UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
The Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): June 9, 2005
SMART
ONLINE, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware |
|
333-119385 |
|
954439334 |
|
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
|
2530
Meridian Parkway, Durham, N.C. |
|
27713 |
|
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant's
telephone number, including area code: (919)
765-5000
Not
applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM
7.1 REGULATION FD DISCLOSURE
The
following information is intended to be furnished under Item 7.01 of Form 8-K,
“Regulation FD Disclosure.” This information shall not be deemed “filed” for
purposes of Section 18 of the Exchange Act or incorporated by reference in any
filing under the Securities Act or the Exchange Act, except as shall be
expressly set forth by specific reference in such a filing.
On June
9, 2005 and thereafter, Smart Online is giving presentations that include the
slide about conversion rate examples attached as Exhibit 99.1 to this Form 8-K,
which is incorporated herein by reference.
Included
in the slide are three examples of the revenue and operating income Smart Online
believes it could achieve if it is successful in its planned efforts to sell
subscriptions to registered users of its website or the websites of its
syndication partners. The three examples in the slide show possible financial
performance under different scenarios that assume conversion rates of 1% per
month, 2% per month and 3% per month for 18 consecutive months. The selection of
these percentages does not reflect any determination by Smart Online that any of
these monthly conversion rates are more likely to occur than any other
conversion rate, including a conversion rate of less than 1%. These examples are
being used solely to show the effect different conversion rates may have on
Smart Online, if they are achieved. Likewise, the use of 18 months does not
apply to any specific 18-month period. Eighteen months was selected solely to
show that sustained consistent efforts will be required to achieve substantial
growth in the future and that Smart Online does not expect an immediate
substantial increase in revenue.
Smart
Online cautions investors that the facts and assumptions underlying these three
examples will change, and those changes may cause significant positive or
negative differences to the results illustrated in the three examples. Many of
the facts and assumptions are beyond the control of Smart Online. Smart Online
anticipates that there will be differences between the results illustrated in
the three examples and Smart Online’s actual results, so investors should not
place undue reliance on these three examples.
The
process of estimating future conversion rates, revenue and operating income is
subjective and is particularly difficult for Smart Online at this stage of Smart
Online’s development, because it requires Smart Online to estimate future demand
for products which have not been developed and for which there are currently no
sales. This lack of historical data causes our examples to have a much greater
risk of inaccuracy than projections made by other companies that have a greater
amount of historical data on which to base their projections.
The
examples were prepared for management’s internal use and were not prepared with
a view to compliance with the published guidelines of the Securities and
Exchange Commission or the American Institute of Certified Public Accountants
regarding projections and forecasts. Smart Online’s independent registered
public accounting firm has not assisted with the preparation of, nor have they
applied testing procedures to, the examples. Accordingly, the independent
registered public accounting firm does not express an opinion or any other form
of assurance regarding the examples. Although the examples are presented with
numerical specificity, they are based on various estimates and assumptions which
may not be released and are inherently subject to significant business, economic
and other uncertainties, many of which are beyond the control of Smart Online.
Smart Online’s actual results will vary from the examples and such variations
are likely to be material, with an increased likelihood of greater variations
the further out the period covered by the examples. The examples are, therefore,
not representations by Smart Online of its future performance. The release of
these examples should not be regarded as an indication that Smart Online
considers them to be a reliable prediction of future events, and investors
should not rely on them for that purpose.
No
Duty to Update
Smart
Online does not intend, and assumes no responsibility, to update the examples to
reflect actual results or changes in assumptions or other factors that could
affect the examples, including changes in the underlying facts and assumptions
used to prepare the examples.
Forward
Looking Statements and Risk Factors
The
examples in the slide contain “forward looking statements” based on information
possessed by management of Smart Online on June 9, 2005. These forward looking
statements include examples of possible future conversion rates, revenue and
operating income.
These
examples are not a guaranty of actual financial performance. Actual results are
likely to differ materially from the examples contained in the slide, because of
many factors, including the “risk factors” contained in the reports we file with
the Securities and Exchange Commission, including on Forms 10-K, 10-Q and 8-K.
Investors should review these risk factors carefully before making any decision
about investing in Smart Online.
Most of
the revenue shown in these projections is anticipated to come from sales of
subscriptions to small businesses. Smart Online has no historical basis for
estimating conversion rates and projections of subscription revenue.
Smart
Online believes the greatest risks to achieving the financial results reflected
in these examples are associated with the fact that Smart Online is facing many
new challenges, which Smart Online has not faced before, particularly those
related to charging fees for subscriptions to small businesses to replace Smart
Online’s current policy of allowing free use of Smart Online’s products.
Therefore, many unknown contingencies are likely to arise that Smart Online
currently lacks the experience to predict. The management of Smart Online
believes this inexperience presents the greatest risks to Smart Online and
investors in Smart Online.
For
example, Smart Online has only recently appointed a Vice President to develop a
marketing plan and is targeting completing its sales and marketing plan in July
2005. Until that time, Smart Online will be testing and refining its assumptions
about sales revenue, including the amount of revenue from subscriptions from
small businesses and whether Smart Online’s syndication partners will make
substantial efforts to sell, and be effective at selling, subscriptions for
Smart Online products. Consequently, until that process has been completed,
Smart Online believes it is highly likely that Smart Online will have to revise
its estimates as it refines its sales and marketing plan. After Smart Online
begins implementing its sales and marketing plan, further changes are likely as
Smart Online collects and analyzes sales and customer information. Smart Online
expressly disclaims any duty to publicly disclose any changes to the information
contained in the slide, even if Smart Online changes its internal
estimates.
Item
9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c )
Exhibits
| Exhibit
Number |
|
Description |
| |
|
|
| 99.1 |
|
Slide
with conversion rate examples being given at private
presentations |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
SMART
ONLINE, INC. |
|
|
| |
By:
/s/ Scott Whittaker |
| |
Name:
Scott Whittaker
Title:
Principal Financial Officer
Date:
June 9, 2005 |
|
|
EXHIBIT
INDEX TO CURRENT REPORT ON FORM 8-K
| Exhibit
Number |
|
Description |
| |
|
|
| 99.1 |
|
Slide
with conversion rate examples being given at private
presentations |