Optex Systems Holdings Inc quarterly report, Q3 FY2008

Business Context and Reporting Period

Company: Sustut Exploration, Inc. (Note: Metadata listed "Optex Systems Holdings Inc," but the filing text identifies the registrant as Sustut Exploration, Inc.)
Reporting Period: Quarterly period ended September 30, 2008.
Status: Exploration stage company; classified as a shell company and smaller reporting company.
Strategic Shift: Following a change in ownership on September 12, 2008, the company ceased mineral exploration activities and plans to locate a target business for a merger or stock-for-stock exchange.

Key Financial Metrics

Metric9 Months Ended 9/30/20089 Months Ended 9/30/2007
Revenue$0$0
Operating Income$14,593($9,976)
Net Income (Loss)$14,593($9,976)
Cash Balance (End of Period)$0$13,617
Total Assets$0$10,157
Total Liabilities$500$25,250
Accumulated Deficit($88,200)($97,583)

Liquidity: The company has zero cash on hand. Net cash used in operating activities for the nine months ended September 30, 2008, was $10,157.

Material Changes vs. Prior Period

  • Profitability: The company reported a net income of $14,593 for the nine months ended September 30, 2008, compared to a net loss of $9,976 in the same period in 2007. This reversal was driven entirely by $20,000 in "Other Income" related to the reversal of a payable agreement for claim rights, rather than operational revenue.
  • Asset Base: Total assets decreased from $10,157 to $0. The company exhausted its cash reserves and no longer holds mineral claims, which reverted to the seller due to default on payments.
  • Liabilities: Total liabilities decreased significantly from $25,250 to $500, primarily due to the removal of the $20,000 payable for claim rights.
  • Management Change: On September 12, 2008, Terry Hughes resigned as sole officer/director. Andrey Oks was appointed as the new sole officer and director, receiving 10,000,000 shares as compensation.

Outlook, Risks, and Contingencies

  • Going Concern: The filing explicitly states that the company's financial statements are presented on a going concern basis, but substantial doubt exists regarding the company's ability to continue as a going concern due to accumulated losses and lack of cash.
  • Future Operations: The company intends to pursue a reverse merger or business combination. No assurances are given that a target will be found or that the transaction will be successful.
  • Capital Needs: Management is actively seeking additional sources of capital to fund operations, with no assurance of success.
  • Tax Status: A significant portion of net operating loss carryforwards ($87,700) was disallowed due to the change in ownership exceeding 50%. A 100% valuation allowance was recorded against remaining deferred tax assets.
  • Legal/Claims: The company defaulted on a mineral claim purchase agreement, resulting in the reversion of the claims to the seller. No other material litigation is pending.

Investor Verification Checklist

  • Shell Status: Verify the company's current status as a shell company and its lack of active operations or revenue.
  • Cash Position: Confirm the zero cash balance and the immediate need for capital to sustain any future activities.
  • Merger Target: Investigate if a specific target company for a merger has been identified or negotiated since the filing date.
  • Shareholder Structure: Review the impact of the 10,000,000 shares issued to the new director (Andrey Oks) and the cancellation of shares by the former director.
  • Going Concern Risk: Assess the likelihood of the company raising capital versus potential delisting or dissolution.