Research Triangle Software Owner Is New Smart Online Board Chair
Posted July 10, 2006 9:14 a.m. EDT
RESEARCH TRIANGLE PARK, N.C. — Jeffrey LeRose, owner of Research Triangle Software and an active investor in the Triangle, is taking over as chairman of the board at
, the company said Friday.
LeRose replaces Michael Nouri, the company's chief executive officer, as head of the board. Nouri will remain a board member. The board reports to LeRose, but he has no day-to-day management responsibilities, LeRose told WRAL Local Tech Wire.
"I am not an investor," LeRose said. "I am a totally independent director."
LeRose was recruited to the Smart Online board last September. He is the only remaining independent director. The two other members recently resigned, LeRose said. The board includes Nouri and another member linked to Smart Online.
The chairmanship change is part of a reorganization recommended to the company after an internal investigation, LeRose said. The investigation was conducted by an independent outside counsel through Smart Online's audit committee earlier this year after the Securities and Exchange Commission disclosed it was investigating the company. "The SEC indicated that the reason for the suspension was a lack of current and accurate information concerning the Company's securities because of possible manipulative conduct occurring in the market for the Company's stock," Smart Online said at the time.
"We did an internal investigation as a result of the fact the SEC was doing an investigation," LeRose said. However, when asked if the SEC investigation continued, LeRose said he could not comment.
"We're definitely putting more controls in place within the organization," LeRose added.
Trading in Smart Online stock (Pink sheets: SOLN) was suspended by the SEC on Jan. 17 just as the RTP-based software was about to be added to the Nasdaq market, as a service company. Nasdaq cancelled the move.
"In order to achieve Smart Online's significant potential, we will be implementing additional changes to our controls and procedures to address the issues raised during the investigation," LeRose said in a statement.
The audit committee reported the results of its investigation to the board on Friday morning. The changes were announced a few hours later.
"The Audit Committee has not concluded that any of our officers or directors have engaged in fraudulent or criminal activity," Smart Online said in a statement. "However, it did conclude that we lacked an adequate control environment, and will take action to address certain conduct of management that was revealed as a result of the investigation."
Smart Online went public in 2005. The stock had traded as high as $11.50. It was trading at $1.90 in Friday afternoon trading.
The company also announced it had lost $15,590.609, or $1.20 per share in 2005. Smart Online lost $2.67 million, or 82 cents per share, in 2004. Most of the loss, or $9.73 million, was a non-cash charge related to shares issued for what the company called "certain investor relations services".
Smart Online spent some $7.6 million in making two acquisitions in 2005.
Revenues did increase to $2.7 million in 2005 from $1.002 million the previous year.