags, survey flagging, pickets etc. 775.00 TRANSPORTATION: Truck Rental 20 days $80.00 1,600.00 Mob/de-mob Vancouver - Beaverdell return (fuel/meals/motel & truck mileage charges) 400.00 ANALYTICAL: Soil Samples 200 samples @ $9.50/sample (Au + 32 element ICP) 1,900.00 MMI / Bio Geochemical 10 samples $ 300.00 OFFICE & ENGINEERING: Report Writing based on results of Phase I exploration program 1,600.00 (including field base map and all final maps detailing geological mapping, sample locations and results, location of old workings and compilation of results Drafting/Cartography from previous work on property) 1,200.00 OVERHEAD & CONTINGENCY 2,200.00 ---------- TOTAL ESTIMATE COST OF THE PHASE I EXPLORATION PROGRAM $24,000.00 ==========
PHASE II: The Phase II exploration program is contingent on the success of the Phase I program. Mechanical trenching and diamond drilling are foreseen to be the logical next step. The minimum estimated cost of the Phase II program is $80,000. The above program costs are management's estimates only and the actual project costs may exceed our estimates. The first phase of our exploration program commenced in June 2006. Following phase one of exploration, and contingent on the findings, we intend to complete a drilling program on the claims. The estimated cost of this program is $80,000 and will take approximately three months to complete, including the collection and interpretation of all exploration data. Subject to financing, we anticipate commencing the drill program in autumn of 2006. Follow up drilling would occur in the spring of 2007. While weather may occasionally prevent us from accessing the South Wallace Mountain Project claims in winter months, we do not expect conditions to impact our plan of operation, 10 as we have scheduled our exploration programs during the spring, summer and autumn. We will require additional funding from the exercise of the warrants associated with our equity securities offering to proceed with any subsequent recommended drilling work on the claims. We cannot provide investors with any assurance that we will be able to raise sufficient funding from the exercise of the warrants to fund any work after the first phase of the exploration program. CRITICAL ACCOUNTING POLICIES The un-audited financial statements as of June 30, 2006 included herein have been prepared without audit pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with general accepted accounting procedures have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. It is suggested that these financial statements be read in conjunction with our March 31, 2006 audited financial statements and notes thereto, which can be found in our Form K-SB on the SEC website at www.sec.gov under our SEC File Number 333-126674. The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgement. USE OF ESTIMATES - The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. INCOME TAXES - The Company accounts for its income taxes in accordance with Statement of Financial Accounting Standards No. 109, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Management feels the Company will have a net operating loss carryover to be used for future years. The Company has not established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization. 11 NET LOSS PER COMMON SHARE - The Company computes net loss per share in accordance with SFAS No. 128, Earnings per Share (SFAS 128) and SEC Staff Accounting Bulletin No. 98 (SAB 98). Under the provisions of SFAS 128 and SAB 98, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive. For the period from March 30, 2005 (Date of Inception) through June 30, 2006, no options and warrants were excluded from the computation of diluted earnings per share because their effect would be anti-dilutive. See Note 7 Subsequent Events. REVENUE RECOGNITION - The Company has no revenues to date from its operations. STOCK-BASED COMPENSATION - The Company applies Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and Related Interpretations, in accounting for stock options issued to employees. Under APB No. 25, employee compensation cost is recognized when estimated fair value of the underlying stock on date of the grant exceeds exercise price of the stock option. For stock options and warrants issued to non-employees, the Company applies SFAS No. 123, Accounting for Stock-Based Compensation, which requires the recognition of compensation cost based upon the fair value of stock options at the grant date using the Black-Scholes option pricing model. The following table represents the effect on net loss and loss per share if the Company had applied the fair value based method and recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation", to stock-based employee compensation for the period ended June 30, 2006: 2006 --------- Net loss, as reported $ (8,602) Add: Stock-based employee compensation expense included in reported loss, net of related tax effects -- Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax effects -- --------- Pro forma net loss $ (8,602) ========= Net loss per common share: Basic and fully diluted loss per share, as reported $ (0.00) ========= Basic and fully diluted loss per share, pro forma $ (0.00) ========= 12 There were no stock options granted for the period ended June 30, 2006. There are additionally no written or verbal agreements related to the sale of any stock, option or warrants of the Company's common stock as of June 30, 2006. See Note 7 Subsequent Events. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure". SFAS No. 148 amends the transition and disclosure provisions of SFAS No. 123. The Company is currently evaluating SFAS No. 148 to determine if it will adopt SFAS No. 123 to account for employee stock options using the fair value method and, if so, when to begin transition to that method. NEW ACCOUNTING PRONOUNCEMENTS - In December 2004, the FASB issued SFAS No. 123 (revised 2004). Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The new standard will be effective for the Company in the first interim or annual reporting period beginning after December 15, 2005. The Company expects the adoption of this standard will have a material impact on its financial statements. In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of ARB No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handing costs, and spoilage. This statement requires that those items be recognized as current period charges regardless of whether they meet the criterion of "so abnormal" which was the criterion specified in ARB No. 43. In addition, this Statement requires that allocation of fixed production overheads to the cost of production be based on normal capacity of the production facilities. This pronouncement is effective for the Company beginning October 1, 2005. The Company has not yet assessed the impact on adopting this new standard. In December 2004, the FASB issued SFAS No. 123 (revised 2004). Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The new standard will be effective for the Company in the first interim or annual reporting period beginning after December 15, 2005. The Company expects the adoption of this standard will have a material impact on its financial statements. In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29 "effective for non-monetary asset exchanges occurring in the fiscal year beginning January 1, 2006. SFAS No. 153 13 requires that exchanges of productive assets be accounted for at fair value unless fair value cannot be reasonably determined or the transaction lacks commercial substance. SFAS No. 153 is not expected to have a material effect on the company's Consolidated Financial Statements. In May 2005, the FASB issued SFAS 154, "Accounting Changes and Error Corrections - a Replacement of APB Opinion No. 20 and FASB Statement No. 3". SFAS 154 requires retrospective application to prior period financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also redefines "restatement" as the revising of previously issued financial statements to reflect the correction of an error. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not believe that the adoption of SFAS 154 will have a significant impact on the financial statements. FORWARD LOOKING STATEMENTS Some of the statements contained in this Form 10-QSB that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-QSB, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. All written forward-looking statements made in connection with this Form 10-QSB that are attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements. The safe harbors of forward-looking statements provided by the Securities Litigation Reform Act of 1995 are unavailable to issuers not subject to the reporting requirements set forth under Section 13(a) or 15(D) of the Securities Exchange Act of 1934, as amended. As we have not registered our securities pursuant to Section 12 of the Exchange Act, such safe harbors set forth under the Reform Act are unavailable to us. ITEM 3. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our 14 disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared. Additionally, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date. We have no identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken. 15 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The following exhibits are included with this registration statement filing. Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our original Form SB-2 Registration Statement, filed under SEC File Number 333-126674, at the SEC website at www.sec.gov: Exhibit No. Description ----------- ----------- 3.1 Articles of Incorporation* 3.2 Bylaws* 31.1 Sec. 302 Certification of Principal Executive Officer 31.2 Sec. 302 Certification of Principal Financial Officer 32.1 Sec. 906 Certification of Principal Executive Officer 32.2 Sec. 906 Certification of Principal Financial Officer There were no reports filed on Form 8-K during the quarter ended June 30, 2006. SIGNATURES Pursuant to the requirements of Section 13(a) 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, thereunto duly authorized. July 31, 2006 Wallace Mountain Resources Corp., Registrant By: /s/ Robert Gelfand ----------------------------------------- Robert Gelfand, President and Chief Executive Officer In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. July 31, 2006 Wallace Mountain Resources Corp., Registrant By: /s/ Robert Gelfand ----------------------------------------- Robert Gelfand, President, Chief Executive Officer, Treasurer, Chief Financial Officer and Principal Accounting Officer 16