Smart Online's Board Authorizes Internal Financial Investigation
Posted March 27, 2006 6:42 a.m. EST
RESEARCH TRIANGLE PARK, N.C. — Smart Online
, a Durham-based firm that offers a variety of software services online, is conducting an internal investigation of its finances.
Smart Online (SOLN.PK), disclosed in a filing with the Securities and Exchange Commission on March 22 that its board had authorized the audit committee to look into the matter.
Company officials declined comment.
The investigation is the latest in a series of events troubling Smart Online, which went public in 2005. Suspending of its stock was suspended for two weeks in January by the Securities and Exchange Commission "because of possible manipulative conduct occurring in the market for the company's stock," Smart said in an SEC filing acknowledging the suspension.
Smart Online was due to be listed on the Nasdaq stock exchange, but when the SEC suspension was announced Nasdaq withdrew its plans.
Since then, Smart Online officials have declined comment publicly, instead relying on SEC filings.
In announcing the internal probe, Smart Online said: "Smart Online's Board of Directors has authorized its Audit Committee to conduct an internal investigation of matters relating to the Order of Suspension of Trading issued by the Securities and Exchange Commission on January 17, 2006. The Audit Committee has retained independent outside legal counsel to conduct the investigation and report its findings back to the Audit Committee."
When contacted by WRAL Local Tech Wire, a spokesperson for Michael Nouri, the company's president and chief executive officer, provided the following statement:
"We are not talking to individual members of the media at this time. We are putting out press releases and SEC filings so everyone has access to information at the same time."
Asked about the latest SEC filing, Jim Verdonik of the law firm Daniels, Daniels and Verdonik, which represents Smart Online, said: "I can't comment."
Calls to two public relations firm representing Smart Online were not returned.
Gerald Gross, assistant regional director for the Northeast Region of the SEC, would neither confirm nor deny an SEC investigation of Smart Online, when contacted at his New York office on Friday.
The SEC suspension of trading in Smart Online stock was initiated on Jan. 17. Since then, the stock has fallen to $2 a share from $9.05 when trading was suspended.
The stock has a 52-week high of $11.50 and a low of $1.50.
Also on the same day Smart Online disclosed the investigation it said its auditing firm Goldstein Golub Kessler had resigned.
In February, Smart Online also disclosed that Capital One the early termination of a contract due to expire in April that paid Smart Online $20,000 a month.
Through Sept. 30 of 2005, the company reported losses of $2.18 million.