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FORM 10-QSB

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 

**[X]**QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES **EXCHANGE ACT of 1934 for the period ended December 31, 2005**OR **[   ]**TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES **EXCHANGE ACT of 1934 for the transition period from**ST ONLINE CORP. (Name of small business issuer in its charter) 
**Commission File Number   000-51712**
**Nevada**71-0971567
(State or Other Jurisdiction of Organization) 
(IRS Employer Identification #)**359 - 240th StreetLangley, British ColumbiaCanada V3A 6H5(Address of principal executive offices, including zip code)
**(604) 534-3879(Registrant's telephone number, including area code)

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.  Yes [X]   No [   ]

The Registrant is a Shell company. [   ]

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:   **As at February 21, 2006, the issuer had 4,000,000 common shares issued and outstanding.**
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**PART I. - FINANCIAL INFORMATION

ITEM 1.     INTERIM FINANCIAL STATEMENTS.

ST Online Corp.
(A Development Stage Company)
Balance Sheets
(Expressed in U.S. dollars)
December 31,
September 30,
2005
2005
$
$
(unaudited)
(audited)
ASSETS
Current Assets
Cash 
73,146 
1,841 
Total Current Assets
73,146
1,841
Property and Equipment (Note 3) 
3,340 
- 
Total Assets 
76,486 
1,841 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 
Current Liabilities

Accounts payable
300
11,873
Accrued liabilities
9,350
7,700
Due to related parties (Note 4) 
5,000 
24,896 
Total Liabilities 
14,650 
44,469 
Stockholders' Equity (Deficit)
Common Stock:
Authorized: 100,000,000 common shares, par value $0.00001
Issued: 4,000,000 common shares
40
40
Common Stock Subscribed
112,065
-
Stock Subscriptions Receivable
(100)
-
Donated Capital
12,000
9,750
Deficit Accumulated During the Development Stage 
(62,169) 
(52,418) 
Total Stockholders' Equity (Deficit) 
61,836 
(42,628) 
Total Liabilities and Stockholders' Equity (Deficit) 
76,486 
1,841 
(The accompanying notes are an integral part of these financial statements)F-1

 

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ST Online Corp.
(A Development Stage Company)
Statements of Operations
(Expressed in U.S. dollars)
(unaudited) 
From
For the
For the
August 27, 2004
Three Months
Three Months
(Date of Inception)
 Ended 
 Ended 
to December 31,
December 31,
December 31,
2005
2005
2004
$
$
$
Revenue 
571 
114 
105 

Expenses
Amortization
1,452
-
363
Impairment loss on intangible assets
2,896
-
-
Management fees (Note 4(b))
8,000
1,500
1,500
Office and general 
4,006
3,265
76
Professional fees
41,403
4,350
2,400
Rent (Note 4(b))
4,000
750
750
Website development costs 
983 
- 
- 

Total Expenses 
62,740 
9,865 
5,089 

Net Loss 
(62,169) 
(9,751) 
(4,984) 
Net Loss Per Share - Basic and Diluted 
- 
- 
Weighted Average Shares Outstanding 
4,000,000 
4,000,000 

 

 

 

 

 

(The accompanying notes are an integral part of these financial statements)F-2

 

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ST Online Corp.
(A Development Stage Company)
Statements of Cash Flows
(Expressed in U.S. dollars)
(unaudited)
For the
For the
Three Months
Three Months
Ended
Ended
December 31,
December 31,
2005
2004
$
 $
Operating Activities
Net loss
(9,751)
(4,984)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization
-
363
Donated services and rent
2,250
2,250
Change in operating assets and liabilities:
Accounts payable and accrued liabilities 
(9,923) 
(1,500) 

Net Cash Flows Used in Operating Activities 
(17,424) 
(3,871) 

Investing Activities
Purchase of property and equipment 
(3,340) 
- 

Net Cash Flows Used in Investing Activities 
(3,340) 
- 

Financing Activities
Advances from related parties
-
85
Repayments to related parties
(19,896)
-
Proceeds from share subscriptions received 
111,965 
- 

Net Cash Flows Provided by Financing Activities 
92,069 
85 

Increase (Decrease) in Cash 
71,305
(3,786)
Cash - Beginning of Period 
1,841 
5,100 

Cash - End of Period 
73,146 
1,314 

Non-cash Investing and Financing Activities 
- 
- 

Supplemental Disclosures
Interest paid
-
-
Income taxes paid 
- 
- 

 

(The accompanying notes are an integral part of these financial statements)F-3

 

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ST Online Corp.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in U.S. dollars)
(unaudited) 
1.
Development Stage Company 
ST Online Corp. (the "Company") was incorporated in the State of Nevada on August 27, 2004. 
The Company is based in Vancouver, British Columbia, Canada and its principal business is as an online website that enables customers to purchase and download tennis lesson video clips. The Company acquired the rights to the website from a principal shareholder by the issue of debt in the amount of $4,348.  Refer to Note 4(b). 
The Company is in the development stage with management devoting most of its activities to developing a market for its products and services. These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenue and has never paid any dividends. The Company is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. The continuation of the Company as a going concern and the ability of the Company to emerge from the development stage is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and to generate sustainable significant revenue. There is no guarantee that the Company will be able to raise any equity financing or generate profitable operations. As at December 31, 2005, the Company has working capital of $58,496 and has accumulated losses of $62,169 since inception. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. 
The Company filed an SB-2 Registration Statement with the United States Securities and Exchange Commission which was declared effective on October 11, 2005, to raise a minimum of $100,000 by selling 1,000,000 common shares and a maximum of $200,000 by selling 2,000,000 common shares at $0.10 per share. If the minimum is not raised within 180 days of the SB-2 Registration Statement being declared effective all funds will be returned to the subscribers.   
2.
Summary of Significant Accounting Principles 
a)
Basis of Presentation  
These financials statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars.  The Company has not produced significant revenue from its principal business and is a development stage company as defined by Statement of Financial Accounting Standard ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises. The Company's fiscal year end is September 30.  
b)
Use of Estimates  
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 
c)
Cash and Cash Equivalents  
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. 
d)
Comprehensive Loss  
SFAS No. 130, "Reporting Comprehensive Income" establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2005 and 2004, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

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ST Online Corp.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in U.S. dollars)
(unaudited) 
2.
Summary of Significant Accounting Principles (continued) 
e)
Financial Instruments  
The fair value of financial instruments which include cash, accounts payable, accrued liabilities, and due to related parties were estimated to approximate their carrying value due to the immediate or relatively short maturity of these instruments. 
f)
Basic and Diluted Net Income (Loss) Per Share  
The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share. SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. 
g)
Property and Equipment  
Property and equipment is recorded at cost and is being amortized on a straight-line basis over the estimated life of three years.   
h)
Long-lived Assets  
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets, the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.  
i)
Foreign Currency Translation  
The Company's functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations. 
j)
Revenue Recognition  
The Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104 ("SAB 104"), "Revenue Recognition in Financial Statements. Revenue consists of direct sale of tennis lessons and products to customers, linkage fees to others websites and advertising revenues. Revenue from these sources are recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, and the product is downloaded by customers with payment received by the Company.  Revenue for the period from inception to December 31, 2005 consists solely of the direct sale of lessons through the Company's website. 
k)
Income Taxes  
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109 "Accounting for Income Taxes as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

F-5

 

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ST Online Corp.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in U.S. dollars)
(unaudited) 
2.
Summary of Significant Accounting Principles (continued) 
l)
Interim Financial Statements  
These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. 
m)
Recent Accounting Pronouncements (continued)  
In May 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154, "Accounting Changes and Error Corrections - A Replacement of APB Opinion No. 20 and SFAS No. 3". SFAS 154 changes the requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS 154 requires retrospective application to prior periods' financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. The provisions of SFAS No. 154 are effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The adoption of this standard is not expected to have a material effect on the Company's results of operations or financial position.  
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29". The guidance in APB Opinion No. 29, "Accounting for Nonmonetary Transactions", is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle. SFAS No. 153 amends Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of SFAS No. 153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Early application is permitted and companies must apply the standard prospectively. The adoption of this standard did not have a material effect on the Company's results of operations or financial position.  
In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 123R, "Share Based Payment". SFAS 123R is a revision of SFAS No. 123 "Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees" and its related implementation guidance. SFAS 123R 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. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123R requires a public 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). SFAS 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. Public entities that file as small business issuers will be required to apply SFAS 123R in the first interim or annual reporting period that begins after December 15, 2005. The adoption of this standard is not expected to have a material effect on the Company's results of operations or financial position.  
In March 2005, the SEC staff issued Staff Accounting Bulletin No. 107 ("SAB 107") to give guidance on the implementation of SFAS 123R. The Company will consider SAB 107 during implementation of SFAS 123R.

F-6

 

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ST Online Corp.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in U.S. dollars)
(unaudited) 
3.
Property and Equipment      
December 31,
September 30,    
2005
2005    
Net Carrying
Net Carrying   
Accumulated
Value
Value  
Cost
Amortization
$
$  
$
$
(unaudited)
(audited)       
Office Equipment 
3,340 
- 
3,340 
-   
4.
Related Party Transactions    
a)
An amount of $5,000 (September 30, 2005 - $20,185) owing to the Secretary of the Company is non-interest bearing, unsecured and due on demand.  
b)
An amount of $nil (September 30, 2005 - $4,711) owing to the President of the Company is non-interest bearing, unsecured and due on demand. 
c)
The President of the Company provided management services and office premises to the Company at no charge. Donated services valued at $500 per month and donated office premises valued at $250 per month were charged to operations and recorded as donated capital.   
5.
Common Stock   
During the three month period ended December 31, 2005, the Company accepted stock subscriptions for 1,120,650 shares of common stock at $0.10 per share for proceeds of $112,065. To December 31, 2005, the Company had received $111,965. The balance of $100 was received subsequently.  
6.
Subsequent Event   
In January, 2006, the Company received $100 from common stock subscriptions.

 

 

 

 

 

 

F-7

 

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**ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS**
This section of our quarterly report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance.  Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events.  You should not place undue certainty on these forward-looking statements, which apply only as of the date of this quarterly report.  These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. 

We are a start-up stage corporation with limited operations and minuscule revenues from our business operations.  Our revenues have been exclusively generated from the sale of tennis lessons on our website.  As of December 31, 2005 we have generated $571 in revenues from the sale of tennis lessons since inception. 

Our auditors have issued a going concern opinion.  This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills.  We are a start-up stage corporation with limited operations and minuscule revenues from our business operations.  We do not anticipate initiating significant operations until we complete the development of our website, source out suppliers for products to sell and source out customers to buy our products.  We believe the technical aspects of our website will be sufficiently developed to use for our operations in about 70 days.

We believe our current cash will last one year.  If we need additional cash and cannot raise it we will either have to suspend operations until we do raise the cash, or cease operations entirely.  We currently have no plans to raise additional cash other than through our operations. 
**Plan of Operation**
We have completed our public offering and have established the following milestones with respect to our operations:  
- Establish our office and acquire the equipment we need to begin operations.  Establishing our offices will take approximately a month from the date of this report.  We believe that it will cost $10,000 to establish our office.  We do not intend to hire employees.  Our officers and directors will handle our administrative duties.  After our office is established, which we said should be in approximately one month, we intend to contact and negotiate with large manufacturers and suppliers of tennis products, such as  HEAD, PRINCE among others, to offer their products on our website.  We also intend to locate smaller, new manufacturers to offer their products on a more exclusive basis.  Once we have signed at least one contract, we will have Tidal Multimedia Inc. complete the initial development our website.  We believe we should have one contract signed within 30 days of setting up our office.  The execution of additional contracts with suppliers and the development of the website will be ongoing during the life of our operations.  As more products are added and as our customer data base expands, we will have to be continually upgrading the website.  We believe that it will cost up to $10,000 in order to have our website completely operational and $5,000 to have our data base initially ready to receive information.  Both the initial full operation of the website and the data base will be ready 60 days from the signing of our first contract with a major
-9-

supplier.  At that point we will be able to accept orders for products we will sell.  We currently sell tennis lessons on our website and our website is functional with respect to the sale of the tennis lessons.  Further, we have already completed production and are selling the four tennis lessons referred to in the Business section of this quarterly report.  As additional contracts are signed with suppliers, we will up-grade the website.  As our customer base increases we will up-grade the data base.  Both upgrades will be ongoing during the life of our operations.  In addition to offering, lessons, equipment and products, we will pass on  industry information to tennis players  that we acquire in the course of our operations. 
- As soon as our website is operational, which as we have said will be approximately 60 days from setting up our office, we will begin to market our website in Canada and the United States through traditional sources such as sports magazines, tennis tournaments and conferences, newspaper advertising in the sports sections, telephone directories and flyers/mailers.  We intend to target tennis players.  We  may utilize inbound links that connect directly to our website from other sites. Potential customers can simply click on these links to become connected to our website from search engines and community and affinity sites.  We believe that it will cost a minimum of $15,000 for our marketing campaign.   Marketing is an ongoing matter which will continue during the life of our operations.  We also believe that we should begin to see results from our marketing campaign within 30 days from its initiation, or 90 days from setting up our office.    Part of our marketing program includes sourcing out and identifying tennis players and manufacturers and suppliers of tennis equipment.  The process of sourcing out suppliers includes identifying manufacturers, large and small by research into existing databases via the Internet and research in tennis publications. This process will start as soon as our office is operational and will be ongoing during the life of our operations. Sourcing customers may consist of telephone surveys and may contain questions which would determine the marketing approach and acceptability of specific products.  It will also involve research into existing databases available via the Internet to target and extract the applicable names and contacts to create our own customized database.  We intend to look into the databases of tennis clubs, tennis lessons, tennis equipment, including racquets, shoes, clothing and accessories, and sports magazines that are publically available through Internet research, telephone directories, and periodical research.  The cost to source and analyze all of the material to identify suitable candidates to develop and maintain the database is estimated to cost $5,000 to $15,000.  Within 90 days from the full operation of our website, we believe that we will begin receiving additional orders for tennis lessons and initial orders for the purchase of tennis products. 
- Within the next twelve months we plan to develop a "doubles strategy" video.  We estimate the cost to be approximately $5,000 which includes the cost of filming, producing and placement of the video on the website.    Once the website is fully operational; we have located and negotiated agreements with a suitable number of manufacturers and suppliers to offer their products for sale; and, we have begun to receive orders for products, we intend to hire 1 or 2 part-time salesperson(s) to handle our Internet transactions.  
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In summary, we should be in full operation and receiving orders within 90 days.  We estimate that we will generate revenue 120 to 180 days after beginning operations.

Until our website is fully operational, we do not believe that large manufacturers will provide us with their best products or best prices.  We believe, however, that once our website is operational and we have developed at significant data base of customers, large industry leaders will provide us with their best products and best prices.  There is no guarantee that the large industry leaders will provide us with their best products and best prices. 

If the manufacturers and suppliers do not provide their products to us on reasonable terms, we may have to suspend or cease operations. 

We will not be conducting any research.  We are not going to buy or sell any plant or significant equipment during the next twelve months.

If we cannot generate sufficient revenues to continue operations, we will suspend or cease operations.  If we cease operations, we do not know what we will do and we do not have any plans to do anything.
**Limited operating history; need for additional capital**
There is limited historical financial information about us  upon which to base an evaluation of our performance.  We are in a start-up stage operations and have generated minuscule revenues. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources  and possible cost overruns due to price and cost increases in services and products.  

To become profitable and competitive, we have to sell tennis lessons and locate and negotiate agreements with manufacturers and suppliers of tennis products to offer their products for sale to us at pricing that will enable us to establish and sell the products to our clientele at a profit. 

We have no assurance that future financing will be available to us on acceptable terms.  If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations.  Equity financing could result in additional dilution to existing shareholders.  
**Results of operations  
*From Inception on August 27, 2004 to December 31, 2005*
During the period we incorporated the company, hired the attorney for the preparation of this Registration Statement and an auditor to audit our financial statements.  We contracted Tidal Multimedia Inc. to create an Internet website with the domain name "www.simpletennis.com".  Our loss from inception to December 31, 2005 was $62,169 of which $41,403 was for professional fees; $1,452 was for the amortization of website development costs; $4,006 was for general office costs; $983 was for the development of the website; $4,000 was for donated rent; and, $8,000 was for donated management fees contributed by the president for the development of the business and $2,896 for the impairment loss on intangible assets.  We have generated $571 in revenues.  We expect to begin full operations 100 days from the date of this report. 

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**Liquidity and capital resources**
As of December 31, 2005, we have generated $571 in revenues. 

In August 2004, we issued 4,000,000 shares of common stock through a private placement of securities to our officers and directors.  We relied upon the exemption from registration contained in section 4(2) of the Securities Act of 1933.  This was accounted for as a sale of common stock.  

On October 31, 2005, our Form SB-2 registration statement (SEC file no. 333-121114) was declared effective by the SEC.  On January 6, 2006, we completed our public offering by selling 1,170,650 shares of common stock at $0.10 to 96 persons and corporations and raised $117,065.  As at December 31, 2005, $111,965 in share subscriptions have been received.

 As at December 31, 2005, we had a working capital of $58,496.  As of December 31, 2005, our total assets were $73,486, which consisted of $73,146 in cash and $3,340 in equipment; and our total liabilities were $14,650 comprised of $5,000 due a related party and $9,650 in accountants payable and accrued liabilities. 
**Recent accounting pronouncements**
In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123 (Revised 2004) ("SFAS No. 123R"), "*Share-Based Payment."* SFAS No. 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. SFAS No. 123R represents the culmination of a two-year effort to respond to requests from investors and many others that the FASB improve the accounting for share-based payment arrangements with employees. The scope of SFAS No. 123R includes a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. SFAS No. 123R replaces SFAS No. 123, "*Accounting for Stock-Based Compensation",* and supersedes APB Opinion No. 25, "*Accounting for Stock Issued to Employees".*SFAS No.**123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, that statement permitted entities the option of continuing to apply the guidance in APB Opinion No. 25, as long as the footnotes to the financial statements disclosed what net income would have been had the preferable fair-value-based method been used. Although those disclosures helped to mitigate the problems associated with accounting under APB Opinion No. 25, many investors and other users of financial statements believed that the failure to include employee compensation costs in the income statement impaired the transparency, comparability, and credibility of financial statements. Public entities that file as small business issuers will be required to apply Statement 123R in the first interim or annual reporting period that begins after December 15, 2005. The adoption of this standard is not expected to have a material impact on the Company's results of operations or financial position.

In March 2005, the SEC staff issued Staff Accounting Bulletin No. 107 ("SAB No. 107") to give guidance on the implementation of SFAS 123R. The Company will consider SAB No. 107 during implementation of SFAS 123R.

 

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In December 2004, the FASB issued SFAS No. 153,*"Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29".* SFAS No. 153 is the result of a broader effort by the FASB to improve financial reporting by eliminating differences between GAAP in the United States and GAAP developed by the International Accounting Standards Board (IASB). As part of this effort, the FASB and the IASB identified opportunities to improve financial reporting by eliminating certain narrow differences between their existing accounting standards. SFAS No. 153 amends APB Opinion No. 29, "*Accounting for Nonmonetary Transactions",*that was issued in 1973. The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have "commercial substance." Previously, APB Opinion No. 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. The provisions in SFAS No.153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Early application is permitted and companies must apply the standard prospectively. The effect of adoption of this standard did not have a material impact on the Company's results of operations or financial position.
**ITEM 3. CONTROLS AND PROCEDURES.****(a)   ***Evaluation of Disclosure Controls and Procedures:* Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports our files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required. **(b)   ***Changes in Internal Control over Financial Reporting:* There were no changes in our internal control over financial reporting identified in connection with our evaluation of these controls as of the end of the period covered by this report that affected those controls subsequent to the date of the evaluation referred to in the previous paragraph, including any correction action with regard to deficiencies and material weakness. 
There were no changes in our internal controls or in other factors that could affect these controls subsequent to the date of their evaluation, including any deficiencies or material weaknesses of internal controls that would require corrective action. 

 

 

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**PART II - OTHER INFORMATION

ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS.**
On October 31, 2005, our Form SB-2 registration statement (SEC file no. 333-121114) was declared effective by the SEC.  On January 6, 2006, we completed our public offering by selling 1,170,650 shares of common stock to 96 persons and corporations and raised $117,065.  Since completing our public offering, we have used the proceeds as follows:

Offering Expenses
$
4,210
Website development 
0
Database 
3,340
Marketing and advertising 
0
Establishing an office 
8,516
Salaries 
0
Working capital 
34,469**TOTAL**$**50,535
**ITEM 6.     EXHIBITS.**
The following documents are included herein:

**Exhibit No.**Document Description  
31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.
32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer).

 

 

 

 

 

 

 

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**SIGNATURES**
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 21st day of February, 2006.

 **ST ONLINE CORP.     
BY:
/s/ Scott Pedersen  
Scott Pedersen, President, Principal Executive Officer, Treasurer, Principal Financial Officer and  Principal Accounting Officer.

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities.

**Signature**Title**Date   
/s/ Scott Pedersen
President, Principal Executive Officer, Treasurer, 
February 21, 2006
Scott Pedersen
Principal Financial Officer and  Principal Accounting Officer.    
/s/ Elena Avadasseva
Secretary and a member of the Board of Directors.
February 21, 2006
Elena Avadasseva  

 

 

 

 

 

 

 

 

 

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