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
| Metric | 9 Months Ended 9/30/2008 | 9 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.