Optex Systems Holdings Inc - Quarter Report: 2008 June (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_______________
FORM
10-Q
_______________
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended June 30, 2008
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the transition period from
______to______.
Sustut
Exploration, Inc.
(Exact
name of registrant as specified in Charter
|
Delaware
|
333-143215
|
|||
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Commission
File No.)
|
(IRS
Employee Identification No.)
|
1420
5th
Avenue #220
Seattle,
Washington 98101
(Address
of Principal Executive Offices)
_______________
(206)
274-5321
(Issuer
Telephone number)
_______________
(Former
Name or Former Address 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 large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company filer.
See definition of “accelerated filer” and “large accelerated filer” in
Rule 12b-2 of the Exchange Act (Check one):
Large
Accelerated Filer o Accelerated
Filer o Non-Accelerated
Filer o Smaller
Reporting Company x
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 June 30, 2008: 15,902,624 shares of common
stock.
SUSTUT
EXPLORATION, INC.
FORM
10-Q
June
30, 2008
INDEX
PART
I-- FINANCIAL INFORMATION
|
Item
1.
|
Financial
Statements
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition
|
|
Item
3
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Quantitative
and Qualitative Disclosures About Market Risk
|
|
Item
4T.
|
Control
and Procedures
|
PART
II-- OTHER INFORMATION
|
Item
1
|
Legal
Proceedings
|
|
Item
1A
|
Risk
Factors
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
|
Item
5.
|
Other
Information
|
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
SIGNATURE
Item 1. Financial
Information
SUSTUT
EXPLORATION, INC.
(an
exploration stage company)
FINANCIAL
STATEMENTS
AS OF
JUNE 30, 2008
SUSTUT
EXPLORATION, INC.
(an
exploration stage company)
| BALANCE SHEET | F-1 |
| STATEMENT OF OPERATIONS | F-2 |
| STATEMENT OF STOCKHOLDERS’ EQUITY | F-4 |
| STATEMENT OF CASH FLOWS | F-5 |
| FINANCIAL STATEMENT FOOTNOTES | F-6 |
|
SUSTUT
EXPLORATION, INC.
|
||||||||
|
(an
exploration stage company)
|
||||||||
|
BALANCE
SHEET
|
||||||||
|
As
of June 30, 2008
|
||||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS
|
6/30/2008
|
12/31/2007
|
||||||
|
Cash
|
$ | 1,274 | $ | 10,157 | ||||
|
Total
Current Assets
|
1,274 | 10,157 | ||||||
|
OTHER CURRENT
ASSETS
|
||||||||
|
L/R -
Related Party
|
2,550 | - | ||||||
|
Total
Other Current Assets
|
2,550 | - | ||||||
|
TOTAL
ASSETS
|
$ | 3,824 | $ | 10,157 | ||||
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accrued
Expenses
|
$ | 1,250 | $ | 5,250 | ||||
|
Payable
agreement for claim rights
|
20,000 | 20,000 | ||||||
|
Total
Current Liabilities
|
21,250 | 25,250 | ||||||
|
LONG-TERM
LIABILITIES
|
||||||||
|
Payable
agreement for claim rights
|
- | - | ||||||
|
TOTAL
LIABILITIES
|
21,250 | 25,250 | ||||||
|
STOCKHOLDERS'
EQUITY
|
||||||||
|
Common
Stock, $.001 par value
|
||||||||
|
Authorized:
200,000,000
|
||||||||
|
Issued:
15,902,624 and 15,902,624, respectively
|
15,903 | 15,903 | ||||||
|
Additional paid
in capital
|
71,797 | 71,797 | ||||||
|
Accumulated
deficit during development stage
|
(105,126 | ) | (102,793 | ) | ||||
|
Total
Stockholders' Equity
|
(17,426 | ) | (15,093 | ) | ||||
|
TOTAL
LIABILITIES AND EQUITY
|
$ | 3,824 | $ | 10,157 | ||||
The
accompanying notes are an integral part of these financial statements.
F-1
|
SUSTUT
EXPLORATION, INC.
|
||||||||||||
|
(an
exploration stage company)
|
||||||||||||
|
STATEMENT
OF OPERATIONS
|
||||||||||||
|
For
the six months ended June 30, 2008 and 2007, and
|
||||||||||||
|
From
inception (April 11, 2006) through June 30, 2008
|
||||||||||||
|
6
MONTHS
|
6
MONTHS
|
|||||||||||
|
ENDING
|
ENDING
|
FROM
|
||||||||||
|
06/30/08
|
06/30/07
|
INCEPTION
|
||||||||||
|
REVENUE
|
$ | - | $ | - | $ | - | ||||||
|
COST OF
SERVICES
|
- | - | - | |||||||||
|
GROSS PROFIT OR
(LOSS)
|
- | - | - | |||||||||
|
GENERAL AND
ADMINISTRATIVE EXPENSES
|
2,333 | 7,007 | 30,126 | |||||||||
|
GENERAL
EXPLORATION
|
- | - | 75,000 | |||||||||
|
OPERATING
INCOME
|
(2,333 | ) | (7,007 | ) | (105,126 | ) | ||||||
|
ACCUMULATED DEFICIT,
BEGINNING
|
(102,793 | ) | (87,607 | ) | - | |||||||
|
ACCUMULATED DEFICIT,
ENDING
|
$ | (105,126 | ) | $ | (94,614 | ) | $ | (105,126 | ) | |||
|
Earnings (loss) per
share, basic
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
|
Weighted average
number of common shares
|
15,902,624 | 15,902,624 | ||||||||||
The
accompanying notes are an integral part of these financial
statements.
F-2
|
SUSTUT
EXPLORATION, INC.
|
||||||||
|
(an
exploration stage company)
|
||||||||
|
STATEMENT
OF OPERATIONS
|
||||||||
|
For
the three months ended June 30, 2008 and 2007, and
|
||||||||
|
From
inception (April 11, 2006) through June 30, 2008
|
||||||||
|
3
MONTHS
|
3
MONTHS
|
|||||||
|
ENDING
|
ENDING
|
|||||||
|
06/30/08
|
06/30/07
|
|||||||
|
REVENUE
|
$ | - | $ | - | ||||
|
COST OF
SERVICES
|
- | - | ||||||
|
GROSS PROFIT OR
(LOSS)
|
- | - | ||||||
|
GENERAL AND
ADMINISTRATIVE EXPENSES
|
1,580 | 6,472 | ||||||
|
GENERAL
EXPLORATION
|
- | - | ||||||
|
OPERATING
INCOME
|
(1,580 | ) | (6,472 | ) | ||||
|
ACCUMULATED DEFICIT,
BEGINNING
|
(103,546 | ) | (88,142 | ) | ||||
|
ACCUMULATED DEFICIT,
ENDING
|
$ | (105,126 | ) | $ | (94,614 | ) | ||
The
accompanying notes are an integral part of these financial
statements.
F-3
|
SUSTUT
EXPLORATION, INC.
|
||||||||||||||||||||
|
(an
exploration stage company)
|
||||||||||||||||||||
|
STATEMENT
OF STOCKHOLDERS' EQUITY
|
||||||||||||||||||||
|
As
of June 30, 2008
|
||||||||||||||||||||
|
ADDITIONAL
|
||||||||||||||||||||
|
COMMON
|
PAR
|
PAID
IN
|
ACCUM.
|
TOTAL
|
||||||||||||||||
|
STOCK
|
VALUE
|
CAPITAL
|
DEFICIT
|
EQUITY
|
||||||||||||||||
|
Common
stock issued for compensation
|
||||||||||||||||||||
|
Aprill
11, 2006 at $0.001 per share
|
9,902,624 | $ | 9,903 | $ | 97 | $ | - | $ | 10,000 | |||||||||||
|
Common
stock issued for cash
|
||||||||||||||||||||
|
April
16, 2006 at $0.01
|
||||||||||||||||||||
|
per
share on private placement
|
5,941,575 | 5,942 | 54,058 | - | 60,000 | |||||||||||||||
|
Net
income (loss)
|
(87,607 | ) | (87,607 | ) | ||||||||||||||||
|
Balance,
December 31, 2006
|
15,844,199 | $ | 15,844 | $ | 54,156 | $ | (87,607 | ) | $ | (17,607 | ) | |||||||||
|
Common
stock issued for cash
|
58,425 | 58 | 17,642 | 17,700 | ||||||||||||||||
|
February
21, 2007 at $0.30
|
||||||||||||||||||||
|
per
share on private placement
|
||||||||||||||||||||
|
Cancellation
of common stock
|
(990 | ) | (1 | ) | (299 | ) | (300 | ) | ||||||||||||
|
issued
for cash March 21, 2007
|
||||||||||||||||||||
|
at
$.30 per share
|
||||||||||||||||||||
|
Common
Stock issued for cash
|
990 | 1 | 299 | 300 | ||||||||||||||||
|
July
4, 2007 at $0.30 per
|
||||||||||||||||||||
|
share
on private placement
|
||||||||||||||||||||
|
Net
income (loss)
|
(15,186 | ) | (15,186 | ) | ||||||||||||||||
|
Balance,
December 31, 2007
|
15,902,624 | $ | 15,903 | $ | 71,797 | $ | (102,793 | ) | $ | (15,093 | ) | |||||||||
|
Retroactively
applied share
|
||||||||||||||||||||
|
issuance
treated as a 0.99026241954-to-1
|
||||||||||||||||||||
|
reverse
stock split at par value,
|
||||||||||||||||||||
|
$0.001
per share on April 17, 2008
|
||||||||||||||||||||
|
Net
income (loss)
|
(2,333 | ) | (2,333 | ) | ||||||||||||||||
|
Balance,
June 30, 2008
|
15,902,624 | $ | 15,903 | $ | 71,797 | $ | (105,126 | ) | $ | (17,426 | ) | |||||||||
The
accompanying notes are an integral part of these financial
statements.
F-4
|
SUSTUT
EXPLORATION, INC.
|
||||||||||||
|
(an
exploration stage company)
|
||||||||||||
|
STATEMENTS
OF CASH FLOWS
|
||||||||||||
|
For
the six months ended June 30, 2008 and 2007, and
|
||||||||||||
|
From
inception (April 11, 2006) through June 30, 2008
|
||||||||||||
|
6
MONTHS
|
6
MONTHS
|
|||||||||||
|
ENDING
|
ENDING
|
FROM
|
||||||||||
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
06/30/08
|
06/30/07
|
INCEPTION
|
|||||||||
|
Net
income (loss)
|
$ | (2,333 | ) | $ | (7,007 | ) | $ | (105,126 | ) | |||
|
Adjustments to
reconcile net income to net cash
|
||||||||||||
|
provided
by (used in) operating activities:
|
||||||||||||
|
Stock
issued in the form of compensation
|
- | - | 10,000 | |||||||||
|
Increase
(Decrease) in Accrued Expenses
|
(4,000 | ) | 500 | 1,250 | ||||||||
|
Increase
(Decrease) in claims payable
|
- | - | 20,000 | |||||||||
|
Total
adjustments to net income
|
(4,000 | ) | 500 | 31,250 | ||||||||
|
Net
cash provided by (used in) operating activities
|
(6,333 | ) | (6,507 | ) | (73,876 | ) | ||||||
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
||||||||||||
|
None
|
- | - | - | |||||||||
|
Net
cash flows provided by (used in) investing activities
|
- | - | - | |||||||||
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
||||||||||||
|
Cash
paid to related party
|
(2,550 | ) | - | (2,550 | ) | |||||||
|
Proceeds from
stock issuance
|
- | 17,400 | 77,700 | |||||||||
|
Net
cash provided by (used in) financing activities
|
(2,550 | ) | 17,400 | 75,150 | ||||||||
|
CASH
RECONCILIATION
|
||||||||||||
|
Net
increase (decrease) in cash
|
(8,883 | ) | 10,893 | 1,274 | ||||||||
|
Cash -
beginning balance
|
10,157 | 4,893 | - | |||||||||
|
CASH BALANCE END OF
PERIOD
|
$ | 1,274 | $ | 15,786 | $ | 1,274 | ||||||
The
accompanying notes are an integral part of these financial
statements.
F-5
NOTE 1 - OPERATIONS AND BASIS OF PRESENTATION
Sustut
Exploration, Inc. (the Company), an exploration stage company, was incorporated
on April 11, 2006 in the State of Delaware. The Company is an
exploration stage mineral company. On May 5, 2006 the Company became
actively engaged in acquiring mineral properties and raising
capital. The Company did not have any significant exploration
operations or activities from inception; accordingly, the Company is deemed to
be in the development stage.
The
Company’s fiscal year end is December 31.
On May 5,
2006, the Company acquired one mineral claim located near Smithers, British
Columbia, Canada. The property consists of one mineral claim and is
contiguous hard rock mineral.
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 from inception to
June 30, 2008. The Company has not realized economic production
from its mineral properties as of June
30, 2008. 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.
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.
F-6
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.
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.
F-7
Stock Based Compensation
The
Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123(R), "Accounting for Stock-Based Compensation,"
(SFAS 123(R)). SFAS 123(R) requires that companies recognize compensation
expense for grants of stock, stock options, and other equity instruments
based on fair value. The Company has adopted SFAS 123(R) 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 withdrawel
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.
F-8
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 ownership of the Don 1-2 claims which were placed in trust with the
Company’s President.
The
Company has stock-based compensation with directors of the Company as disclosed
in Footnote No. 7.
NOTE 4 - MINERAL PROPERTIES
The Company's net investment
in mineral properties include one claim as described in footnote number 1 have
all costs related to the claim have be expended in accordance with Generally
Accepted Accounting Principles for the industry . Currently the
Company does not have proven reserves by a geological study and will begin to
capitalize amortizable property once reserves have been proven.
NOTE 5
- INCOME TAXES
The
income tax payable that was accrued from inception through June 30, 2008 was
offset by the Company’s net operating loss carry-forward therefore the
provisions for income tax in the income statement is $0. For the six
months ended June 30, 2008, the Company had an operating loss of $2,333, which
is a loss that can be carried forward to offset future income for a period of 20
years. The Company has net operating loss carry-forwards that were derived
solely from operating losses. These amounts can be carried forward to be used to
offset future income for tax purposes for a period of 20 years for each year’s
loss. The accounting for these losses derives a deferred tax asset for the
period from inception to June 30, 2008 of 21,025.
No
provision was made for federal income tax since the Company has significant net
operating losses. From inception through June 30, 2008, the Company incurred net
operating losses for tax purposes of approximately $105,126. The net operating
loss carry forwards may be used to reduce taxable income through the years 2026
to 2028. The availability of the Company’s net operating loss carry-forwards are
subject to limitation if there is a 50% or more positive change in the ownership
of the Company’s stock. The provision for income taxes consists of the federal
and state minimum tax imposed on corporations.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial statement purposes and
the amounts used for income tax purposes. Significant components of the
Company's deferred tax liabilities and assets as of June 30, 2008 are as
follows:
F-9
|
Deferred
tax assets:
|
||||
|
Federal
net operating loss
|
$
|
15,770
|
||
|
State
net operating loss
|
5,255
|
|||
|
Total
deferred tax assets
|
21,026
|
|||
|
Less
valuation allowance
|
(21,026
|
)
|
||
|
$
|
--
|
|||
The
Company has provided a 100% valuation allowance on the deferred tax assets at
June 31, 2008 to reduce such asset to zero, since there is no assurance that the
Company will generate future taxable income to utilize such asset. Management
will review this valuation allowance requirement periodically and make
adjustments as warranted.
The
reconciliation of the effective income tax rate to the federal statutory rate
for the periods ended June 30, 2007 and June 30, 2006 is as
follows:
|
2007
|
2006
|
||||||
|
Federal
income tax rate
|
(15.0
|
%)
|
(15.0
|
%)
|
|||
|
State
tax, net of federal benefit
|
(5.0
|
%)
|
(5.0
|
%)
|
|||
|
Increase
in valuation allowance
|
20.0
|
%
|
20.0
|
%
|
|||
|
Effective
income tax rate
|
0.0
|
%
|
0.0
|
%
|
|||
NOTE 6 –
CLAIM AGREEMENT
On May 5,
2006, the Company entered into an agreement with Richard Simpson of Vancouver,
BC to acquire one rock mineral claim covering 445.70 hectares. The
agreement called for a 100% interest in the claims subject to a 2.5% Net Smelter
Royalty (NSR) for a total of $25,000. 1.5% of the NSR can be acquired
for $1.0 million within 12 months from commencement of commercial
production. Advance royalties of $20,000 shall be paid annually
commencing January 17, 2010. The purchase of the claim required
payment of $55,000 on May 15, 2006 and a further $20,000 on or before May 15,
2008.
F-10
NOTE 7
- SHAREHOLDERS' EQUITY
Common
Stock
The
Company has authorized two hundred million (200,000,000) shares of common stock
with a par value of $.001.
Upon
incorporation the Company issued 10,000,000 common shares to directors of the
Company as compensation in the amount of $10,000, or $0.001 per
share.
During
April 2006 the Company undertook a Section 4(2) registration under the
Securities Act of 1933 to raise $60,000 in the issuance of 6,000,000 shares of
common stock for the purpose of acquisition and exploration of mining
properties. The Company’s management considers this offering to be
exempt under the Securities Act of 1933.
During
February 2007, the Company undertook a Section 4(2) registration under the
Securities Act of 1933 to raise $17,700 in the issuance of 59,000 shares of
common stock at $.30 per share. The Company’s management considers this offering
to be exempt under the Securities Act of 1933.
During
March 2007, the Company cancelled the issuance of 1,000 shares of common stock
at $.30 per share.
During
July 2007, the Company reissued 1,000 shares of common stock at $0.30 per share
that were cancelled during March 2007.
During
April 2008, the Company undertook a 0.99026241954-for-1 reverse stock split of
the Corporation’s issued and outstanding shares of common stock.
NOTE 8
- COMMITMENTS AND CONTINGENCIES
The
Company’s claim will revert back to the seller within no less than a 10 day
period if the Company fails to make the advance royalty payments per the sales
contract commencing 5 years from the date of the agreement.
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.
F-11
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.
F-12
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Plan
of Operation
Our plan
of operations over the next twelve months is to raise additional capital to
complete the planned exploration program. The following is an exploration budget
that is outlined in the summary geology report that was prepared for the company
by George Nicholson, P.Geo.
|
Item
Description
|
Cost
Estimate
|
|||
|
Helicopter
support (6 hrs x $1,000/hr)
|
$
|
6,000
|
||
|
Labor
(2 tech. x 7 days @ $350/day)
|
$
|
4,900
|
||
|
Sample
Analyses (100 soil + 50 rock @ $30/sample)
|
$
|
4,500
|
||
|
Room
and board
|
$
|
2,000
|
||
|
Mob./Demob.
+ truck + fuel
|
$
|
3,000
|
||
|
Report
and drafting
|
$
|
5,000
|
||
|
10%
contingency
|
$
|
2,500
|
||
|
Total
|
$
|
27,900
|
||
|
ROUNDED
= $30,000
|
||||
At
present, we do not have sufficient cash on hand to complete the filing of this
prospectus and meeting our exploration, general and administration expenses and
we attempte d to raise more capital by May 15, 2008 to carry out further
exploration programs to maintain our interest in the WILLOW claim. We have been
unable to raise sufficient capital to meet our obligations and could lose our
interest in the properties or a portion thereof.
We plan
to raise a minimum of $30,000 to continue minimum exploration of our properties
during the next 12 months through a private placement of debt, convertible
securities, or common equity. If we are successful in raising the necessary
capital, we may have to significantly dilute the current shareholders. We plan
to initially offer the debt or equity to our current shareholders and
management. If we are not successful in raising the required capital, we will
offer our debt or equity to new investors. At present, we have no specific plans
regarding a debt or equity offering, but intend to actively commence raising the
required capital during the spring of 2008. As an alternative to raising capital
through the selling of debt or equity, we will attempt to negotiate a joint
venture with an industry partner. If the company is required to enter into a
joint venture, we could end up with a minority interest in our properties. We
have not contacted another party in the industry regarding a joint venture.
There is no assurance we will raise the necessary capital, therefore there is a
significant risk that the company may have to abandon or reduce the size of our
property.
We are
still pursuing this plan but to date we have not been able to raise additional
funds through either debt or equity offerings. Without this additional cash we
have been unable to pursue our plan of operations and commence generating
revenue. We believe that we may not be able to raise the necessary funds to
continue to pursue our business operations. As a result of the foregoing, we
have recently begun to explore our options regarding the development of a new
business plan and direction. We are currently engaged in discussions with a
company regarding the possibility of a reverse triangular merger (the “Merger”)
involving our company. At this stage, no definitive terms have been agreed to,
and neither party is currently bound to proceed with the Merger.
Recent Accounting
Pronouncements
In March
2008, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
objective of SFAS 157 is to increase consistency and comparability in fair value
measurements and to expand disclosures about fair value measurements. SFAS 157
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS 157 applies under other accounting pronouncements that
require or permit fair value measurements and does not require any new fair
value measurements. The provisions of SFAS No. 157 are effective for fair value
measurements made in fiscal years beginning after November 15, 2007. The
adoption of this statement is not expected to have a material effect on the
Company's future reported financial position or results of
operations.
In
February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
159, “The Fair Value Option
for Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115”. This statement permits entities to choose to measure
many financial instruments and certain other items at fair value. Most of the
provisions of SFAS No. 159 apply only to entities that elect the fair value
option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments
in Debt and Equity Securities” applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity’s first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, “Fair Value Measurements”. The
adoption of this statement is not expected to have a material effect on the
Company's financial statements.
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, revenues 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 of 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.
Off Balance Sheet
Arrangements
We have
no off-balance sheet arrangements.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
The
Company is subject to certain market risks, including changes in interest rates
and currency exchange rates. The Company does not undertake any specific
actions to limit those exposures.
Foreign
Currency Exchange Rate Risk
The
Company procures products from domestic sources with operations located
overseas. As such, its financial results could be indirectly affected by
the weakening of the dollar. If that were to occur, and if it were
material enough in movement, the financial results of the Company could be
affected, but not immediately because the Company has entered into contracts
with these vendors which establish product pricing levels for up to one year.
Management believes these contracts provide a sufficient amount of time to
mitigate the risk of changes in exchange rates.
Item
4T. Controls and Procedures
Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Accounting Officer (“CAO”) (the Company’s principal financial and accounting
officer), of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this report. Based upon that evaluation, the
Company’s CEO and CAO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CAO, as appropriate, to allow timely decisions regarding required
disclosure.
Management’s Report on
Internal Controls over Financial Reporting
financial
reporting and the preparation of financial statements for external purposes in
accordance with U.S. generally accepted accounting principles. There has
been no change in the Company’s internal control over financial reporting during
the quarter ended June 30, 2008 that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
The
Company’s management, including the Company’s CEO and CAO, does not expect that
the Company’s disclosure controls and procedures or the Company’s internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of the
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected.
Management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control – Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on this evaluation, management concluded that the company’s internal control
over financial reporting was effective as of June 30, 2008.
This
quarterly report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this quarterly report.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings.
Currently
we are not aware of any litigation pending or threatened by or against the
Company.
Item 1A. Risk Factors
None.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item
3. Defaults Upon Senior Securities.
None
Item
4. Submission of Matters to a Vote of Security Holders.
On April
17, 2008, our board of directors and a majority of our stockholders approved a
0.99026241954-for-1 reverse stock split of our common stock, par value $0.001
per share.
Item
5. Other Information.
None
Item
6. Exhibits and Reports of Form 8-K.
(a) Exhibits
31.1
Certifications pursuant to Section 302 of Sarbanes Oxley Act of
2002
32.1
Certifications pursuant to Section 906 of Sarbanes Oxley Act of
2002
(b) Reports
of Form 8-K
We have
filed Form 8-K on April 17, 2008 disclosing the reverse stock split of our
common stock.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
SUSTUT
EXPLORATION, INC.
|
||
|
Date:
August 13, 2008
|
By:
|
/s/
Terry Hughes
|
|
Terry
Hughes
|
||
|
President,
Chief Executive Officer
and
Chief Financial Officer
|
||