UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 
 (Mark One)
 
 þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the fiscal year ended December 31, 2010
 
 oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the transition period from _______ to __________
 
 Commission File Number: 000-52618
 
 SOUTHERN TRUST SECURITIES HOLDING CORP.
 (Exact name of registrant as specified in its charter)
  Florida

651001593(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employee

Identification Number)
  145 Almeria Ave., Coral Gables, Florida 33134
 (Address of principal executive offices)
 
 Registrant’s telephone number, including area code: (305) 446-4800
 
 Securities registered pursuant to Section 12(b) of the Act: None
 
 Securities registered pursuant to Section 12(g) of the Act: Common Stock
 
 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act  o Yes    þ   No
 
 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes    þ   No
 
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes    o  No
 
 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K. þ
  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “larger accelerated filer, “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
  o
Large accelerated filero
Accelerated Filero
Non-accelerated filerþ
Smaller reporting company
  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  o Yes    þ   No
 
 The aggregate market value of the 3,461,012 shares of voting common stock of the registrant held by non-affiliates computed as of September 20, 2010, on which date the price of the registrant’s common stock was $0.30 per share, was $1,038,304.
 
 The registrant had 14,333,378 shares of common stock issued and outstanding on March 25, 2011.
 
 DOCUMENTS INCORPORATED BY REFERENCE
 
 Portions of the definitive Information Statement containing a written consent in lieu of the registrants’ Annual Meeting of Shareholders for 2011 have been incorporated by reference into Part III of this Annual Report on Form 10-K.
  
 
 
 Table of Contents
  PART IItem 1.
Business


3Item 1A.
Risk Factors


9Item 1B.
Unresolved Staff Comments


9Item 2.
Properties


9Item 3.
Legal Proceedings


10Item 4.
Submission of Matters to a Vote of Security Holders


10PART IIItem 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


11Item 6.
Selected Financial Data


12Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operation


13Item 7A.
Quantitative and Qualitative Disclosures About Market Risk


21Item 8.
Financial Statements and Supplementary Data


22Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.


23Item 9A.
Controls and Procedures


23Item 9B.
Other Information


24PART III



2424Item 10.
Directors, Executive Officers and Corporate Governance


24Item 11.
Executive Compensation


24Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


24Item 13.
Certain Relationships and Related Transactions and Director Independence


24Item 14.
Principal Accounting Fees and Services


24PART IVItem 15.
Exhibits, Financial Statement Schedules


25
 2
  Introductory Note:  The Registrant qualifies as a “small reporting company” and has elected to comply with the requirements applicable to smaller reporting companies set forth in Regulation S-K.
  PART I
 ITEM 1. BUSINESS
 
 Overview
 
 Southern Trust Securities Holding Corp. (referred to herein as “we” or the “Registrant”) is the holding company for Southern Trust Securities, Inc. (formerly named “Capital Investment Services, Inc.” or “CIS”), a registered broker-dealer and investment banking firm, which we will refer to herein as “STS”.  Our principal executive offices are located in Coral Gables, Florida. Our principal business is the business of STS.
 
 Through our subsidiary, Southern Trust Securities Asset Management, Inc. (“STSAM”), an investment advisor registered with the State of Florida (formerly named “CIS Asset Management, Inc.” or “CISAM”) we also provide asset management services.
 
 Through our subsidiary Southern Trust Metals, Inc. ("STM"), which was formed in the fourth quarter of 2009, we trade precious metals such as gold, silver, platinum and palladium.  STM is separately managed and works directly with its own clients looking to generate new business through innovative trading of primarily gold, silver, platinum and palladium.
 
 As a broker-dealer and investment adviser, we offer our clients:
 
 ·
access to all major domestic and international securities and options exchanges;
 ·
trading in fixed income products, corporate, government, agencies, municipals, and emerging market debt;
 ·
fixed and variable annuities and life insurance;
 ·
hundreds of domestic and international mutual funds;
 ·
management of retirement plans such as IRAs, 401ks, 403bs, SEP IRAs, and other popular plans;
 ·
portfolio management for individuals, pension funds, retirement plans, foundations, trusts and corporations; and
 ·
corporate services facilitating restricted stock dispositions and stock option exercises.
 
 We also offer offshore services enabling client access to foreign trusts and corporations by providing administrative services and referrals to foreign filing specialists and attorneys to enable clients to establish offshore accounts and entities, from time to time.  Income derived from these services has been immaterial to our consolidated business; the services are provided primarily as an accommodation to our clients.
 
 We also offer Investment banking services. We provide traditional as well as innovative securities transaction structures.  Our focus is on merger and acquisition advisory services, private placements convertible into publicly-traded shares and private placements bridging to public offerings through reverse mergers into publicly-traded shell corporations.
  3
 
 STS is headquartered in Coral Gables, Florida due to that city’s importance as a regional financial center attracting investors from throughout the United States, Latin America, and Europe. STS also has offices in Madrid, Spain and Geneva, Switzerland, which enable us to better serve our international clients and to more readily access the financial markets in Europe.  Almost all of our employees and agents are fluent in both English and Spanish and this fact is extremely important to our competitive ability to grow our business by engaging in transactions with investors and companies in South Florida, Latin America and Spain, among other locations.  We also have relationships with approximately 9 foreign associates who provide market access for our clients in the following countries:  Argentina, Brazil, Columbia, Mexico, Spain, Switzerland and Venezuela.
 
 During July 2008, we opened several offices in Spain under a partnership agreement between us and the Swiss Financial Group, International Private Wealth Management, SA (“IPWM, SA”). A new company, IPWM, España S.A. ("IPWM Spain") was formed for this purpose and it is owned 50% by us and 50% by IPWM, SA. IPWM Spain was established to capitalize on the growing wealth management and private banking market in Spain. The company will focus on developing the retail banking, corporate banking, private wealth management and brokerage businesses. The offices are located in Barcelona, San Sebastian and Marbella. IPWM had limited operations during 2010 and 2009.
 
 In August 2009, we acquired a 22% common stock interest in Nexo Emprendimientos S.A. ("Nexo"). Nexo is a fast growing consumer credit card company based in Sunchales, Argentina. We also have a put option on the shares of Nexo we own beginning in September of 2012 should we choose to exercise the put option. We hope to develop this investment in coordination with financial institution partners based in Argentina.
 
 On August 4, 2009, the Company restructured its investment in AR Growth. In summary, the Company exchanged its $2.5 million Preferred Stock investment in AR Growth for a 22% common stock interest in Nexo Emprendimientos S.A. (“Nexo”). Nexo is a fast growing consumer credit card company based in Sunchales, Argentina. Subsequently, in 2010 Probenefit exchanged certain Nexo debt held by it into additional Nexo equity resulting in the Company's ownership in Nexo decreasing to 17.29%.
 
 History
 
 We were incorporated on January 14, 1998, in the State of Florida under the name “February Project III”.  Subsequently we changed our name to “Atlantis Ideas Corp.”  In March 2006, we effectuated a reverse merger with Southern Trust Securities Holding Corp. (“Target”), in which we survived owning the operations of the Target and we subsequently changed our name to “Southern Trust Securities Holding Corp.”  Prior to the acquisition of the Target, we did not have any material business operations.
 
 The Target was formed as a Florida corporation on January 25, 2000. It was the holding company for STS, which was organized as a Florida corporation on June 10, 1999.  By way of a share exchange, in 2004, the Target and STS exchanged shares so that STS became the wholly-owned subsidiary of the Target.
  4
 
 Mission Statement
 
 Our mission is to meet each individual and institutional investor’s objectives through the use of a wide array of financial products.  Each client has a set of financial goals, which permits our professionals to gauge their ability to accept varying degrees of risk. From the most conservative risk adverse investor, to the most aggressive trader, we may offer mutual funds, equity, option and fixed income trading, insurance products such as fixed and variable annuities, structured products, futures, managed accounts and many more investment options.  We are committed to continuously offering highly personalized services.
 
 Ourbusinessobjectives are straightforward: aggressive revenue growth coupled with a high profit margin, which ultimately translates into higher share prices for our capital stock. At present, we generate our revenue primary from trading and commission revenue from individual and institutional accounts and revenues from our metals trading subsidiary.  To a lesser extent, we generate asset management fee income from account management and investment advisory services and investment banking fees from private placement and merger and acquisition advisory services.
  Retail and Institutional Brokerage
 
 With regard to our core business of trading and acting as a broker-dealer for our clients, we view ourselves as a specialty broker-dealer. Our expertise is in the trading and structuring of complex programs that utilize derivatives as hedges and also as incremental return vehicles. We primarily trade in fixed income instruments, foreign currencies, and broad-based indexes. By utilizing derivatives (puts and call options) in conjunction with either the purchase or sale of a bond, currency or index, we are able to generate superior returns while at the same time minimizing the risks to our clients. A large component of our trading is done in foreign bonds and currencies. We also trade in equities and are able to transact any trade desired by our clients. As of December 31, 2010, we had approximately $91 million under management, including $84.3 million at STS, $5,.8 million at STSAM, approximately $.9 million held by MF Global (formerly Man Financial) and $.7 at STM.
 
 We effectuate transactions in domestic and international debt and equity markets on behalf of our clients by maintaining a correspondent relationship with Pershing LLC, a wholly-owned subsidiary of The Bank of New York Inc., one of the largest bank holding companies in the United States.  We also have clearing and correspondent arrangements with Deutsche Bank, MF Global (formerly Man Financial), and Penson Worldwide, Inc. and R. J. O’Brien. These arrangements also allow our clients to participate in the domestic and international futures and forward markets. Depending on the customer and the security being traded, we endeavor to utilize the optimum clearing partner for our customers. In all cases, we act as the introducing broker to clearing firms that will clear and maintain custody of all of our customer accounts. This allows us to minimize our back office operations.
 
 At present, STS has one senior trader and two associate traders.  We plan to hire additional traders as qualified candidates become available.
  5
 
 Asset Management
 
 We conduct our asset management business through our wholly-owned subsidiary, STSAM. Our asset management business handles client funds under fixed fee arrangements based on the dollar amount under management.  When appropriate, our broker-dealer operations act as agent in affecting transactions for managed accounts. STSAM also offers non-discretionary advisory accounts in coordination with Pershing Advisor Solutions, LLC, a registered broker-dealer.  In addition, the asset management group assists clients with their insurance needs, including life insurance and fixed annuities. The asset management group works closely with our broker-dealer group allowing for many shared clients and, more importantly, giving our clients more financial products from which to choose.
 
 Investment Banking
 
 Our investment banking group is very specialized and works closely with corporate clients providing specific financial solutions to their capital and strategic needs. Namely, our group makes private placement and merger and acquisition services available to primarily foreign clients but we also work with domestic clients.
 
 Many of our corporate clients are seeking capital in order to grow.  Furthermore, many of our broker-dealer and asset management clients are seeking investments in growing companies. As such, we seek to match our investment clients with our corporate clients through structured financing products.  Specifically, we focus on private investments in public equities (“PIPE”) for our corporate clients. If the common stock of a corporate client is already publicly-traded, then we will privately place with our investment clients’ discounted common stock or a structured security such as a convertible preferred stock or convertible debenture. If the common stock of a corporate client is not publicly-traded, then we will locate and negotiate a purchase of a publicly-traded shell corporation which we would utilize to effect a reverse merger with the corporate client thereby making the entity a publicly-traded entity (an “Alternative Public Offering” or “APO”).  This allows us to then privately place a discounted common stock or structured PIPE financing with the newly public client.
 
 The PIPE financing market is growing at a rapid pace and all indications are that this will continue. We plan to aggressively grow our investment banking staff to allow for more PIPE and APO transactions to be executed.  Our existing investment clients provide us opportunities to access the funds necessary to complete the financing. Further, we have ready access to many public shell corporations through contacts we have with various third parties who maintain inventories of such companies, allowing us to purchase such companies and take a private company public and to secure its funds for growth in a manner very similar to taking a company through an initial public offering (“IPO”), but in a more timely and cost-effective manner.
  6
 
 There are many reasons for the growth of APOs including the fact that many small to mid-sized companies cannot access the more traditional IPO due to their number of shareholders or duration. In addition, many of our corporate clients want to maintain control of their company and are thus not interested in venture capital financing which cedes some control to such investors. Historically, venture financing has generally been a source of equity-related financing for the small to mid-sized company. PIPE financing is distinguished from a normal private placement in that the company must be public so that the investor in the PIPE financing has the ability at any time to exit its investment, subject to applicable securities laws, through converting its security into publicly-trading common stock.  The combination of the APO and PIPE is a very attractive alternative for smaller businesses.
 
 Again, having a broker-dealer business coupled with the investment banking services provides multiple revenue opportunities for both groups. For example, when our investment clients look to exit a PIPE investment, our broker-dealer group will assist them in doing so through selling their shares and thereby generating commission income. On the other hand, our investment banking group will be able to execute PIPE transactions, and thus fee income, by having a ready source of investment capital from asset management and broker-dealer clients.
 
 The investment banking group earns a fee based on the amount of PIPE financing it structures. This fee is generally 5%-10% of the funds raised. In addition, we generally will receive equity in the form of warrants and/or common stock of the company financed. Thus, we are able to generate high margin fee income as well as receiving equities in growing companies.
 
 Our investment banking group also performs merger and acquisition advisory services for our corporate clients and renders general strategic advisory services.
 
 Metals Trading
 
 In October 2009, we formed Southern Trust Metals as a subsidiary, which works directly with its own clients looking to generate new business through innovative trading of primarily gold, silver, platinum and palladium.
 
 Acquisitions
 
 We expect growth of our core businesses to come through both internal expansion and acquisitions. To the extent we make acquisitions or enter into combinations, we face numerous risks and uncertainties combining the businesses and systems, including the need to combine accounting and data processing systems and management controls and to integrate relationships with customers and business partners. We have not at this time entered into any arrangements regarding specific acquisitions.
  7
 
 Government Regulation
 
 The securities industry and our business is subject to extensive regulation by the United States Securities and Exchange Commission (“SEC”), state securities regulators and other governmental regulatory authorities. The principal purpose of these regulations is the protection of customers and the securities markets. The SEC is the federal agency charged with the administration of the federal securities laws. Much of the regulation of broker-dealers, however, has been delegated to self-regulatory organizations, principally the Financial Industry Regulatory Authority (“FINRA”) and the Municipal Securities Rulemaking Board (“MSRB”).  These self-regulatory organizations adopt rules, subject to approval by the SEC, which govern its members and conduct periodic examinations of member firms’ operations. STS is a registered broker-dealer with the SEC and a member of FINRA, the National Futures Association (“NFA”), and MSRB. STSAM is a registered investment adviser with the State of Florida.
 
 STS is a member of the Securities Investor Protection Corporation (“SIPC”), which provides, in the event of the liquidation of a broker dealer, protection for clients' accounts up to $500,000, subject to a limitation of $100,000 for claims for cash balances.
 
 Securities firms are also subject to regulation by state securities commissions in the states in which they are registered. STS is licensed to conduct activities as a broker-dealer in the following states: Florida, New York, California, Michigan, New Jersey, Virginia,Colorado, Georgia, Kentucky, Massachusetts and Arizona.
 
 The regulations to which broker-dealers are subject cover all aspects of the securities industry, including, but not limited to:
 
 •
sales methods and supervision;
 •
trading practices among broker-dealers;
 •
use and safekeeping of customers’ funds and securities;
 •
capital structure of securities firms;
 •
record keeping;
 •
anti-money laundering and foreign asset control compliance; and
 •
the conduct of directors, officers and employees.
  Additional legislation, changes in rules promulgated by the SEC and by self-regulatory bodies or changes in the interpretation or enforcement of existing laws and rules often directly affects the method of operation and profitability of broker-dealers.  The SEC and the self-regulatory bodies may conduct administrative proceedings, which can result in censure, fine, suspension or expulsion of a broker-dealer, its officers, employees or registered representatives.
  Net Capital Requirements
 
 As a registered broker-dealer and member of FINRA, STS is subject to the SEC’s net capital rule, which is designed to measure the general financial integrity and liquidity of a broker-dealer. Net capital is defined as the net worth of a broker-dealer subject to certain adjustments. In computing net capital, various adjustments are made to net worth, which exclude assets not readily convertible into cash. Additionally, the regulations require that certain assets, such as a broker-dealer’s position in securities, be valued in a conservative manner so as to avoid over-statement of the broker-dealer’s net capital.
  8
 
 More specifically, STS is subject to the SEC Uniform Net Capital Rule 15c3-1.  This rule requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn or dividends paid if the resulting net capital ratio would exceed 10 to 1.  STS is also subject to the Commodity Futures Trading Commission’s minimum financial requirements which requires it to maintain net capital, as defined for securities brokers and dealers, equal to or in excess of the greater of $45,000 or the amount of net capital required by the SEC Rule 15c3-1. At December 31, 2010, STS’s net capital was approximately $799,000 which was approximately $699,000 in excess of its minimum requirement of $100,000.
 
 Competition
 
 The financial services industry and therefore all of our businesses are intensely competitive, and management expects them to remain so. Our competitors include other brokers and dealers, investment banking firms, insurance companies, investment advisors, mutual funds, hedge funds, commercial banks and merchant banks. We compete with some of our competitors globally and with others on a regional, product or niche basis. Such competition is based on a number of factors, including transaction execution, our products and services offered, innovation, reputation and price. Our management believes that we may experience pricing pressures in the future as some of our competitors seek to increase market share by reducing their prices.
  Personnel
 
 At December 31, 2010, we had a total of 12 employees, of which 10 are registered representatives and two are other full-time employees. These employees are not covered by a collective bargaining agreement. We consider our relationship with our employees to be good.
 
 ITEM 1A. RISK FACTORS.
 
 Not applicable.
  ITEM 1B. UNRESOLVED STAFF COMMENTS.
 
 None.
 
 ITEM 2. PROPERTIES.
 
 We operate our business through our subsidiaries, STS, STSAM and STM. We are currently operating out of 145 Almeria Ave., Coral Gables, Florida. The approximate book value of our real property is $1,557,000 million as of December 31, 2010.
  9
  
 ITEM 3. LEGAL PROCEEDINGS.
 
 In the ordinary course of business, incidental to our operations, we retain outside counsel to address claims with which we are involved. As of December 31, 2010, we are not aware of any legal proceedings, which management has determined to be material to our business operations; however, we have been named in the following three actions which we are vigorously defending and which actions, based on management's assessment in coordination with outside litigation counsel, we believe to be without merit:
  Salvatore Frieri, individually and as beneficiary of the Robert J. Escobio and Salvador Frieri-Gallo Trust, Plaintiff v. Robert Escobio, individually and as trustee of the Robert J. Escobio and Salvador Frieri-Gallo Trust, Southern Trust Securities Holding Corporation and Southern Trust Securities, Inc f/k/a Capital Investment Services, Inc., Defendants, in the Circuit Court of the Eleventh Judicial Circuit In and For Miami-Dade County, Florida, Case No. 08-07586 CA 08.The initial complaint in this action was filed on February 12, 2008. An amended complaint was filed on October 14, 2008. The amended complaint attempts to plead various causes of action related to the purchase and sale by the Salvador Frieri-Gallo Trust of STSHC’s stock in a private placement in 2005. The plaintiff seeks rescission of the transaction. Management does not believe there is any merit to plaintiff’s claims and the case is in an early stage.
 
 In November 2008, the STS initiated legal action against two individuals and their related company. One of the individuals named in the suit is also an individual who has brought legal action against STS, as discussed in the preceding paragraph. STS’s actions seek to recover compensation owed to it for work performed in connection with extensive financial and investment advice work, and services provided in preparation of a bid for Defendants regarding the restructuring, financing, investing, and acquisition of an interest in Aerovias Nacionales de Colombia S.A. Avianca (“Avianca S.A.”) and its subsidiaries (“Avianca”) in connection with Avianca’s bankruptcy reorganization under Chapter 11 of the U.S. Bankruptcy Code. After serving one of the individuals and the related company, STS moved for and obtained defaults against these two Defendants on September 17, 2009.  These two Defendants moved to set aside the defaults against them, which the Court set aside on November 2, 2009. On December 11, 2009, these two Defendants filed a Motion to Dismiss based on alleged failure to join an indispensable party, the ACDAC (Pilot Association).  We do not believe that motion has any merit.  We have served process on the second individual defendant. Based on information that is now available, STS claims the Defendants owe it approximately $8.35 million dollars plus prejudgment interest from on or about January 2005. In the opinion of outside counsel, it is too early to predict the ultimate recovery from Defendants.
 
 On December 7, 2010, STS filed a FINRA arbitration against Joseph Meuse, Rosewood Securities, LLC, BP Capital, LLC, and China Values Technology, Inc.  The FINRA filing was amended on January 18, 2011, before FINRA commenced serving the Respondents.  STS seeks to recover compensation it was entitled to receive for acting as placement agent under an agreement involving an offering of securities in a reverse merger into a publicly traded company, Respondent China Valves, which closed on May 18, 2009. The Agreement provided that STS would receive 23,490 warrant shares of China Valves, but it only received 5,739 warrant shares.  Thus, STS has sued the Respondents to recover the additional 17,751 warrant shares that it should have received on May 18, 2009, their valued, lost profits, and lost opportunity costs caused by the failure to timely deliver the shares as required. The Respondents, in response to STS’s pre-filing demands for payment, each blamed the other for the claimed failures to timely deliver the missing warrant shares.  Outside counsel, believes that it is likely that STS will obtain an award against one or more of the Respondents, but it still has not been determined who is telling the truth as to when and where the missing warrant shares are, because arbitration proceedings have just begun.  Respondents have not filed their answers and no discovery has yet commenced.
 
 On or about December 28, 2010, plaintiffs attempted to serve process on STSCH by serving STS, with an Amended Complaint filed in the United States Federal District Court for the Southern District Court of New York.  The trust of the Amended Complaint seems to be that Plaintiffs invested about $12.5 million in a company named Aamaxen Transport Group, Inc. (“AAXT”), pursuant to a Securities Purchase Agreement, dated April 14, 2008, in exchange for AAXT’s Series A Convertible Preferred Stock.  AAXT, a publicly traded company, shares are listed on the OTC Bulletin Board.  AAXT, a Delaware Company, has its principal place of business in Shanghai, China.  AAXT was to ultimately invest in and own a significant beneficial interest in Shanghai Atrip Medical Technology, Co., Ltd. (“SMT”), another Chinese company.  Plaintiffs claim the transaction did not take place as agreed and that the Chinese principals in certain of the entities involved continued to maintain control over some entities, when they should not have and AAXT and other Plaintiffs’ invested funds were ultimately embezzled.  The investors sued those allegedly involved in the embezzlement, the attorneys involved in the transactions, and those who allegedly provided investment banking advice.  The Amended Complaint includes STSHC along with certain entities controlled by Joseph Meuse and used to provide investment, business, and structuring advice under the names Belmont Partners, LLC (“Belmont”) and Rosewood Securities, LLC (“Rosewood”).  The Amended Complaint defines Belmont to include Belmont Partners, Rosewood, or Meuse.  STSHC had nothing to do with this matter.  STS, which was not named a defendant, had a branch office agreement, whereby Rosewood operated as a branch office of STS managed by Meuse during part of the period involved.  As determined so far, STS had no involvement in the transaction and whose only possible connection the parties was through the Rosewood branch office agreement, which was terminated in December 2009. STSHC retained New York counsel to represent it in this case.  Counsel received an order from the Court extending the date for STSHC to respond to the Amended Complaint until March 11, 2011.  STSHC responded to the Amended Complaint as required and filed its motion to dismiss.  On March 18, 2011, the Court issued an order requiring that opposing affidavits to motions to dismiss be filed by May 16, 2011.
 
 Based on what is known, management does not believe that STSHC had any involvement whatsoever and is not a proper defendant, and it also does not believe STS had any involvement, other than the possibility that the Rosewood branch office having some as yet unknown involvement without STS’s knowledge or participation. At this point, little is known about the facts, since the case was only recently filed against STSHC.
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
 None.
  10
  PART II
 
 ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
 
 Market Information.Our common stock trades on the OTC Bulletin Board under the symbol “SOHL”.  The high and low sales prices for our common stock for each quarter in the past two fiscal years are as follows:
 
 Quarter Ended,

High Sale Price


Low Sale PriceDecember 31, 2010

$
0.28


$
0.28September 30, 2010

$
0.33


$
0.33June 30, 2010

$
0.25


$
0.25March 31, 2010

$
0.05


$
0.05December 31, 2009

$
0.20


$
0.20September 30, 2009

$
0.50


$
0.05June 30, 2009

$
0.55


$
0.45March 31, 2009

$
0.45


$
0.30
 
 As of April 2011, the last reported sales price for our common stock was $0.32. (a/o 2/28/2012)
 
 Holders.  As of March 4, 2011, we had 600 holders of record of our common stock.
 
 Dividends.  We have not paid any dividends on our common stock and do not foresee doing so in the future.  Dividends on shares of our common stock may only be paid after any and all dividends payable on our Series C Convertible Preferred Stock have been paid in full.  Dividends on the Series C Convertible Preferred Stock have been deferred.
  11
  Securities authorized for issuance under equity compensation plans.
 
 Set forth in the table below is aggregated information as of December 31, 2010, with respect to compensation plans under which our equity securities are authorized for issuance:
 
 Equity Compensation Plan Information
 
 Plan category

Number of securities to be issued upon exercise of outstanding options, warrants and rights


Weighted-average exercise price of outstanding options, warrants and rights


Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(a)


(b)


(c)Equity compensation plans approved by security holders

None.



N/A



N/AEquity compensation plans not approved by holders


5,010,000
(1)

$
0.34
(2)


0Total


5,010,000







0
 
 (1) Includes 5,010,100 shares of our common stock issuable to three employees, a director and two former employees upon exercise of stock options granted under Non-Statutory Stock Option Agreements. Each of these agreements qualifies as an Employee Benefit Plan as defined under Rule 405 of Regulation C.
 
 (2) See footnote 12 of the financial statements.
 
 ITEM 6.  SELECTED FINANCIAL DATA.
 
 Not applicable.
  12
  ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
  The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contain “forward-looking statements” including statements about our beliefs and expectations. There are many risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements.
  All forward-looking statements are based on information available to us on the date of this filing, and we assume no obligation to update such statements. The following discussion should be read in conjunction with the consolidated financial statements and the related notes included in this Annual Report on Form 10-K.
 
 Overview
  We were formed as a Florida corporation on January 14, 1998. We are the holding company for STS, which is registered as an introducing broker-dealer with the SEC and is a member of, or subject to regulations of, the SEC, FINRA, the NFA, the CFTC, SIPC and the MSRB. We are also the holding company for both: (i) STSAM a fee-based investment advisory service registered with the State of Florida, which offers its services to retail customers, (ii) Southern Trust Metals, a trader of primarily gold, silver and palladium, and (iii) Loreley Overseas  Corporation (‘LOR”), which acts as an international intermediary for STM’s international trading transactions.
  Our principal business is the business of STS. We offer clients access to all major domestic and international securities and options exchanges, as well as trading in fixed income products, corporate, government, agencies, municipals, and emerging market debt. We also offer fixed and variable annuities and life insurance. We currently offer hundreds of domestic and international mutual funds, as well as retirement plans. We manage portfolios for individuals, pension funds, retirement plans, foundations, trusts and corporations. Our corporate services facilitate restricted stock dispositions and employee stock options exercises. Our offshore services give clients access to foreign trusts and corporations, which they can use to structure their financial planning.
  Investment banking is a vital part of our business. We provide traditional as well as innovative securities transaction structures. Our focus is on merger and acquisition services, private placements convertible into publicly-traded shares, and private placements bridging to public offerings through reverse mergers into publicly-traded shell corporations.
   13
  Critical Accounting Policies and Estimates
 
 Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to the valuation of securities owned and deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
 
 Valuation of Investments in Securities at Fair Value—Definition and Hierarchy.FASB ASC Topic 820 “Fair Value Measurements and Disclosures” provides a framework for measuring fair value under generally accepted accounting principles in the United States and requires expanded disclosures regarding fair value measurements.  ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
 
 In determining fair value, the Company uses various valuation approaches.  In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.  Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.  Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  FASB ASC Topic 820 establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations, as follows:
  Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.  Valuation adjustments and block discounts are not applied to Level 1 securities.  Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.
  Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
   Level 3 -Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
   14
  The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction.  To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.  Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined.
  Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement.
  Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure.  Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date.  The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation.  In periods of market dislocation, the observability of prices and inputs may be reduced for many securities.  This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.
 
 Valuation Techniques.
 
 The Company values investments in securities that are freely tradable and are listed on a national securities exchange or reported on the NASDAQ national market at their last sales price as of the last business day of the year.  At December 31, 2010, all of the Company’s investments classified as securities owned on the consolidated statements of financial condition are classified as Level 1 investments on the fair value hierarchy table in Note 5.
 
 Clearing Arrangements.STS does not carry accounts for customers or perform custodial functions related to customers’ securities. STS introduces all of its customer transactions, which are not reflected in these financial statements, to its primary clearing broker, which maintains the customers’ accounts and clears such transactions. These activities may expose us to off-balance-sheet risk in the event that customers do not fulfill their obligations with the primary clearing broker, as we have agreed to indemnify our primary clearing broker for any resulting losses. We continually assess risk associated with each customer who is on margin credit and record an estimated loss when we believe collection from the customer is unlikely. Our losses incurred from these arrangements were not significant for the years ended December 31, 2010 and 2009.
 
 Stock-Based Compensation.The Company complies with FASB ASC Topic 718 “Compensation – Stock Compensation,” which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. FASB ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  FASB ASC Topic 718 requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions).  That cost will be recognized over the period during which an employee is required to provide service in exchange for the award the requisite service period (usually the vesting period).  No compensation costs are recognized for equity instruments for which employees do not render the requisite service.  The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available).  If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.  Based on stock options and stock awards that vested during 2010 and 2009, the Company recorded approximately $179,000 and $449,000, respectively, as additional compensation expense under FASB ASC 718.
  Revenue Recognition.Commissions, revenue and related clearing expenses are recorded on a trade-date basis as security transactions occur. Riskless principal transactions in regular-way trades are recorded on the trade date, as if they had settled.
 
 Investment banking revenue includes private placement agency fees earned through our participation in private placements of equity and convertible debt securities and fees earned as financial advisor in mergers and acquisitions and similar transactions. Merger and acquisition fees and other advisory service revenue are generally earned and recognized only upon successful completion of the engagement. Unreimbursed expenses associated with private placement and advisory transactions are recorded as expenses as incurred.
 
 Asset management (or managed accounts) fees are primarily earned based on a percentage of assets under management.  Fees are computed and due at specified intervals, generally quarterly and recorded when earned.  We also offer fee-based investment advisory services to our customers and independent registered investment advisors through our wholly-owned subsidiary, STSAM.
 15
  Deferred Tax Valuation Allowance.We account for income taxes in accordance with the provision of FASB ASC Topic 740, “Income Taxes,” which requires accounting for deferred income taxes under the asset and liability method.  Deferred income tax asset and liabilities are computed for difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on the enacted tax laws and rates applicable to the periods in which the differences are expect to affect taxable income.  Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized. We have concluded that it is more likely than not that our deferred tax assets as of December 31, 2010 and 2009 will not be realized based on the scheduling of deferred tax assets and projected taxable income. The amount of the deferred tax assets actually realized, however, could vary if there are differences in the timing or amount of future reversals of existing deferred tax assets or changes in the actual amounts of future taxable income. Should we determine that we will be able to realize all or part of the deferred tax asset in the future, an adjustment to the deferred tax asset will be recorded in the period such determination is made.
 
 Net Capital Requirement.Our broker-dealer subsidiary, STS, is a member of FINRA and is subject to the SEC Uniform Net Capital Rule 15c3-1.  This rule requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn or dividends paid if the resulting net capital ratio would exceed 10 to 1.  STS is also subject to the Commodity Futures Trading Commission’s minimum financial requirements which requires it to maintain net capital, as defined for securities brokers and dealers, equal to or in excess of the greater of $45,000 or the amount of net capital required by the SEC Rule 15c3-1. At December 31, 2010, STS’s net capital was approximately $799,000 which was approximately $699,000 in excess of its minimum requirement of $100,000.
 
 Commissions and Clearing Costs.Commissions and clearing costs include commissions paid to our employee registered representatives, independent contractor arrangements and fees paid to clearing entities for certain clearance and settlement services. Commissions paid to registered representatives vary according to the contracted payout percentage and clearing costs generally fluctuate based on revenues generated on trades and on the volume of transactions.
  Accounting for Contingencies.We accrue for contingencies in accordance with FASB ASC Topic 855, “Subsequent Events,” when it is probable that a liability or loss has been incurred and the amount can be reasonably estimated. Contingencies by their nature relate to uncertainties that require our exercise of judgment both in assessing whether or not a liability or loss has been incurred and estimated the amount of probable loss. There were none at either December 31, 2010 or 2009.
  16
  Results of Operations for the years ended December 31, 2010 and 2009
  The following table sets forth a summary of financial highlights for the years ended December 31:
  Year EndedDecember 31,


%2010


2009


Change


ChangeStatement of operations data:Revenue

$
2,967,547


$
1,328,998



123
%

$
1,638,549Expenses


3,206,891



4,119,024



(22
%)


(912,133
)Net loss applicable tocommon stockholders


(246,219
)


(3,104,395
)


(0.92
)


2,858,176Loss per common share

$
(0.02
)

$
(0.22
)
 Year EndedDecember 31,


%2010


2009


Change


ChangeFinancial condition data:Cash and cash equilvalents

$
281,878


$
130,631



116
%

$
151,247Marketing securities owned,at fair value


968,161



1,288,654



(25
%)


(320,493
)Total assets


4,776,448



4,624,921



3
%


151,527Notes payable


763,696



1,126,557



(32
%)


(362,861
)Stockholdes' equity


2,985,636



3,059,520



(2
%)


(73,884
)
 For the year ended December 31, 2010, we experienced a net loss before dividends to preferred stockholders of $246,219 as compared to a net loss before dividends to preferred stockholders of $2,792,395 for the year ended December 31, 2009. The decrease in net loss is primarily attributable to the increase in trading income and commissions, the decrease in employee compensation and benefits, professional fees and travel and entertainment expenses, partially offset by the increase in commissions and clearing fees, and the fact that we recorded a $800,000 impairment charge on our building in 2009.
  17
  Revenues
  Our commissions for the year ended December 31, 2010, increased $153,052, or 21%, to $870,968, up from $717,916 for the year ended December 31, 2009.  Commissions include all revenue received by Southern Trust Securities, Inc. (“STS”) and its registered representatives on an agency basis, and are primarily derived from transactions in OTC securities and options. The increase in commissions is mainly attributable to the current spike in economic activity, which in turn has improved investor confidence, and new customer accounts opened during the year.
 
 Our trading income for the year ended December 31, 2010 increased $1,469,925, or 330%, to $1,195,415 from $445,490 recognized for the year ended December 31, 2009. Trading profits are generated mainly from fixed income products sold to our customers on a riskless trading principal basis. Even though the markets and the economy have been struggling for the last few quarters, we were able to acquire new customers who were interested in investing in fixed income products. Our ability to increase our trading revenues will depend mostly on future economic conditions and our ability to generate more customer accounts.
 
 We had no investment banking revenues for the year ended December 31, 2010 as compared to $47,770 reported for the year ended December 31, 2009.  For the years ended December 31, 2010 and 2009, no major investment banking deals were closed and only advisory and referral fees from investment banking customers were generated during 2009. Investment banking fees are generally determined as a percentage of the size of the deal or contract.
 
 Managed account fees decreased 7.34% or $5,050 to $63,794 for the year ended December 31, 2010 when compared to $68,844 for the same period in 2009. Managed account fees are primarily earned based on a percentage of assets under management and the related fees are computed and due at specified intervals, generally quarterly and recorded when earned. The main reason for the decrease is related to the decrease in value of the assets under management because and the attrition of customer accounts.
  Our interest and dividend income increased $48,627 to $83,892 for the year ended December 31, 2010 from $35,265 for the year ended December 31, 2009, primarily attributable to our cash management of surplus funds.
  Other miscellaneous income increased $20,305 to $33,478 for the year ended December 31, 2010 when compared to $13,713 for the year ended December 31, 2009.  This increase is primarily due to an increase in other miscellaneous fees earned by STS and STM during the year ended December 31, 2010.
  Expenses
 
 Commissions and clearing fees expenses incurred during the year ended December 31, 2010 increased $901,197, or 155%, to $1,482,761 when compared to $581,654 incurred during the year ended December 31, 2009, primarily due to the increase in trading income. Our broker-dealer, STS, shares a varying percentage of commissions with its registered representatives based on arrangements between STS and each registered representative and based on the nature of the product from which commissions are earned. The portion of the commission paid to a registered representative is an expense on our consolidated statements of operations under “commission and clearing fees.” Also included in “commissions and clearing fees” are referral fees STS pays to foreign finders for transactions effectuated by STS and its registered representatives at the request of such foreign finders. These revenues, which are directly identifiable and attributable to any registered representative or foreign finder, are commonly known as “compensable revenues.” Commissions paid to registered representatives are variable in nature and are based on a pre-determined percentage of compensable revenues generated. Compensable revenues include revenues derived from commissions, trading income, investment banking fees and managed account fees. Any other income recognized by us (for example interest and dividend income generated from our investment portfolio) is not considered compensable revenue and thus no payouts to registered representatives are made. Total commissions compensation paid, as a percentage of compensable revenues, increased from 38% in the year ended December 31, 2009 to 52% for the year ended December 31, 2010. Clearing fees are costs paid to third party service providers who provide clearance services for our sales transactions. Fees are assessed based on the type of product and, accordingly, vary according to the mix of products and volume generated. Clearing fees paid for the year ended December 31, 2010 and 2009 were $93,140 and $92,611, respectively, an increase of $529, or .01%, primarily due to an increase in total sales transactions subject to clearing fees.
  Total employee compensation and benefits expenses decreased 49.5% or $681,428 to $695,469 for the year ended December 31, 2010, as compared to $1,376,897 for the same period ended December 31, 2009 primarily due to the decrease in executive salaries, and a decrease in share-based compensation amortization. Employee compensation and benefits expenses include the amortization of share-based compensation expenses related to shares and options given to certain key employees during 2007 and 2008.
 
 Share-based compensation decreased 60% or $269,475 for the year ended December 31, 2010, thus representing approximately 27% of the total decrease when compared to the expenses for the year ended December 31, 2009. The vesting period for these share-based compensation awards range from twelve to sixty months. As part of the employment agreements entered with several of our key executives on January 4, 2007, one executive was granted 4,500,000 shares of common stock vesting equally on a monthly basis over three year but was later amended in June 2007 to vest over five year, prospectively. In November 2009, the executive entered into a Stock Waiver Agreement with respect to shares that would have otherwise vested in December 2009 through August 2010, giving the executive the right to waive his right to such shares and have such shares be canceled.  The executive waived his right to have 125,000 shares vest in 2009, and these shares were thus redeemed in that month.  On August 4, 2010, the executive waived his right title and interest to vest in the remaining 3 million shares of restricted common stock.  Concurrently, the Board awarded the executive option to purchase 3,350,000 shares of common stock with a strike price of $.25 vesting equally over 10 years.  The Board also granted stock options for 300,000 shares to the president and two other financial executives, all wards having a strike price of $.25 per option.
 
 For the year ended December 31, 2009, we determined that the fair value of our building had decreased in value since its purchase in 2005. Due to changes in the commercial real estate environment, we determined and recorded an impairment charge of $800,000.
  18
  In August of 2009, we were able to restructure the investment in AR Growth exchanging our preferred stock investment for an investment in the common stock of Nexo Emprendimientos, S.A. Please refer to Note 18 in the consolidated financial statements, included herein, for further details.
  For the year ended December 31, 2010, the Company recognized an impairment loss of $29,800 on its investment in AR Growth based on the excess of the carrying value over the fair value of the investment.
 
 Occupancy costs increased 29% or $20,195 for the year ended December 31, 2009, to $90,158, from $69,963 for the year ended December 31, 2009. Major expenses included under occupancy costs are, property taxes, depreciation and common repair and maintenance of our office building. The increase is mainly due tohigher property taxes paid on our building, offset in part by lower maintenance expenses.
 
 Communications and market data expenses represent mostly charges on our terminals used to monitor and analyze real-time financial market data movements, telephone expenses, and licenses and registration expenses associated with our broker-dealer operations. Communications and market data expenses increased $6,784 or 6% to $122,967 incurred in the year ended December 31, 2010 from $116,183 for the year ended December 31, 2009. This increase is primarily attributable to cost incurred to expand and improve the efficiency of the technology used by STM in its daily operations.
  Professional fees decreased $329,832 or 48% for the year ended December 31, 2010 to $356,583 from $686,415 for the year ended December 31, 2009, due to lower legal expenses incurred related to our current lawsuits, which are either stayed or in their final stages as discussed with our outside legal counsel. From time to time, STS may be a defendant, or co-defendant, in arbitration matters incidental to its retail brokerage services business. As of December 31, 2010, there are no material legal disputes that may have an adverse impact on our financial statements.
 
 Our travel and entertainment expenses decreased 52% or $47,859 for the year ended December 31, 2009, down from $99,641 for the year ended December 31, 2009. The decrease is mainly due to our cost reduction initiatives implemented as part of our efforts in trying to reduce operational expenses for 2010.
 
 Our other operational expenses include miscellaneous expenses and our Directors and Officers (“D&O”) insurance premium. Other operational expenses increased 11%, or $23,610, to $248,191 for the year ended December 31, 2010 when compared to $224,581 incurred for the year ended December 31, 2009.
 
 Interest expense decreased $24,642 to $63,616 for the year ended December 31, 2010 from $88,258 incurred for the year ended December 31, 2009.  This decrease is due to a reduction of principal balances on our outstanding loans.
  19
  Dividends attributable to our preferred stockholders decreased because we paid no dividend in 2010 as compared to $312,000 for the year ended December 31, 2009.
  Liquidity and Capital Resources
 
 As of December 31, 2010, liquid assets consisted primarily of cash and cash equivalents of approximately $282,000  and securities owned of approximately $968,000 for a total of $1,250,000 as compared to cash and cash equivalents of approximately $131,000 and securities owned of approximately $1,289,000 for a total of $1,420,000 at December 31, 2009.  Historically, we have financed our business primarily through cash generated by our brokerage operations, as well as proceeds from our private placement of preferred stock and issuance of common stock. In 2007, we raised $4,300,000 in a private placement of our Series B preferred stock (which has been exchanged into Series C preferred stock) and during the second quarter of 2008, we were able to raise an additional $900,000 from the sale of Series C preferred stock, which will be used to fund our business expansion plans.
 
 Cash and cash equivalents increased by approximately $151,247 at December 31, 2010. Cash provided in our operating activities for the year ended December 31, 2010 was approximately $537,637, which consists of our net loss of approximately $239,343 adjusted for non-cash expenses of approximately $278,665 of share-based compensation, depreciation and amortization and impairment on investment in AR Growth, and a net increase in operating assets and liabilities of approximately $498,315.  We used no cash in investing activities. Cash used in our financing activities was $372,470, which consisted of debt service payments made on our notes payable and capital lease obligations.
 
 STS, as a broker-dealer, is subject to Rule15c3-1 of the Securities Exchange Act of 1934, which specifies uniform minimum net capital requirements, as defined, for their registrants. As of December 31, 2009, STS had regulatory net capital of approximately $799,000, which exceeded the required amount by approximately $699,000.
 
 In response to the current economic environment, we have implemented changes to our capital management practices to ensure that we will be able to continue to meet our obligations.  During 2009, certain employee salaries and payout percentages were reduced to match current business levels, and recent employee resignations will not be immediately replaced.  We have also undertaken the task of reviewing other general expenses incurred, with the objective of reducing the overall charges against this expense category.
 
 We believe that our liquidity will be sufficient to allow the Company to operate for the next 12 months. Should our revenues fall from their present levels we will be required to seek alternative sources of funding to continue our current level of operations.
  20
  The following is a table summarizing our significant commitments as of December 31, 2010, consisting of debt payments related to our notes payable.
  Years Ended December 31,2011

$
56,0002012


61,0002013


65,0002014


70,0002015


76,000Thereafter


429,000Total commitment

$
757,000
  Off-Balance Sheet Arrangements
  We were not a party to any off-balance sheet arrangements during the period ended December 31, 2010, except for the one identified in “Clearing Arrangements” above. In particular, we do not have any interest in so-called limited purpose entities, which include special purpose entities and structured finance entities.
  ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
 
 Not applicable.
  21
  ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
 INDEX TO FINANCIAL STATEMENTS
  Report of Independent Registered Public Accounting Firm


F-1Financial StatementsConsolidated Statements of Financial Condition at December 31, 2010 and 2009


F-2Consolidated Statements of Operations for the years ended December 31, 2010 and 2009


F-3Consolidated Statements of Changes in Stockholders’ Equity (Deficit) and Comprehensive loss for the years ended December 31, 2010 and 2009


F-4Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009


F-5Notes to Consolidated Financial Statements


F-6
 
 In accordance with the Form 10-K instructions, as a smaller reporting company, we are not required to provide supplementary data pursuant to Item 302 of Regulation S-K.
  22
   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the Board of Directors and
 Stockholders of Southern Trust Securities Holding Corp. and Subsidiaries
  We have audited the accompanying consolidated statements of financial condition of Southern Trust Securities Holding Corp. and Subsidiaries (collectively, the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity and comprehensive loss, and cash flows for each of the years in the two-year period ended December 31, 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
 
 We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Southern Trust Securities Holding Corp. and Subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
 
 
 Roseland, New Jersey
 April 15, 2011
  F-1
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  December 31,2010


2009ASSETSCash and cash equivalents

$
281,878


$
130,631Securities owned at fair value, including restricted securitiesof $400,000 as of December 31, 2009


968,161



1,288,654Due from clearing broker


529,773



193,809Commissions receivable


90,348



13,947Investment in AR Growth


22,370



52,170Investment in Nexo Emprendimientos, S.A. (see Note 14)


1,250,000



1,250,000Other assets


20,931



13,239Property and equipment,net


1,612,986



1,682,471Total assets

$
4,776,448


$
4,624,921LIABILITIES AND STOCKHOLDERS' EQUITYLiabilitiesAccounts payable and accrued expenses

$
244,475


$
251,425Payable to customers


782,640



177,810Obligations under capital lease


6,509



9,609Notes payable


757,188



1,126,557Total liabilities


1,790,812



1,565,401Commitments and contingenciesStockholders' equitySeries C 8% convertible preferred stock, no par value, 2.5 million shares authorized,520,000 issued and outstanding


5,200,000



5,200,000Common stock, no par value, 100 million shares authorized; 14,333,378 sharesissued and outstanding at December 31, 2010 and December 31, 2009, respectively


9,002,986



9,002,986Additional paid-in-capital


1,536,991



1,357,612Accumulated deficit


(12,854,535
)


(12,608,316
)Accumulated other comprehensive income (loss)


(11,002
)


2,918Total Southern Trust Securities Holding Corp. and Subsidiaries stockholders' equity


2,874,440



2,955,200Noncontrolling interest


111,196



104,320Total stockholders' equity


2,985,636



3,059,520Total Liabilities and Stockholders' Equity

$
4,776,448


$
4,624,921
  F-2
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
 2010


2009RevenuesTrading income

$
1,915,415


$
717,916Commissions


870,968



445,490Investment banking fees






47,770Managed account fees


63,794



68,844Interest and dividend income


83,892



35,265Other miscellaneous income


33,478



13,7132,967,547



1,328,998ExpensesCommissions and clearing fees


1,482,761



581,564Employee compensation and benefits


695,469



1,376,897Impairment charge on building


-



800,000Impairment charge on investment in AR Growth


29,800



-Occupancy


90,158



69,963Communications and market data


122,967



116,183Professional fees


356,583



686,415Travel and entertainment


47,859



99,641Depreciation


69,486



75,522Interest expense


63,616



88,258Other operational expenses


248,191



224,5813,206,890



4,119,024Net loss before noncontrolling interest


(239,343
)


(2,790,026
)Net income (loss) attributable to noncontrolling interest


6,876



2,369Net loss attributable to Southern Trust Securities Holding Corp.and Subsidiares


(246,219
)


(2,792,395
)Preferred stock dividends


-



312,000Net loss applicable to common stockholders

$
(246,219
)

$
(3,104,395
)Weighted average common shares outstandingBasic and diluted


14,333,378



13,856,727Income (loss) per common shareBasic and diluted

$
(0.02
)

$
(0.22
)
  F-3
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLERS' EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS)
 Preferred Stock


Common Stock


Additional

Paid-In


Accumulated


Accumulated

Other

Comprehensive


Total

Stockholders'


Noncontrolling


TotalShares


Amount


Shares


Amount


Capital


Deficit


Income (loss)


Equity


Interest


EquityBalances,January 1, 2009


520,000


$
5,200,000



13,833,378


$
8,752,986


$
1,158,758


$
(9,503,831
)


(631
)

$
5,607,282


$
101,951


$
5,709,233Stock-based compensation










500,000



250,000



198,854











448,854







448,854Dividends to preferred stockholders






















(312,000
)






(312,000
)






(312,000
)Comprehensive loss:Net loss






















(2,792,485
)






(2,792,485
)


2,369



(2,790,116
)Foreign currencytranslation adjustment


























3,549



3,549







3,549Total comprehensive loss






























(2,788,936
)


2,369



(2,786,567
)Balances, December 31, 2009


520,000



5,200,000



14,333,378



9,002,986



1,357,612



(12,608,316
)


2,918



2,955,200



104,320



3,059,520Stock-based compensation


















179,379











179,379







179,379Comprehensive loss:Net income






















(246,219
)






(246,219
)


6,876



(239,343
)Foreign currencycurrency adjustment


























(13,920
)


(13,920
)






(13,920
)Total comprehensive loss






























(260,139
)


6,876



(253,263
)Balances, December 31, 2010


520,000


$
5,200,000



14,333,378


$
9,002,986


$
1,536,991


$
(12,854,535
)

$
(11,002
)

$
2,874,440


$
111,196


$
2,985,636
 F-4
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
 2010


2009Cash flows from operating activitiesNet loss

$
(239,343
)

$
(2,790,116
)Adjustments to reconcile net loss to net cash provided by(used in) operating activities:Stock-based compensation


179,379



448,854Impairment charge on building


-



800,000Impairment charge on investment in AR Growth


29,800



-Depreciation and amortization


69,486



75,522Changes in operating assets and liabilities:Securities owned


320,492



1,224,132Due from clearing broker


(335,964
)


(186,140
)Commissions receivable


(76,401
)


(6,378
)Other assets


(7,692
)


55,651Accounts payable and accrued expenses


(6,950
)


(49,323
)Payable to custormers


604,829



-Net cash provided by (used in) operating activities


537,636



(427,798
)Cash flows from investing activitiesPurchases of property and equipment


-



(1,525
)Investment in AR Growth


-



47,830Redemption of investment in limited liability company


-



240,661Net cash flows provided by investing activities


-



286,966Cash flows from financing activitiesDividends paid to preferred stockholders


-



(312,000
)Principal payments on notes payable and capital lease obligations


(372,469
)


(72,869
)Net cash flows used in financing activities


(372,469
)


(384,869
)Effect of foreign exchange rate changeson cash and cash equivalents


(13,920
)


3,549Net increase (decrease) in cash and cash equivalents


151,247



(522,152
)Cash and cash equivalents,beginning of period


130,631



652,783Cash and cash equivalents,end of period

$
281,878


$
130,631Supplementary disclosure of cash flow information:Cash paid during the periods for interest

$
63,616


$
88,258Exchange of AR Growth preferred stock for Nexo Emprendiminto S.A.common stock

$
-


$
1,250,000
 F-5
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 1. Nature of operations
 
 Southern Trust Securities Holding Corp. (the "Company”) owns Southern Trust Securities, Inc. ("STS"), Southern Trust Metals, Inc. (“STM”), Southern Trust Securities Asset Management, Inc. ("STSAM"), and Loreley Overseas Corporation (“LOR”). Additionally, on October 23, 2006, the Company formed Kiernan Investment Corp. (“KIC”) as an international business company in Belize.  KIC has had very limited operations since inception.
 
 The Company contributed $105,653 in cash to form a new company, IPWM, España S.A. ("IPWM Spain") under a partnership agreement with a Swiss Financial Group, International Private Wealth Management, SA (“IPWM, SA”), in exchange for a 50.01% interest and control of the newly created company.  During July 2008, IPWM Spain commenced operations and opened offices in the cities of Barcelona, Spain, San Sebastian, Spain and Marbella, Spain.  IPWM Spain had limited operations for the years ended December 31, 2010 and 2009.
 
 The Company is a Florida corporation and was organized on January 25, 2000.  STS, a Florida corporation, was organized on June 10, 1999 and is registered as an introducing broker/dealer with the Securities and Exchange Commission (“SEC”).  STS is a member of the Financial Industry Regulatory Authority (“FINRA”) and National Futures Association (“NFA”). STS operates as an introducing broker clearing customer trades on a fully disclosed basis through a clearing firm.  Under this basis, it forwards all customers transactions to another broker who carries all customers’ accounts and maintains and preserves books and records.  Pershing, LLC currently performs the transaction clearing functions and related services for STS.   STSAM, a Florida corporation formed on November 22, 2005, is a fee-based investment advisory company which offers its services to retail customers. STM, a Florida corporation formed on October 29, 2009, to capitalize on investor interest in the trading of precious metals such as gold, silver, platinum, and palladium.  LOR, a British Virgin Islands corporation, was formed on May 19, 2004, and acts as an international intermediary for STM’s international trading transactions; the corporation had been inactive until 2010.
 
 2. Liquidity
 
 During the year ended December 31, 2010 and 2009, the Company incurred net loss applicable to common shareholders of approximately $216,000 and $2,304,000, exclusive of the impairment charges of $29,800 and $800,000, respectively, while cash provided by operations was approximately $538,000 and cash utilized in operations was approximately $428,000, respectively. The Company has not attained a level of revenues sufficient to support recurring expenses.
 
 Should the Company revenues decline from their current levels the Company will need to seek alternative sources of funding to continue its operations.
 
 3. Summary of significant accounting policies
  Basis of Presentation and Principles of Consolidation
  The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
 
 The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, STS, STM, STSAM, LOR, and KIC.  IPWM Spain’s assets and liabilities are consolidated with those of the Company and the outside investor’s 49.99% interest in IPWM Spain is included in the accompanying consolidated financial statements as a noncontrolling interest.  All intercompany balances and transactions have been eliminated in consolidation.
  F-6
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 3. Summary of significant accounting policies (continued)
 
 Cash and Cash Equivalents
 
 The Company considers short-term interest bearing investments with initial maturities of three months or less to be cash equivalents. Cash and cash equivalents consist of cash in banks, free credit on investment accounts and money market accounts.
 
 Securities Owned
 
 All securities owned are valued at market and unrealized gains and losses are reflected in revenues.
 
 Property and Equipment
 
 Property and equipment is stated at cost less accumulated depreciation.  Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance are expensed as incurred while betterments and improvements are capitalized.
 
 The Company provides for depreciation and amortization over the following estimated useful lives:
  Building and improvements
40 yearsOffice equipment
5 yearsFurniture and fixtures
10 years
 
 Long-Lived Assets
 
 In accordance with Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360 “Property, Plant, and Equipment,” the Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.  During December 2009, the Company took a impairment charge on their building in the amount of $800,000. There was no impairment charges during the year ended December 31, 2010.
 
 Revenue and Expense Recognition from Securities Transactions
 
 The Company records all securities transactions, including commission revenue and related expenses, on a trade-date basis.
 
 Investment Banking Fees
 
 Investment banking fees include fees, net of syndication expenses, arising from securities offerings in which the Company acts as an underwriter or agent.  Investment banking revenues also include fees earned in providing financial advisory services.  These revenues are recorded in accordance with the terms of the investment banking agreements.
 
 F-7
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 3. Summary of significant accounting policies (continued)
 
 Managed Account Fees
  Managed account fees are primarily earned based on a percentage of assets under management.  Fees are computed and due at specified intervals, generally quarterly and recorded when earned.
  Income Taxes
 
 The Company files a consolidated income tax return with its subsidiaries.  The Company accounts for income taxes in accordance with FASB ASC Topic 740 “Income Taxes”,which requires accounting for deferred income taxes under the asset and liability method.  Deferred income tax asset and liabilities are computed for difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on the enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized.
 
 The determination of the Company’s provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws.  Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions.  The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities.  When facts and circumstances change, the Company reassesses these probabilities and records any changes in the financial statements as appropriate.
  In accordance with GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position.  The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.  De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce stockholders equity.  This policy also provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different entities.  Management’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. Generally, the tax filings are no longer subject to income tax examinations by major taxing authorities for years before 2007. Any potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, state and local tax laws.  The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
 
 Interest and Penalty Recognition on Unrecognized Tax Benefits
 
 The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No interest expense or penalties have been recognized as of and for the period ended December 31, 2010.
 
 F-8
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  3. Summary of significant accounting policies (continued)
 
 Foreign Currency Adjustments
 
 The financial position and results of operations of the Company’s foreign subsidiary is measured using the foreign subsidiary’s local currency as the functional currency in accordance with FASB ASC Topic 830, “Foreign Currency Matters.” Revenues and expenses of such subsidiary have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange as of the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of stockholders’ equity.  Foreign currency translation adjustments resulted in losses of $13,920 and gains of $3,549 in 2010 and 2009, respectively.
 
 Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.
 
 Comprehensive Income (Loss)
 
 The Company complies with FASB ASC Topic 220, “Comprehensive Income,” which establishes rules for the reporting and display of comprehensive income (loss) and its components.  FASB ASC Topic 220 requires the Company’s change in foreign currency translation adjustments to be included in other comprehensive loss, and is reflected as a separate component of stockholders’ equity.
  Fair Value of Financial Instruments
  The fair values of the Company’s assets and liabilities that qualify as financial instruments under FASB ASC Topic 825, “Financial Instruments,” approximate their carrying amounts presented in the accompanying consolidated statements of financial condition at December 31, 2010 and 2009.
  Loss Per Common Share
  The Company complies with the accounting and disclosure requirements of FASB ASC 260, “Earnings Per Share.” Basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period.  Diluted loss per common share incorporates the dilutive effect of common stock equivalents on an average basis during the period.  The calculation of diluted net loss per share excludes 4,500 and 26,000 warrants and 2,080,000 shares of common stock issuable upon the conversion of the Series C 8% convertible preferred stock as of December 31, 2010 and 2009, respectively, since their effect is anti-dilutive.
 
 Investment
 
 The Company classifies its common stock investment in AR Growth Finance Corp. (“AR Growth”) and Nexo Emprendimientos S.A. (“Nexo”) as available-for-sale in accordance with FASB ASC Topic 320, “Investments-Debt and Equity securities.” Available-for-sale investments are carried on the consolidated statements of financial condition at their fair value with the current period adjustments to the carrying value recorded in accumulated other comprehensive income (loss). As of December 31, 2010, there has been no adjustment to the carrying value of the Company’s common stock investment Nexo.  During the year ended December 31, 2010, the Company recognized an impairment loss of approximately $30,000 on its investment in AR Growth based on excess carrying value over the fair value of the investment. (See Note 19)
 
 F-9
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  3. Summary of significant accounting policies (continued)
 
 Stock-Based Compensation
 
 The Company complies with FASB ASC Topic 718 “Compensation – Stock Compensation,” which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. FASB ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  FASB ASC Topic 718 requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions).  That cost will be recognized over the period during which an employee is required to provide service in exchange for the award the requisite service period (usually the vesting period).  No compensation costs are recognized for equity instruments for which employees do not render the requisite service.  The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available).  If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.  Based on stock options and stock awards that vested during 2010 and 2009, the Company recorded approximately
 $179,000 and $449,000, respectively, as compensation expense under FASB ASC 718.
 
 Use of Estimates
 
 The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities at the date of the financial statements, as well as their related disclosures.  Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
 
 Valuation of Investments in Securities at Fair Value—Definition and Hierarchy
 
 FASB ASC Topic 820 “Fair Value Measurements and Disclosures” provides a framework for measuring fair value under generally accepted accounting principles in the United States and requires expanded disclosures regarding fair value measurements.  ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
 
 In determining fair value, the Company uses various valuation approaches.  In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.  Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.  Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  FASB ASC Topic 820 establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations, as follows:
 
 F-10
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  3. Summary of significant accounting policies (continued)
 
 Valuation of Investments in Securities at Fair Value – Definition and Hierarchy (continued)
 
 Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.  Valuation adjustments and block discounts are not applied to Level 1 securities.  Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.
  Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
  Level 3 -Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
  The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction.  To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.  Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined.
  Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement.
  Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure.  Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date.  The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation.  In periods of market dislocation, the observability of prices and inputs may be reduced for many securities.  This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.
 
 Valuation Techniques
 
 The Company values investments in securities that are freely tradable and are listed on a national securities exchange or reported on the NASDAQ national market at their last sales price as of the last business day of the year.  At December 31, 2010, all of the Company’s investments classified as securities owned on the consolidated statements of financial condition are classified as Level 1 investments on the fair value hierarchy table in Note 5.
 
 F-11
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  3. Summary of significant accounting policies (continued)
 
 Government Bonds
 
 The fair value of sovereign government bonds is generally based on quoted prices in active markets. When quoted prices are not available, fair value is determined based on a valuation model that uses inputs that include interest-rate yield curves, cross-currency-basis index spreads, and country credit spreads similar to the bond in terms of issuer, maturity and seniority. At December 31, 2010 and 2009 all government bonds are categorized as level 1.
 
 Certificate of Deposits
 
 The fair values of the bank certificate of deposits are based on the face value of the certificate of deposits.
 
 Derivative Contracts
 
 The Company records its derivative activities at fair value. Gains and losses from derivative contracts are included in trading income in the consolidated statement of operations.  Derivative contracts include future and option contracts related to foreign currencies, government bonds and other securities.
 
 The fair value of the derivate contacts traded by the Company is generally based on quoted prices in active markets on national exchanges. The derivative contracts, such as options and futures, which are listed on a national securities exchange or reported on the NASDAQ national market, are generally categorized in Level 1 of the fair value hierarchy.
 
 Offsetting of Amounts Related to Certain Contracts
 
 The Company has elected to offset fair value amounts recognized for cash collateral receivables and payables against fair value amounts recognized for net derivative positions executed with the same counterparty under the same master netting arrangement. At December 31, 2010 and 2009, the Company offset cash collateral receivables of $44,223 and $132,481, respectively against its net derivative positions.
 
 Recently Adopted Accounting Pronouncements
 
 In January 2010, the FASB issued Accounting Standards Update 2010-06,“Fair Value Measurements and Disclosures (Topic 820) - Improving Disclosures about Fair Value Measurements” (ASU 2010-06), to require new disclosures related to transfers into and out of Levels 1 and 2 of the fair value hierarchy and additional disclosure requirements related to Level 3 measurements.  The guidance also clarifies existing fair value measurement disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value.  The additional disclosure requirements are effective for the first reporting period beginning after December 15, 2009, except for the additional disclosure requirements related to Level 3 measurements, which are effective for fiscal years beginning after December 15, 2010.  The adoption of the additional requirements is not expected to have any financial impact on the Company’s consolidated financial statements.
 
 F-12
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  3. Summary of significant accounting policies (continued)
 
 Recently Adopted Accounting Pronouncements (continued)
 
 In December 2009, the FASB issued ASU No. 2009-17, Consolidations (Topic 810)-Improvements to Financial Reporting By Enterprises Involved with Variable Interest Entities (ASU No. 2009-17). ASU No. 2009-17 requires a qualitative approach for determining the primary beneficiary of a variable interest entity and replaces the quantitative evaluation previously set forth under FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities . This approach is focused on identifying the reporting entity that has the ability to direct the activities of a variable interest entity that most significantly affects the entity's economic performance and has the obligation to absorb the entity's losses or has the right to receive benefits from the entity. ASU No. 2009-17, among other things, will require enhanced disclosures about a reporting entity's involvement in variable interest entities.  The Company adopted the pronouncement on January 1, 2010 resulting in no impact to the Company’s consolidated financial statements.
 
 In February 2010, the FASB issued an amendment which requires that an SEC filer, as defined, evaluate subsequent events through the date that the financial statements are issued. The update also removed the requirement for an SEC filer to disclose the date through which subsequent events have been evaluated. The adoption of this guidance on January 1, 2010 did not have a material effect on the Company’s consolidated financial statements.
 
 Recently Issued Accounting Pronouncements
  In April 2010, the FASB issued ASU No. 2010-13, “Compensation - Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades ,” which addresses the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. Topic 718 is amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments in this update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. ASU No. 2010-13 is effective for interim and annual periods beginning on or after December 15, 2010 and is not expected to have a material impact on the Company’s consolidated financial position or results of operations.
  In December 2010, FASB issued ASC ASU 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (Topic 350) — Intangibles — Goodwill and Other.” ASU 2010-28 amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2, if qualitative factors indicate that it is more likely than not that goodwill impairment exists. The amendments to this update are effective for us in the first quarter of 2011. Any impairment to be recorded upon adoption will be recognized as an adjustment to our beginning retained earnings. We are currently evaluating the impact of the pending adoption of ASU 2010-28 on our consolidated financial statements and don’t expect ASU 2010-28 to have a material impact on our consolidated financial statements.
 
 F-13
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4. Securities owned, at fair value
 
 The balance of securities owned at fair value consisted of the following at December 31:
  December 31,


December 31,2010


2009Certificates of deposits

$
-


$
200,000Money Market


706,156



200,000U.S. Government obligations


-



562,878Options and futures


47,362



150,543Corporate bonds


180,803



149,381Equity securities


33,840



25,852$
968,161


$
1,288,654
 At December 31, 2009, a $200,000 certificate of deposit and a $200,000 money market served as collateral for a note payable to a bank (see Note 8).
 
 F-14
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 5. Fair value measurements
  The Company's assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with GAAP guidance for fair value measurement.  See Note 3 for a discussion of the Company's policies regarding this hierarchy.  The Company’s financial assets and liabilities measured at fair value on a recurring basis include those securities classified as securities owned on the consolidated statements of financial condition (see Note 4).
 
 The following table presents information about the Company’s assets and liabilities measured at fair value as of December 31, 2010 and 2009:
 
 Markets


Other


Significant





Balancefor Identical


Observable


Unobservable


Collateral


as ofAssets


Inputs


Inputs


Held


December 31,(Level 1)


(Level 2)


(Level 3)


at Broker


2010Money market

$
706,156


$
-


$
-


$
-


$
706,156Corporate bonds


180,803















180,803Options and futures


3,139











44,223



47,362Equity securities


33,840















33,840$
923,938


$
-


$
-


$
44,223


$
968,161Investment in AR Growthcommon stock

$
-


$
-


$
22,370


$
-


$
22,370
 
 During the year ended December 31, 2010, the Company recognized an impairment loss on its investment in AR Growth based on the excess of the carrying value over the fair value of the investment.  The Company estimated the fair value of the investment to be approximately $ 23,000 based on an analysis of its ownership of outstanding shares, trading volume, and trading prices of A/R Growth.  The fair value measurement of the investment in A/R Growth is categorized as a Level 3 in the fair value hierarchy.
  F-15
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 5.  Fair value measurements (continued)
 
 Markets


Other


Significant





Balancefor Identical


Observable


Unobservable


Collateral


as ofAssets


Inputs


Inputs


Held


December 31,(Level 1)


(Level 2)


(Level 3)


at Broker


2009AssetsSecurities owned, at fair value:Certificates of deposits

$
200,000


$
-


$
-


$
-


$
200,000Offshore securities investments


-















-U.S. Government obligations


562,878















562,878Money market


200,000















200,000Corporate bonds


149,381















149,381Options and futures


18,062











132,481



150,543Equity securities


25,852















25,852$
1,156,173


$
-


$
-


$
132,481


$
1,288,654Investment in AR Growthcommon stock

$
-


$
52,170


$
-


$
-


$
52,170
 During the year ended December 31, 2009, the Company recognized an impairment loss on its building based on the excess of the carrying amount over the fair value of the building.  The Company estimated the fair value of the building to be approximately $1,076,000 based on an analysis of real estate transactions of comparable properties in the Coral Gables, Florida area, resulting in an impairment loss of $800,000.  The fair value measurement of the building is categorized as a Level 3 in the fair value hierarchy.
 
 6. Derivative contracts
 
 In the normal course of business, the Company utilizes derivative contracts in connection with its proprietary trading activities.  Investments in derivative contracts are subject to additional risks that can result in a loss of all or part of an investment.  The Company’s derivative activities and exposure to derivative contracts are classified by the following primary underlying risks: interest rate, credit, foreign currency exchange rate, commodity price, and equity price risks.  In addition to its primary underlying risks, the Company is also subject to additional counterparty risk due to the potential inability of  its counterparties to meet the terms of their contracts.
 
 Options
 
 The Company is subject to equity price risk in the normal course of pursuing its investment objectives.  Option contracts give the Company the right, but not the obligation, to buy or sell within a limited time, a financial instrument, commodity or currency at a contracted price that may also be settled in cash, based on differentials between specified indices or prices.
 
 F-16
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 6. Derivative contracts (continued)
 
 The Company is exposed to counterparty risk from the potential that a seller of an option contract does not sell or purchase the underlying asset as agreed under the terms of the option contract.  The maximum risk of loss from counterparty risk to the Company is the fair value of the contracts and the premiums paid to purchase its open option contracts.  The Company considers the credit risk of the intermediary counterparty to its option transactions in evaluating potential credit risk.
 
 Futures Contracts
 
 The Company is subject to equity price risk in the normal course of pursuing its investment objectives. The Company may use futures contracts to gain exposure to, or hedge against, changes in the value of equities. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.   At December 31, 2010, there is one futures contract held and is classified by commodity price risk.
 
 Impact of Derivatives on the Consolidated Statement of Financial Condition and Consolidated Statement of Operations
 
 The following table identifies the fair value amounts of derivative instruments included in the consolidated statement of financial condition as securities owned, categorized by primary underlying risk, at December 31, 2010. The following table also identifies the net gain and loss amounts included in the consolidated statement of operations as trading income, categorized by primary underlying risk, for the year ended December 31, 2010.
  Derivative


Amount ofPrimary underlying risk

assets


gain (loss)Equity priceCommodity and futures

$
3,139


$
33,674Total

$
3,139


$
33,674
 7. Property and equipment
 
 Property and equipment consisted of the following at December 31:
 
 December 31,


December 31,2010


2009Building and improvements

$
1,075,942


$
1,075,942Land


725,000



725,000Office equipment


135,010



135,010Captialized leases


17,543



17,5431,953,495



1,953,495Less:  accumulated depreciation


(340,509
)


(271,024
)$
1,612,986


$
1,682,471
  F-17
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  7.   Property and equipment (continued)
 Depreciation expense was $69,486 and $75,522 for the years ended December 31, 2010 and 2009, respectively.
 
 During 2009, the Company took an impairment on the building and improvements in the amount of $800,000.
  8. Notes payable  
 Notes payable consisted of the following at December 31:
 December 31,


December 31,2010


2009Note payable to bank, secured by money marketand certificate of deposit accounts totaling$400,000, monthly payments of $3,379, includinginterest at 5.93% per annum, due July 20, 2020.

$
-


$
316,900Mortgage payable to a bank, secured by thebuilding, monthly payments of $9,207, includinginterest at 7.28% per annum, due July 20, 2020.


757,188



809,657$
757,188


$
1,126,557
  Maturities of notes payable are approximately as follows at December 31:
 2011

$
56,0002012


61,0002013


65,0002014


70,0002015


76,000Thereafer


429,000$
757,000
 
 In February 2010, the Company paid off the remaining balance of the note payable with the bank. As a result of the payoff, the remaining balance of the restricted certificate of deposit and money market after the payoff, approximately $80,000, became unrestricted cash investments for the Company.
 F-18
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  9.Income taxes
 
 At December 31, 2010, the Company had approximately $7.4 million of net operating losses (“NOL”) carry-forwards for federal and state income purposes.  These losses are available for future years and expire through 2030.  Utilization of these losses may be severely or completely limited if the Company undergoes an ownership change pursuant to Internal Revenue Code Section 382.
 
 The deferred tax asset is summarized as follows:
  December 31,


December 31,2010


2009Deferred tax asset:Net operating loss carryforwards

$
2,777,000


$
2,717,000Other temporary differences


958,000



955,000Deferred tax assets


3,735,000



3,672,000Less:  Valuation allowance


(3,735,000
)


(3,672,000
)Net deferred tax asset

$
-


$
-
 A reconciliation of income tax expense computed at the U.S. federal, state, and local statutory rates and the Company’s effective tax rate is as follows:
 
 December 31,


December 31,2010


2009Statutory federal income tax expense


(34
) %


(34
) %State and local income tax


(4
)


(4
)(net of federal benefits)Other temporary differences


8



8Valuation allowance


30



30-
%


-
%
 The Company has taken a 100% valuation allowance against the other timing differences and the deferred asset attributable to the NOL carry-forwards of $3.735 million and $3.672 million at December 31, 2010 and 2009, respectively,  due to the uncertainty of realizing the future tax benefits.  The increase in valuation allowance of $63,000 is primarily attributable to the Company’s net operating loss during the year ended December 31, 2010.
  F-19
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 9. Income taxes
 The Company files a consolidated income tax return with its subsidiaries.  Income taxes are charged by the Company based on the amount of income taxes the subsidiaries would have paid had they filed their own income tax returns.  In accordance with FASB ASC Topic 740, “Accounting for Income Taxes,” allocation of the consolidated income tax expense is necessary when separate financial statements are prepared for the affiliates.  As a result, the Company uses a method that allocates current and deferred taxes to members of the consolidated group by applying the liability method to each member as if it were a separate taxpayer.
 
 10. Common stock
 
 The Company is authorized to issue 100 million shares of common stock, no par value and 10 million shares of preferred stock of which 2.5 million shares have been designated as Series C 8% convertible preferred stock, no par value.
 
 During December 2009, the Company issued an officer of the Company 500,000 shares at $0.50 per share of its no par value common stock in connection with an employment agreement dated January 4, 2007, amended July 31, 2007.
 
 11. Preferred stock
 
 No Series C preferred stock was sold during 2010 or 2009.
 
 12. Stock options and warrants
 
 The Company accounts for its stock option awards under FASB ASC Topic 718 “Compensation—Stock compensation.” The fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for each grant for the years ended December 31, 2010 and 2009: risk free interest rate between 2.25% and 4.65%, no dividend yield, expected lives of ten years and volatility between 129.73% and 185.76%. Options vest ratably between one and ten years and are excerciable over ten years. For the years ended December 31, 2010 and 2009, the Company recognized approximately $48,000 and $90,000, respectively, of stock-based compensation expense related to the issuance of options.
  Options Outstanding


Options ExercisableNumber


Weighted





NumberOutstanding


Average


Weighted


Exercisable


Weightedat


Remaining


Average


at


AverageExercise


December 31,


Contractual


Exercise


December 31,


ExercisePrice


2010


Life


Price


2010


Price$
0.25



4,250,000



9.8


$
0.25



118,539


$
0.25$
0.50



200,000



6.0



0.50



200,000



0.50$
0.75



100,000



8.0



0.75



40,000



0.75$
1.00



400,000



6.2



1.00



400,000



1.00$
1.50



60,000



7.8



1.50



36,500



1.505,010,000






$
0.34



795,039


$
0.77
  F-20
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 12. Stock options and warrants (continued)
 
 The following is a summary of all option activity through December 31, 2010:
 
 Number of


Weighted


Remaining


AggregateShares


Average


Term


InstrinsicOutstanding


Price


(in years)


ValueOptions outstanding at December 31, 2008


830,000



0.87



8.9



-Granted in 2009


30,000



1.50Cancelled in 2009


(100,000
)


1.00Options outstanding at December 31, 2009


760,000


$
0.88



8.0


$
-Granted in 2010


4,250,000



0.25Cancelled in 2010


-



-Options outstanding at December 31, 2010

$
5,010,000



0.34



7.6


$
-Excercisable at December 31, 2009


640,500


$
0.85



8.0


$
-Exercisable at December 31, 2010


795,039


$
0.77



7.6


$
-
 The total compensation cost not yet recognized of approximately $1,068,600 (for non-vested awards) has a weighted average period of 3.6 years over which the compensation expense is expected to be recognized.
 
 On January 4, 2007, the Company granted its chief executive officer 4,500,000 shares, in accordance with the executive’s employment agreement, reduced to 3,500,000 shares pursuant to a stock waiver agreement entered into on November 18, 2009 (see Note 18). The issuances of the shares were subject to a forfeiture period which ended in July 2009, at which point the shares would vest over a three year period. Since January 2007, the Company has been recognizing stock compensation expense over the service period of the employment contract of 5 1⁄2 years.  For the four month period ended November 4, 2009, 500,000 shares of the 3,500,000 share grant vested; these shares were issued in December 2009.  On August 4, 2010, the chief executive officer waived his right, title, and interest to vest in the remaining 3,000,000 shares of restricted common stock.  For the years ended December 31, 2010 and 2009, the Company recognized $131,700 and $358,871, respectively, of stock-based compensation expense related to the issuance of the shares.
 
 During 2010, the Board of Directors granted 3,350,000 options to its chief executive officer with a strike price of $0.25, vesting equally over ten years, 300,000 options to its president, with a strike price of $0.25, vesting equally over two years, 300,000 options each to two financial executives with a strike price of $0.25, vesting equally over two years and five years, respectively.
 
 During 2009, the Board of Directors granted 30,000 options to a financial executive with a strike price of $1.50, vesting equally for five years, with an expiration date of ten years.  During 2008, the board of directors granted 100,000 options to a newly hired financial executive with a strike price of $1.00, vesting equally for five years, with an expiration date of ten years.  The 100,000 option grant was cancelled in 2009.
  F-21
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 12. Stock options and warrants (continued)
 For the years ended December 31, 2010 and 2009, warrant activity was as follows:
  Exercise

Price Per

Share

Warrants

Expiring

Balance

January 1,

2009


Warrants

Issued


Exercised

2009


Expired

2009


Balance

December

31, 2009


Warrants

Issued


Exercised

2010


Expired

2010


Balance

Deember 31,

2010$
2.16

May 29, 2010


15,500



-



-



-



15,500



-



-



15,500



-$
2.16

August 17, 2010


1,000



-



-



-



1,000



-



-



1,000



-$
2.16

October 29, 2010


5,000



-



-



-



5,000



-



-



5,000



-$
1.25

April 11, 2011


500



-



-



-



500



-



-



-



500$
1.25

May 30, 2011


4,000



-



-



-



4,000



-



-



-



4,000Totals


26,000



-



-



-



26,000



-



-



21,500



4,500
 
 All warrants outstanding at December 31, 2010 and 2009 are exercisable.
 
 13. Employee benefit plan
 
 The Company has established a retirement and savings plan for the benefit of employees who have at least one hour of service and have attained the age of 21 years. Under the provisions of the plan, participants may contribute up to 25 percent of their compensation. The Company has the option of matching a percentage of employee contributions. The Company did not make any contributions to the plan in 2010 and 2009.
 
 14. Net capital requirement
 
 STS is a member of FINRA and is subject to the SEC Uniform Net Capital Rule 15c3-1. This Rule requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn or dividends paid if the resulting net capital ratio would exceed 10 to 1. STS is also subject to the Commodity Futures Trading Commission’s minimum financial requirements which require that it maintains net capital, as defined for securities brokers and dealers, equal to or in excess of the greater of $45,000 or the amount of net capital required by the SEC Rule 15c3-1. At December 31, 2010, STS’s net capital was approximately $799,000 which was approximately $699,000 in excess of its minimum requirement of $100,000.
 
 15. Exemption from Rule 15c3-3
 
 STS is exempt from the SEC Rule 15c3-3 pursuant to the exemptive provision under sub-paragraph (k)(2)(ii) and, therefore, is not required to maintain a "Special Reserve Bank Account for the Exclusive Benefit of Customers."
 F-22
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 16. Concentration of risk
 
 Off-balance Sheet Risk
 
 Pursuant to a clearance agreement, STS introduces all of its securities transactions to a clearing broker on a fully-disclosed basis.  All of the customers' money balances and long and short security positions are carried on the books of the clearing broker.  In accordance with the clearance agreement, STS has agreed to indemnify the clearing broker for losses, if any, which the clearing broker may sustain from carrying securities transactions introduced by STS.  In accordance with industry practice and regulatory requirements, STS and the clearing broker monitor collateral on the customers' accounts. In addition, the receivable from clearing broker is pursuant to the clearance agreement.
 
 In the normal course of business, STS’s customer activities involve the execution, settlement and financing of various customer securities transactions.  These activities may expose STS to off-balance sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and STS has to purchase or sell the financial instrument underlying the contract at a loss.
 
 Credit Risk
 
 The Company maintains its cash in financial institutions, which at times, may exceed federally insured limits.  The Company has not experienced any losses in such accounts and believes it is not subject to any significant credit risk on cash.
  17. Commitments and contingencies
 
 Legal Claims
 
 In the ordinary course of business, incidental to the Company’s operations, the Company retains outside counsel to address claims with which the Company is involved. As of December 31, 2010, the Company was not aware of any legal proceedings, which management has determined to be material to its business operations; however, the Company has been named in the following thre actions which it is vigorously defending and which actions, based on management's assessment in coordination with outside litigation counsel, the Company believes to be frivolous and without merit:
 
 Salvatore Frieri, individually and as beneficiary of the Robert J. Escobio and Salvador Frieri-Gallo Trust, Plaintiff v. Robert Escobio, individually and as trustee of the Robert J. Escobio and Salvador Frieri-Gallo Trust, Southern Trust Securities Holding Corporation and Southern Trust Securities, Inc f/k/a Capital Investment Services, Inc., Defendants, in the Circuit Court of the Eleventh Judicial Circuit In and For Miami-Dade County, Florida, Case No. 08-07586 CA 08. The initial complaint in this action was filed on February 12, 2008. An amended complaint
  F-23
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  17. Commitments and contingencies (continued)
 
 Legal Claims (continued)
 
 was filed on October 14, 2008. The amended complaint attempts to plead various causes of action related to the purchase and sale by the Salvador Frieri-Gallo Trust of STSHC’s stock in a private placement in 2005. The plaintiff seeks rescission of the transaction. Management does not believe there is any merit to plaintiff’s claims and the case is in an early stage.
 
 In November 2008, the STS initiated legal action against two individuals and their related company. One of the individuals named in the suit is also an individual who has brought legal action against STS, as discussed in the preceding paragraph. STS’s actions seek to recover compensation owed to it for work performed in connection with extensive financial and investment advice work, and services provided in preparation of a bid for Defendants regarding the restructuring, financing, investing, and acquisition of an interest in Aerovias Nacionales de Colombia S.A. Avianca (“Avianca S.A.”) and its subsidiaries (“Avianca”) in connection with Avianca’s bankruptcy reorganization under Chapter 11 of the U.S. Bankruptcy Code. After serving one of the individuals and the related company, STS moved for and obtained defaults against these two Defendants on September 17, 2009.  These two Defendants moved to set aside the defaults against them, which the Court set aside on November 2, 2009. On December 11, 2009, these two Defendants filed a Motion to Dismiss based on alleged failure to join an indispensable party, the ACDAC (Pilot Association).  We do not believe that motion has any merit.  We have served process on the second individual defendant. Based on information that is now available, STS claims the Defendants owe it approximately $8.35 million dollars plus prejudgment interest from on or about January 2005. In the opinion of outside counsel, it is too early to predict the ultimate recovery from Defendants.
 
 On December 7, 2010, STS filed a FINRA arbitration against Joseph Meuse, Rosewood Securities, LLC, BP Capital, LLC, and China Values Technology, Inc.  The FINRA filing was amended on January 18, 2011, before FINRA commenced serving the Respondents.  STS seeks to recover compensation it was entitled to receive for acting as placement agent under an agreement involving an offering of securities in a reverse merger into a publicly traded company, Respondent China Valves, which closed on May 18, 2009. The Agreement provided that STS would receive 23,490 warrant shares of China Valves, but it only received 5,739 warrant shares.  Thus, STS has sued the Respondents to recover the additional 17,751 warrant shares that it should have received on May 18, 2009, their valued, lost profits, and lost opportunity costs caused by the failure to timely deliver the shares as required. The Respondents, in response to STS’s pre-filing demands for payment, each blamed the other for the claimed failures to timely deliver the missing warrant shares.
 
 Outside counsel, believes that it is likely that STS will obtain an award against one or more of the Respondents, but it still has not been determined who is telling the truth as to when and where the missing warrant shares are, because arbitration proceedings have just begun.  Respondents have not filed their answers and no discovery has yet commenced.
 
 On or about December 28, 2010, plaintiffs attempted to serve process on STSCH by serving STS, with an Amended Complaint filed in the United States Federal District Court for the Southern District Court of New York.  The trust of the Amended Complaint seems to be that Plaintiffs invested about $12.5 million in a company named Aamaxen Transport Group, Inc. (“AAXT”), pursuant to a Securities Purchase Agreement, dated April 14, 2008, in exchange for AAXT’s Series A Convertible Preferred Stock.  AAXT, a publicly traded company, shares are listed on the OTC Bulletin Board.  AAXT, a Delaware Company, has its principal place of business in Shanghai, China.  AAXT was to ultimately invest in and own a significant beneficial interest in Shanghai Atrip Medical Technology, Co., Ltd. (“SMT”), another Chinese company.  Plaintiffs claim the transaction did not take
  F-24
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 17. Commitments and contingencies (continued)
 
 Legal Claims (continued)
 
 place as agreed and that the Chinese principals in certain of the entities involved continued to maintain control over some entities, when they should not have and AAXT and other Plaintiffs’ invested funds were ultimately embezzled.  The investors sued those allegedly involved in the embezzlement, the attorneys involved in the transactions, and those who allegedly provided investment banking advice.  The Amended Complaint includes STSHC along with certain entities controlled by Joseph Meuse and used to provide investment, business, and
 structuring advice under the names Belmont Partners, LLC (“Belmont”) and Rosewood Securities, LLC (“Rosewood”).  The Amended Complaint defines Belmont to include Belmont Partners, Rosewood, or Meuse.  STSHC had nothing to do with this matter.  STS, which was not named a defendant, had a branch office agreement, whereby Rosewood operated as a branch office of STS managed by Meuse during part of the period involved.  As determined so far, STS had no involvement in the transaction and whose only possible
 connection the parties was through the Rosewood branch office agreement, which was terminated in December 2009. STSHC retained New York counsel to represent it in this case.  Counsel received an order from the Court extending the date for STSHC to respond to the Amended Complaint until March 11, 2011.  STSHC responded to the Amended Complaint as required and filed its motion to dismiss.  On March 18, 2011, the Court issued an order requiring that opposing affidavits to motions to dismiss be filed by May 16, 2011.
 
 Based on what is known, management does not believe that STSHC had any involvement whatsoever and is not a proper defendant, and it also does not believe STS had any involvement, other than the possibility that the Rosewood branch office having some as yet unknown involvement without STS’s knowledge or participation. At this point, little is known about the facts, since the case was only recently filed against STSHC.
 
 Capital Lease - Future Minimum Lease Payments
 
 The Company leases certain office equipment under an agreement that is classified as a capital lease. At December 31, 2010 office equipment with a cost basis of $17,543 and accumulated depreciation of $13,157 is recorded under a capital lease.
 
 The future minimum lease payments required under the capital lease and the present value of the net minimum lease payments as of December 31, 2010, are as follows:
  For the year ending December 31,2011

$
7,6302012


2,180Total minimum lease payments


9,810Less: Amount representing supplies andmaintenance included in total amounts above


(2,610
)Net minimum lease payments


7,200Less: Amount representing interest


(691
)Present value of net minimum lease payments

$
6,509
 
 F-25
 
 SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 17. Commitments and contingencies (continued)
 
 Employment Agreements
 
 On January 4, 2007, the Company entered into employment agreements with several of its key executives.  The agreements are for two to three-year duration and renew automatically for one year unless either party provides notice of non-renewal 30 days prior to the anniversary date of the agreement or the agreement is earlier terminated in accordance with its terms.  Two of the agreements are for two-year duration with total compensation of $247,000 per year. The third agreement is for three-year duration with total compensation of $150,000 per year.
 
 As part of the agreements, the Company granted 4,500,000 shares of common stock vesting over five years to one of the executives, reduced to 3,500,000 shares pursuant to a stock waiver agreement entered into on November 18, 2009; on August 4, 2010, the executive waived his right, title, and interest to vest the remaining 3,000,000 shares, the balance after 500,000 were vested and issued in December 2009. Also, as part of the employment agreements, the Company  granted 922,389 shares vesting equally over eighteen months to another executive, and 200,000 options to the third executive exercisable on December 31, 2007 and for a period of ten years.
 
 One of the key executive’s agreements provides for a lump-sum payment of $5 million and the repurchase of all shares based on their fair market value, if his employment is terminated as a result of a change of control.  Should the executive’s employment be terminated for any other reason, the Company would have to pay him $2 million and repurchase all of his shares based on their fair market value.  Lastly, another agreement provides for a lump-sum payment of $1 million to one of the executives if his employment is terminated due to change of control.
  18. Investment in AR Growth Finance Corp. and Nexo Emprendimientos S.A.
 
 During the first quarter of 2007, the Company entered into an agreement to work in concert with two Argentine companies, Inversora Castellanos, S.A. (“ICSA”), a company comprised of executives from SanCor, the largest dairy cooperative in Argentina, and Administración de Carteras S.A. (“ACSA”), whereas we purchased a controlling interest in AR Growth Finance Corp. (“AR Growth”). The common stock of AR Growth trades on the Pink Sheets under the symbol “ARGW.PK.” The Company, together with ICSA and ACSA, intend to implement an acquisition plan to acquire finance related companies in Argentina through AR Growth. The Company previously accounted for its preferred stock investment in AR Growth, as discussed below, under the cost method of accounting.
  F-26
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 18. Investment in AR Growth Finance Corp. and Nexo Emprendimientos S.A. (continued)
  In November 2007, the Company invested $1 million for 100,000 shares of the Series A 8% convertible preferred stock (“Series A ARGW”) of AR Growth. The Series A ARGW provides for cumulative dividends at the rate of 8% per year, payable quarterly, in cash or shares of AR Growth’s common stock at AR Growth’s election. Each share of Series A ARGW shall be convertible into 3.9 shares of AR Growth’s common stock at any time after six (6) months from date of issuance of the preferred stock and prior to notice of redemption at the option of the holder, subject to adjustment for customary anti-dilution events (Conversion Rate). Subject to certain restrictions, the Series A ARGW shall automatically convert into shares of AR Growth’s common stock upon any of the following events: (i) the sale by AR Growth of all, or substantially all, of its assets; (ii) the consummation of a merger or a consolidation; or (iii) the sale or exchange of all, or substantially all, of the outstanding shares of AR Growth’s common stock.
 
 On February 25, 2008, the Company invested an additional $1.5 million for 150,000 shares of Series A ARGW. Simultaneously on that date, AR Growth acquired ProBenefit, S.A. (“ProBenefit”), a privately owned Argentine based holding company comprised of pension, insurance and annuity companies as well as a consumer credit card company, through the following transactions: A) AR Growth acquired the originally issued shares of ProBenefit representing a 37.76% ownership interest for an aggregate purchase price of $7.5 million dollars, of which $2.5 million was paid in cash and $5.0 million (plus interest) shall be paid before February 18, 2010 through the issuance of an 8% Senior Promissory Note by AR Growth to ProBenefit and B) on the same date, AR Growth acquired a 57.34% ownership interest in ProBenefit through the issuance of 11,521,055 shares of common stock of AR Growth and a $12.0 million 8% Junior Subordinated Convertible Debenture due December 15, 2010 to SFN Santafesina de Negocios, S.A., an Argentine company created to consolidate existing ProBenefit investors.
 
 Following all of these transactions, the Company has a 4.3% ownership interest in the common stock of AR Growth and 250,000 non-voting shares of Series A 8% Convertible Preferred Stock of AR Growth convertible into common at 3.9:1. Robert Escobio is the CEO and a director of STSHC and also the President and a director of AR Growth, and Kevin Fitzgerald is the President and a director of STSHC and also the CEO and a director of AR Growth.
 
 The Company determined that the business of ProBenefit, AR Growth’s primary operating entity, has been adversely affected by recent law changes in Argentina. During October 2008, the Argentinean government proposed a law to nationalize approximately $26 billion in private pensions, stating that the current pension system had failed. In December 2008, the government’s proposed law was passed and the government took control of the country’s pension assets. While ProBenefit still has the insurance, annuity and consumer credit card businesses, the takeover of the pension business had a detrimental effect on ProBenefit’s operations and earnings.  Further, the Argentinean government has indicated that it will compensate those companies affected by the takeover of their pension business, however the amount of the compensation, if any, and the timing and form of such compensation has yet to be determined by the Argentinean government.
 
 As a result of the changes in the operations of ProBenefit, the Company recorded an another-than-temporary impairment charge of $1,250,000 against its preferred stock investment in AR Growth of $2,500,000 in December 2008. The preferred stock was the Company’s only investment carried under the cost method. The Company has also reserved the dividends receivable for the full year 2009 and the fourth quarter ended December 31, 2008.
  F-27
  SOUTHERN TRUST SECURITIES HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 18. Investment in AR Growth Finance Corp. and Nexo Emprendimientos S.A. (continued)
  Any future recovery relative to the value in preferred stock will not be recognized until realized as the impairment has effectively reduced the cost of the preferred stock to $1,250,000. Additionally, future charges may be required pending further deterioration in ProBenefit’s operations, lack of compensation from the Argentinean government and the changes resulting from the restructure of the original transaction, as summarized below.
 
 On August 4, 2009, the Company restructured its investment in AR Growth. In summary, the Company exchanged its $2.5 million Preferred Stock investment in AR Growth for a 22% common stock interest in Nexo Emprendimientos S.A. (“Nexo”). Nexo is a fast growing consumer credit card company based in Sunchales, Argentina.
 
 ProBenefit S.A., a financial services holding corporation (“ProBenefit”), the Company and AR Growth will be the major shareholders of Nexo. As part of the terms of the restructuring, the Company has a put option on the shares of Nexo it now owns whereby ProBenefit will be required to buy back from the Company its Nexo shares at the request of the Company at any time either (i) commencing one year from the date of the agreement and for a period of two years thereafter; or (ii) upon a change of control of Nexo by any person other than the Company. The payment under the put option will commence in September 2012 and continue quarterly for 10 quarters and provides for interest at 8% per annum. Should the Company exercise the put option for 100% of its Nexo shares, ProBenefit will be obligated to pay the Company $2.5 million plus accrued interest.
 
 The Company accounts for its investment in Nexo under the cost method of accounting.
  F-28
  ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
 
 None.
 
 ITEM 9A. CONTROLS AND PROCEDURES.
  As of the end of the period covered by this annual report on Form 10-K, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures.  Based on its evaluation, the Company identified a material weakness in its disclosure controls namely, that the Company lacked appropriate resources in the accounting and finance department, including a lack of personnel that are appropriately qualified in the areas of U.S. GAAP and SEC reporting. While this material weakness did not have an effect on our reported results or any related disclosures, it nevertheless constitutes a deficiency in our controls and led our Chief Executive Officer and Chief Financial Officer to conclude that our disclosure controls and procedures continue to not be effective at the reasonable assurance level as of December 31, 2010. Despite this deficiency, management believes that there are no material inaccuracies or omissions of fact in this annual report. Due to our small size and limited resources it is difficult for us to attract qualified personnel. As soon as finances allow, we will add resources to our corporate and finance department to remediate this deficiency. The material weakness will not be considered remediated until the applicable remedial procedures are tested and management has concluded that the procedures are operating effectively. Based on its evaluation, the Company identified a weakness in its disclosure controls namely, that the Company lacked appropriate resources in the accounting and finance department, including a lack of personnel that are appropriately qualified in the areas of U.S. GAAP and SEC reporting.
    Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
 
 In addition, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15 or Rule 15d-15 under the Securities Act of 1934, as amended) during the quarter ended December 31, 2010, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.  We have assessed the effectiveness of those internal controls as of December 31, 2010, using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control Integrated Framework as a basis for our assessment.  Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
  23
 
 A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected.
 
 This annual 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 annual report.
 
 ITEM 9B.  OTHER INFORMATION.
 
 None.
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 
 The information required by this Item is incorporated by reference from our definitive information statement, which involves the election of directors, and which will be filed with the Commission not later than April 30, 2011 (the “Information Statement”).
 
 ITEM 11. EXECUTIVE COMPENSATION
 
 The information required by this Item is incorporated by reference from our Information Statement.
 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
 
 The information required by this Item is incorporated by reference from our Information Statement.
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
 
 The information required by this Item is incorporated by reference from our Information Statement.
 
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
 
 The information required by this Item is incorporated by reference from our Information Statement.
  24
  PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
  2.0
Agreement and Plan of Merger between Southern Trust Securities Holding Corp. and Atlantis Ideas Corp. (1)2.1
Share Exchange Agreement between Southern Trust Securities Holding Corp. and Capital Investment Services, Inc. (1)2.2
Form of Share Exchange Agreement between Southern Trust Securities Holding Corp. and Series B Preferred Stock Holders (5)3(i)(1)
Amended and Restated Articles of Incorporation of Southern Trust Securities Holding Corp. (1)3(i)(2)
Amendment to Amended and Restated Articles of Incorporation of Southern Trust Securities Holding Corp. (2).3(i)(3)
Amendment to Amended and Restated Articles of Incorporation of Southern Trust Securities Holding Corp. (3)3(i)(4)
Amendment to Amended and Restated Articles of Incorporation of Southern Trust Securities Holding Corp. (4)3(i)(5)
Amendment to Amended and Restated Articles of Incorporation of Southern Trust Securities Holding Corp. (6)3(i)(6)
Amendment to Amended and Restated Articles of Incorporation of Southern Trust Securities Holding Corp. (8)3(ii)
Bylaws of Southern Trust Securities Holding Corp. (1)4.1
Form of Common Stock Certificate of Southern Trust Securities Holding Corp. (1)4.2
Warrant held by Robert Escobio (3)4.3
Form of Warrant issued with Series B Preferred Stock private placement. (3)10.1
Employment Agreement between Southern Trust Securities Holding Corp. and Robert Escobio. (1)10.2
Employment Agreement between Southern Trust Securities Holding Corp. and Kevin Fitzgerald. (1)
 
 25
  10.3
Employment Agreement between Southern Trust Securities Holding Corp. and Susan Escobio. (1)10.4
Amendment No. 1 to Employment Agreement of Robert Escobio (3)10.5
Non-Statutory Stock Option Agreement for Fernando Fussa (3)10.6
Non-Statutory Stock Option Agreement for John Hourihan (3)10.7
Agreement of Waiver of Stock Waiver (7)10.8
Restricted Stock Grant Waiver and Non-Statutory Stock Option Agreement and  for Robert Escobio (9)10.9
Non-Statutory Stock Option Agreement for Susan Escobio (9)10.10
Non-Statutory Stock Option Agreement for Kevin Fitzgerald (9)10.11
Non-Statutory Stock Option Agreement for Ramon Amilibia (9)21.0
Subsidiaries of the Registrant (See “Business Section” of the Annual Report on Form 10-K)23.1
Consent of Rothstein, Kass & Company, P.C.31.1
Rule 13a-14(a) Certification of Chief Executive Officer and Chief Financial Officer32
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
 
 26
  (1) Filed on April 30, 2007 as an exhibit to our Registration Statement on Form 10-SB and incorporated herein by reference.
 
 (2) Filed on June 13, 2007, as an exhibit to Amendment No. 1 to our Registration Statement on Form 10-SB and incorporated herein by reference.
 
 (3) Filed on August 1, 2007 as an exhibit to the Form 10-QSB for the period ended June 30, 2007 and incorporated herein by reference.
 
 (4) Filed on November 29, 2007, as an exhibit to a Form 8-K and incorporated herein by reference.
 
 (5)Filed on November 30, 2007, as exhibit 2.0 to the Schedule TO and incorporated herein by reference.
 
 (6) Filed on January 16, 2008, as an exhibit to the Form 8-K and incorporated herein by reference.
 
 (7) Filed on November 18, 2009 as an exhibit to the Form 8-K and incorporated herein by reference.
 
 (8) Filed on October 12, 2010 as an exhibit to the Form 8-K and incorporated herein by reference.
 
 (9) Filed on October 1, 2010 as an exhibit to the Form 8-K and incorporated herein by reference.
 27
  SIGNATURES
 
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant had duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on April 15, 2011.
  SOUTHERN TRUST SECURITIES HOLDING CORP.By:
/s/Robert EscobioRobert EscobioChief Executive Officer andChief Financial Officer
  Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, by the following persons, on behalf of the registrant, and in the capacities and on the dates indicated.
 
 Signature

Title

Date/s/ Robert Escobio

Chief Executive Officer, Chief Financial Officer and DirectorRobert Escobio

(Principal Executive Officer and Principal Accounting Officer)

April 15, 2011/s/ Kevin FitzgeraldKevin Fitzgerald

President and Director

April 15, 2011/s/ Susan EscobioSusan Escobio

Director

April 15, 2011/s/ Ramon AmilibiaRamon Amilibia

Director

April 15, 2011