**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


___________




**FORM
      10-QSB**




**x**
            **Quarterly
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934.**


**For
      the quarterly period ended June 30, 2007**




**or**




**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)**




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Exchange Act during the past 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No




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):




Large
                accelerated filer
            
            Accelerated
                filer
            
            Non-accelerated
                filer





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).




Yes
[
      X]
  No[  ]




As
      of
      August 13, 2007 the registrant had issued and outstanding 16,059,000 shares
      of
      common stock, par value $.001 per share.











**SUSTUT
      EXPLORATION, INC.**




**FORM
      10QSB**




**JUNE
      30, 2007**




**INDEX**




**PART
      I-- FINANCIAL INFORMATION**




Item
                1.
            Financial
                StatementsItem
                2.
            Management’s
                Discussion and Analysis of Financial ConditionItem
                3.
            Control
                and Procedures






**PART
      II-- OTHER INFORMATION**




Item
                1A.
            Risk
                FactorsItem
                2.
            Unregistered
                Sales of Equity Securities and Use of ProceedsItem
                3.
            Defaults
                Upon Senior SecuritiesItem
                4.
            Submission
                of Matters to a Vote of Security HoldersItem
                5.
            Other
                InformationItem
                6.
            Exhibits
                and Reports on Form 8-K






**SIGNATURE**




**Item
      1. Financial Infor****mation**












**SUSTUT
        EXPLORATION, INC.**
 **(an
        exploration stage company)**
 
 **FINANCIAL
        STATEMENTS**
 
 **AS
        OF JUNE 30, 2007**
 
 
 
 
 
  
 
 SUSTUT
        EXPLORATION, INC.
 (an
        exploration stage company)
 
 
 
 
 
 
 BALANCE
                  SHEET
              F-1STATEMENT
                  OF OPERATIONS
              F-2STATEMENT
                  OF STOCKHOLDERS’ EQUITY
              F-3STATEMENT
                  OF CASH FLOWS
              F-4FINANCIAL
                  STATEMENT FOOTNOTES
              F-5
 
 
 
 
 
 
 **SUSTUT
                    EXPLORATION, INC.****(an
                    exploration stage company)****BALANCE
                    SHEET****As
                    of June 30, 2007****ASSETS****CURRENT
                    ASSETS**
                
                **6/30/2007**
                
                
                **12/31/2006**Cash
                
                $
                15,786
                
                
                $
                4,893Total
                    Current Assets
                
                
                15,786
                
                
                
                4,893**TOTAL
                    ASSETS**
                
                $
                15,786
                
                
                $
                4,893**LIABILITIES
                    AND STOCKHOLDERS' EQUITY****CURRENT
                    LIABILITIES**Accrued
                    Expenses
                
                $
                3,000
                
                
                $
                2,500Total
                    Current Liabilities
                
                
                3,000
                
                
                
                2,500**LONG-TERM
                    LIABILITIES**Payable
                    agreement for claim rights
                
                
                20,000
                
                
                
                20,000**TOTAL
                    LIABILITIES**
                
                $
                23,000
                
                
                $
                22,500**STOCKHOLDERS'
                    EQUITY**Common
                    Stock, $.001 par valueAuthorized:
                    200,000,000Issued:
                    16,058,000 and 16,000,000, respectively
                
                
                16,058
                
                
                
                16,000Additional
                    paid
                    in capital
                
                
                71,342
                
                
                
                54,000Accumulated
                    deficit during development stage
                
                
                (94,614
                )
                
                
                (87,607
                )Total
                    Stockholders' Equity
                
                
                (7,214
                )
                
                
                (17,607
                )**TOTAL
                    LIABILITIES AND EQUITY**
                
                $
                15,786
                
                
                $
                4,893
 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, 2007 and 80 days ended June 30, 2006,
                  and****From
                  inception (April 11, 2006) through June 30, 2007****FROM****06/30/07**
              
              
              **06/30/06**
              
              
              **INCEPTION****REVENUE**
              
              $
              -
              
              
              $
              -
              
              
              $
              -**COST
                  OF SERVICES**
              
              
              -
              
              
              
              -
              
              
              
              -**GROSS
                  PROFIT OR (LOSS)**
              
              
              -
              
              
              
              -
              
              
              
              -**GENERAL
                  AND ADMINISTRATIVE EXPENSES**
              
              
              7,007
              
              
              
              10,072
              
              
              
              19,614**GENERAL
                  EXPLORATION**
              
              
              -
              
              
              
              75,000
              
              
              
              75,000**OPERATING
                  INCOME**
              
              
              (7,007
              )
              
              
              (85,072
              )
              
              
              (94,614
              )**ACCUMULATED
                  DEFICIT, BEGINNING**
              
              
              (87,607
              )
              
              
              -
              
              
              
              -**ACCUMULATED
                  DEFICIT, ENDING**
              
              $
              (94,614
              )
              
              $
              (85,072
              )
              
              $
              (94,614
              )**Earnings
                  (loss) per share, basic**
              
              $
              (0.00
              )
              
              $
              (0.01
              )**Weighted
                  average number of common shares**
              
              
              16,049,814
              
              
              
              15,886,364




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, 2007 and 80 days ended June 30,
                  2006****06/30/07**
              
              
              **06/30/06****REVENUE**
              
              $
              -
              
              
              $
              -**COST
                  OF SERVICES**
              
              
              -
              
              
              
              -**GROSS
                  PROFIT OR (LOSS)**
              
              
              -
              
              
              
              -**GENERAL
                  AND ADMINISTRATIVE EXPENSES**
              
              
              6,472
              
              
              
              10,072**GENERAL
                  EXPLORATION**
              
              
              -
              
              
              
              75,000**OPERATING
                  INCOME**
              
              
              (6,472
              )
              
              
              (85,072
              )**ACCUMULATED
                  DEFICIT, BEGINNING**
              
              
              (88,142
              )
              
              
              -**ACCUMULATED
                  DEFICIT, ENDING**
              
              $
              (94,614
              )
              
              $
              (85,072
              )




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 March 31, 2007****ADDITIONAL****COMMON**
              
              
              **PAR**
              
              
              **PAID
                  IN**
              
              
              **ACCUM.**
              
              
              **TOTAL****STOCK**
              
              
              **VALUE**
              
              
              **CAPITAL**
              
              
              **DEFICIT**
              
              
              **EQUITY**Common
                  stock issued for compensationApril
                  11, 2006 at $0.001 per share
              
              
              10,000,000
              
              
              
              10,000
              
              
              
              -
              
              
              
              -
              
              
              
              10,000Common
                  stock issued for cashApril
                  16, 2006 at $0.01per
                  share on private placement
              
              
              6,000,000
              
              
              
              6,000
              
              
              
              54,000
              
              
              
              -
              
              
              
              60,000Net
                  income (loss)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (87,607
              )
              
              
              (87,607
              )Balance,
                  December 31, 2006
              
              
              16,000,000
              
              
              $
              16,000
              
              
              $
              54,000
              
              
              $
              (87,607
              )
              
              $
              (17,607
              )Common
                  stock issued for cash
              
              
              59,000
              
              
              
              59
              
              
              
              17,641
              
              
              
              
              
              
              
              17,700February
                  21, 2007 at $0.30per
                  share on private placementCancellation
                  of common stock
              
              
              (1,000
              )
              
              
              (1
              )
              
              
              (299
              )
              
              
              
              
              
              
              (300
              )issued
                  for cash March 21, 2007at
                  $.30 per shareNet
                  income (loss)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (7,007
              )
              
              
              (7,007
              )Balance,
                  June 30, 2007
              
              
              16,058,000
              
              
              $
              16,058
              
              
              $
              71,342
              
              
              $
              (94,614
              )
              
              $
              (7,214
              )




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, 2007 and 80 days ended June 30, 2006,
                  and****From
                  inception (April 11, 2006) through June 30, 2007****FROM****CASH
                  FLOWS FROM OPERATING ACTIVITIES**
              
              **06/30/07**
              
              
              **06/30/06**
              
              
              **INCEPTION**Net
                  income (loss)
              
              $
              (7,007
              )
              
              $
              (85,072
              )
              
              $
              (94,614
              )Adjustments
                  to reconcile net income to net cashprovided
                  by  (used in) operating activities:Stock
                  issued in the form of compensation
              
              
              -
              
              
              
              10,000
              
              
              
              10,000Increase
                  (Decrease) in Accrued Expenses
              
              
              500
              
              
              
              -
              
              
              
              3,000Increase
                  (Decrease) in claims payable
              
              
              -
              
              
              
              20,000
              
              
              
              20,000Total
                  adjustments to net income
              
              
              500
              
              
              
              30,000
              
              
              
              33,000Net
                  cash provided by (used in) operating activities
              
              
              (6,507
              )
              
              
              (55,072
              )
              
              
              (61,614
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**None
              
              
              -
              
              
              
              -
              
              
              
              -Net
                  cash flows provided by (used in) investing activities
              
              
              -
              
              
              
              -
              
              
              
              -**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from stock issuance
              
              
              17,400
              
              
              
              60,000
              
              
              
              77,400Net
                  cash provided by (used in) financing activities
              
              
              17,400
              
              
              
              60,000
              
              
              
              77,400**CASH
                  RECONCILIATION**Net
                  increase (decrease) in cash
              
              
              10,893
              
              
              
              4,928
              
              
              
              15,786Cash
                  - beginning balance
              
              
              4,893
              
              
              
              -
              
              
              
              -**CASH
                  BALANCE END OF PERIOD**
              
              $
              15,786
              
              
              $
              4,928
              
              
              $
              15,786




The
      accompanying notes are an integral part of these financial
      statements.






F-5


**SUSTUT
        EXPLORATION, INC.**
 **(an
        exploration stage company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 
 
 **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, 2007. The Company has not realized
        economic production
        from  its  mineral  properties  as  of  June
        30, 2007.    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.
 
 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.
   F-6
 **SUSTUT
          EXPLORATION, INC.**
 **(an
          exploration stage company)**
 **NOTES
          TO FINANCIAL STATEMENTS**
 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.
  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.
   F-7
 **SUSTUT
          EXPLORATION, INC.**
 **(an
          exploration stage company)**
 **NOTES
          TO FINANCIAL STATEMENTS**
 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.
 
 **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
          Company has available net operating loss carryforwards of $94,614 for
          financial  statement  and
          federal  income  tax  purposes.  These  loss  carryforwards  expire  if
          not used by the year 2026 and 2007.  The Company’s management has
          decided a valuation allowance in the amount of approximately $17,600 is
          necessary to reduce any tax benefits of using the net operating losses
          to offset
          future tax liabilities.  The future
          available  benefits  are  more likely than not to
          expire before they can be used based on current uncertainties.
  
  F-8
 **SUSTUT
          EXPLORATION, INC.**
 **(an
          exploration stage company)**
 **NOTES
          TO FINANCIAL STATEMENTS**
 
 **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
 
 **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.
  **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-9
  **SUSTUT
        EXPLORATION, INC.**
 **(an
        exploration stage company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
  
 **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-10






**ITEM
      2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS**




*This
      report contains certain “forward-looking statements” within the meaning of
      Section 27A of the Securities Act of 1933, as amended, and Section 21E
      of the Exchange Act of 1934, as amended, which are based on management’s
      exercise of business judgment as well as assumptions made by and information
      currently available to, management. When used in this document, the words “may”,
“will”, “anticipate”, “believe”, “estimate”, “expect”, “intend” and words of
      similar import, are intended to identify any forward-looking statements. You
      should not place undue reliance on these forward-looking statements. These
      statements reflect our current view of future events and are subject to certain
      risks and uncertainties as described in this Report on Form 10-QSB as well
      as
      other periodic reports, filed with the Securities and Exchange Commission,
      and
      as noted below. Should one or more of these risks or uncertainties materialize,
      or should underlying assumptions prove incorrect, our actual results could
      differ materially from those anticipated in these forward-looking statements.
      We
      undertake no obligation, and do not intend, to update, revise or otherwise
      publicly release any revisions to these forward-looking statements to reflect
      events or circumstances after the date hereof, or to reflect the occurrence
      of
      any unanticipated events. Although we believe that our expectations are based
      on
      reasonable assumptions, we can give no assurance that our expectations will
      materialize.*





The
      following discussion and analysis provides information which management believes
      is relevant to an assessment and understanding of our results of operations
      and
      financial condition. On June 30, 2007 we had $15,786 in cash in the bank. We
      estimate that in order to carry forward over the next 12 months we will need
      approximately $32,500 to pay for office expenses and our “phase 1” exploration
      program. Based upon our present capital, we do not have enough capital to pay
      for the $30,000 that is necessary to complete our planned “phase 1” exploration
      program. We need to spend a minimum of $4.00 per hectare in exploration work
      or
      pay the equivalent to the Province of BC Ministry of Finance and a $0.40 filing
      fee per hectare annually to maintain our claim. Based upon the one claim that
      the company has that totals 447 hectares we would need to pay a minimum of
      $1966.80 annually to maintain our claim. Our estimated annual office expenses
      are approximately $2,500. If we do not raise additional capital we will be
      unable to pay the further $20,000 that is owed by May 15, 2008 as per our
      agreement with Richard Simpson the seller of our property.




We
      will
      need to raise additional funds through private debt or the sale of equities
      to
      meet our capital requirements. We have no present loans or arrangements to
      cover
      our capital requirements. If we do not raise additional capital we will not
      be
      able to implement our business plan. We can only conduct our “phase 1”
exploration program from mid May to mid October only due to inclement weather
      conditions. If we do not raise the $30,000 needed for the “phase 1” program by
      the end of September 2007, we will have to wait until mid May 2008 to commence
      the program.




The
      accompanying financial statements have been prepared assuming that the company
      will continue as a going concern. As discussed in the notes to the financial
      statements, the company has experienced losses since inception. Our financial
      situation raises substantial doubt about its ability to continue as a going
      concern. The financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.




The
      following discussion and analysis contains forward-looking statements, which
      involve risks and uncertainties. Our actual results may differ significantly
      from the results, expectations and plans discussed in these forward-looking
      statements.




**Organization**




We
      were
      organized as a Delaware Corporation on April 11, 2006 for the purpose of
      locating and developing a copper-gold exploration property in the Province
      of
      British Columbia.




**Overview**




On
      May 5,
      2006 we entered into an option agreement with Richard Simpson to acquire a
      100%
      interest in the “Willowvale Project”. The property was acquired from Richard
      Simpson by paying him $55,000 on May 5, 2006. The company must pay advance
      royalties of $20,000 annually commencing on January 17, 2010. Upon commercial
      production, the property will be subject to a 2.5% Net Smelter Royalty (“NSR”).
      1.5% of the “NSR” can be acquired for $1.0 million within 12 months from
      commencement of commercial production.




If
      Sustut
      fails to make the advance royalty payments on the five yearanniversary
      of
      the claims, as described in the agreement with Richard Simpson the company
      agrees to transfer the claim back to Richard Simpson within no less than a
      10
      day period.











The
      Willovale Project consists of one claim totaling 447 hectares. The property
      is
      owned 100% by Terry Hughes as President in trust for Sustut Exploration Inc.
      The
      claims are located in the Omineca Mining Division, NTS map sheet 94D/10E. The
      property is 4.5km east of the Sustut River in the Province of British
      Columbia, Canada. The property is owned by the Province of British Columbia,
      which grants the mineral claim.




Currently
      we are not aware of any native land claim that might affect our title to the
      mineral claim. Although we are unaware of any situation that would threaten
      our
      claim, it is possible that a native land claim could be made in the future.
      The
      Canadian federal and provincial governments policy at this time is to consult
      with all the potentially affected native bands and other stakeholders in the
      area of any proposed commercial production. If we should encounter a situation
      where a native band or group claims an interest in our claim, we may choose
      to
      provide compensation to the affected party in order to continue with our
      exploration work. If such an option is not available we may have to relinquish
      our interest in the willow project.




The
      British Columbia government released “The BC Mining Plan” in January 2005 to
      help ensure the mining industry that Province is committed to remain competitive
      in the global mineral exploration sector. British Columbia currently has nine
      operating mines, of which six produce copper-gold. The exploration expenditures
      in BC topped $100 million in 2004 according to the BC Mine Plan.




The
      B.C**.**Mine Plan outlines the following:




**•**
            B.C.
                Mineral potential is good**•**
            B.C.
                Has untapped reserves of metals**•**
            Competitive
                taxes**•**
            Streamlined
                regulatory requirements**•**
            Electricity
                rates are among the lowest in North America**•**
            Highly
                skilled work force**•**
            Well
                developed infrastructure






The
      plan
      addresses a range of factors that set the stage for a healthy mining industry
      that delivers community benefits and is sustainable for years to
      come.




The
      Canadian Federal Government and the Provinces offer very attractive tax breaks
      for investors in exploration companies. The Federal and Provincial Tax Credits
      are a tax advantage investment that is made into a company carrying out
      grassroots exploration work in Canada. The mining company enters into an
      agreement with an investor and “flow-through mining expenditure” is incurred by
      the company and the individual can claim over 100% of that investment off earned
      income. The B.C**.** Government will grant in addition to the
      Federal 15% tax credit a further 20% non-refundable tax credit for qualified
      investments made in new B.C. mineral exploration. Hence, an investor who is
      taxed at the highest marginal rate would receive a 141% tax deduction from
      earned income. The company must be publicly trading in order to deal with this
      tax advantage investment.




**The
      next twelve months**




The
      companies plan of operations over the next twelve months is to raise additional
      capital to complete the planned “phase 1” 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)
            $6,000Labour
                (2 tech. x 7 days @ $350/day)
            $4,900Sample
                Analyses (100 soil + 50 rock @ $30/sample)
            $4,500Room
                and board
            $2,000Mob./Demob.
                + truck + fuel
            $3,000Report
                and drafting
            $5,00010%
                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 must raise more capital by May 15, 2008 to carry out further exploration
      programs to maintain our interest in the WILLOW claim. If we are unable to
      raise
      sufficient capital to meet our obligations we 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 fall of 2007. 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.




Off-Balance
      Sheet Arrangements




We
      have
      no significant off-balance sheet arrangements that have or are reasonably likely
      to have a current or future effect on our financial condition, changes in
      financial condition, revenues or expenses, results of operations, liquidity,
      capital expenditures or capital resources that is material to
      stockholders.




**Item
      3. Controls and Procedures**




Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we conducted an
      evaluation of our disclosure controls and procedures, as such term is defined
      under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
      Exchange Act of 1934, as amended (Exchange Act), as of June 30, 2007. Based
      on
      this evaluation, our principal executive officer and principal financial officer
      have concluded that our disclosure controls and procedures are effective to
      ensure that information required to be disclosed by us in the reports we file
      or
      submit under the Exchange Act is recorded, processed, summarized, and reported
      within the time periods specified in the Securities and Exchange Commission’s
      rules and forms and that our disclosure and controls are designed to ensure
      that
      information required to be disclosed by us in the reports that we file or submit
      under the Exchange Act is accumulated and communicated to our management,
      including our principal executive officer and principal financial officer,
      or
      persons performing similar functions, as appropriate to allow timely decisions
      regarding required disclosure.











There
      were no changes (including corrective actions with regard to significant
      deficiencies or material weaknesses) in our internal controls over financial
      reporting that occurred during the second quarter of fiscal 2007 that has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.




**Recent
      Accounting Pronouncements**




In
      September 2006, 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 Fi**nancial
      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.












**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
      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.**




None.




**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




None.
















**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 14, 2007
            By:
            */s/
                Terry Hughes*Terry
                HughesPresident,
                Chief Executive Officer and Chief Financial
                Officer