UNITED STATES
SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13G
Under the Securities Exchange Act of 1934
(Amendment No. )*
SMART ONLINE, INC.
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(Name of Issuer)
Common Stock, $.001 par value per share
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(Title of Class of Securities)
83171V100
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(CUSIP Number)
December 31, 2007
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(Date of Event which Requires Filing of this Statement)
Check the appropriate box to designate the rule pursuant to which this Schedule
is filed:
[ X ] Rule 13d-1(b)
[ ] Rule 13d-1(c)
[ ] Rule 13d-1(d)
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Continued on following pages
Page 1 of 11 Pages
Exhibit Index: Page 10
SCHEDULE 13G
CUSIP No.: 83171V100 Page 2 of 11 Pages
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
MAGNETAR FINANCIAL LLC
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2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
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3. SEC Use Only
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4. Citizenship or Place of Organization
Delaware
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Number of Shares 5. Sole Voting Power None
Beneficially ----------------------------------------------------------
Owned by Each 6. Shared Voting Power 1,431,650/1/
Reporting ----------------------------------------------------------
Person With 7. Sole Dispositive Power None
----------------------------------------------------------
8. Shared Dispositive Power 1,431,650/1/
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9. Aggregate Amount Beneficially Owned by Each Reporting Person
1,431,650/1/
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10. Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions)
[ ]
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11. Percent of Class Represented by Amount in Row (9)
7.70% based on 18,598,903 shares outstanding as of November 12, 2007./1/
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12. Type of Reporting Person:
IA; OO
/1/ This figure includes 588,903 Shares that the Reporting Person is entitled to
obtain upon exercise of warrants to purchase the Shares. In addition, the holder
owns warrants to purchase 195,441 Shares held for the account of Magnetar
Capital Master Fund. The warrants, which are exercisable immediately at the
option of the holder, are subject to so-called "blocker" provisions prohibiting
the holder from exercising the warrants to the extent that such exercise or
conversion would result in the holder being deemed the beneficial owner of more
than 9.99% of the Shares then issued and outstanding. See Item 4(a).
SCHEDULE 13G
CUSIP No.: 83171V100 Page 3 of 11 Pages
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
MAGNETAR CAPITAL PARTNERS LP
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2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
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3. SEC Use Only
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4. Citizenship or Place of Organization
Delaware
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Number of Shares 5. Sole Voting Power None
Beneficially Owned ----------------------------------------------------------
by Each Reporting 6. Shared Voting Power 1,858,030/1/
Person With ----------------------------------------------------------
7. Sole Dispositive Power None
----------------------------------------------------------
8. Shared Dispositive Power 1,858,030/1/
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9. Aggregate Amount Beneficially Owned by Each Reporting Person
1,858,030/1/
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10. Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions)
[ ]
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11. Percent of Class Represented by Amount in Row (9)
9.99% based on 18,598,903 shares outstanding as of November 12, 2007./1/
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12. Type of Reporting Person:
HC; OO
/1/ This figure includes 588,903 Shares that the Reporting Person is entitled to
obtain upon exercise of warrants to purchase the Shares. In addition, the holder
owns warrants to purchase 195,411 Shares held for the account of Magnetar
Capital Master Fund. The warrants, which are exercisable immediately at the
option of the holder, are subject to so-called "blocker" provisions prohibiting
the holder from exercising the warrants to the extent that such exercise or
conversion would result in the holder being deemed the beneficial owner of more
than 9.99% of the Shares then issued and outstanding. See Item 4(a).
SCHEDULE 13G
CUSIP No.: 83171V100 Page 4 of 11 Pages
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
SUPERNOVA MANAGEMENT LLC
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2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
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3. SEC Use Only
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4. Citizenship or Place of Organization
Delaware
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Number of Shares 5. Sole Voting Power None
Beneficially Owned ----------------------------------------------------------
by Each Reporting 6. Shared Voting Power 1,858,030 /1/
Person With ----------------------------------------------------------
7. Sole Dispositive Power None
----------------------------------------------------------
8. Shared Dispositive Power 1,858,030 /1/
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9. Aggregate Amount Beneficially Owned by Each Reporting Person
1,858,030/1/
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10. Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions)
[ ]
--------------------------------------------------------------------------------
11. Percent of Class Represented by Amount in Row (9)
9.99% based on 18,598,903 shares outstanding as of November 12, 2007./1/
--------------------------------------------------------------------------------
12. Type of Reporting Person:
HC; OO
/1/ This figure includes 588,903 shares that the Reporting Person is entitled to
obtain upon exercise of warrants to purchase the Shares. In addition, the holder
owns warrants to purchase 195,411 Shares held for the account of Magnetar
Capital Master Fund. The warrants, which are exercisable immediately at the
option of the holder, are subject to so-called "blocker" provisions prohibiting
the holder from exercising the warrants to the extent that such exercise or
conversion would result in the holder being deemed the beneficial owner of more
than 9.99% of the Shares then issued and outstanding. See Item 4(a).
SCHEDULE 13G
CUSIP No.: 83171V100 Page 5 of 11 Pages
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
ALEC N. LITOWITZ
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2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
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3. SEC Use Only
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4. Citizenship or Place of Organization
United States of America
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Number of Shares 5. Sole Voting Power None
Beneficially Owned ----------------------------------------------------------
by Each Reporting 6. Shared Voting Power 1,858,030/1/
Person With ----------------------------------------------------------
7. Sole Dispositive Power None
----------------------------------------------------------
8. Shared Dispositive Power 1,858,030/1/
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9. Aggregate Amount Beneficially Owned by Each Reporting Person
1,858,030 /1/
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10. Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions)
[ ]
--------------------------------------------------------------------------------
11. Percent of Class Represented by Amount in Row (9)
9.99% based on 18,598,903 shares outstanding as of November 12, 2007. /1/
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12. Type of Reporting Person:
HC
/1/ This figure includes 588,903 shares that the Reporting Person is entitled to
obtain upon exercise of warrants to purchase the Shares. In addition, the holder
owns warrants to purchase 195,411 Shares held for the account of Magnetar
Capital Master Fund. The warrants, which are exercisable immediately at the
option of the holder, are subject to so-called "blocker" provisions prohibiting
the holder from exercising the warrants to the extent that such exercise or
conversion would result in the holder being deemed the beneficial owner of more
than 9.99% of the Shares then issued and outstanding. See Item 4(a).
Page 6 of 11 Pages
Item 1(a). Name of Issuer:
Smart Online, Inc. (the "Issuer")
Item 1(b). Address of Issuer's Principal Executive Offices:
2530 Meridian Parkway, 2nd Floor, Durham, North Carolina 27713.
Item 2(a). Name of Person Filing:
This Statement is filed on behalf of each of the following persons
(collectively, the "Reporting Persons"):
i) Magnetar Financial LLC ("Magnetar Financial");
ii) Magnetar Capital Partners LP ("Magnetar Capital Partners");
iii) Supernova Management LLC ("Supernova Management"); and
iv) Alec N. Litowitz ("Mr. Litowitz").
This Statement relates to Shares (as defined herein) and certain
warrants to purchase Shares held for the account of Magnetar Capital Master
Fund, Ltd, a Cayman Islands exempted company ("Magnetar Capital Master Fund")and
Shares held for the account of certain Managed Accounts (the "Managed
Accounts"). Magnetar Capital Partners serves as the sole member and parent
holding company of Magnetar Financial and Magnetar Investment Management, LLC a
Delaware limited liability company ("Magnetar Investment Management"). Each of
Magnetar Financial and Magnetar Investment Management are registered investment
advisers under Section 203 of the Investment Advisers Act of 1940, as amended.
Magnetar Financial serves as investment adviser to Magnetar Capital Master Fund.
In such capacity, Magnetar Financial exercises voting and investment power over
the Shares held for the account of Magnetar Capital Master Fund. Magnetar
Investment Management serve as investment adviser to the Managed Accounts. In
such capacity, Magnetar Investment Management exercises voting and investment
power over the Shares held for the accounts of the Managed Accounts. Supernova
Management is the general partner of Magnetar Capital Partners. The manager of
Supernova Management is Mr. Litowitz.
Item 2(b). Address of Principal Business Office or, if None, Residence
The address of the principal business office of each of Magnetar
Financial, Magnetar Capital Partners, Supernova Management, and Mr. Litowitz is
1603 Orrington Avenue, 13th Floor, Evanston, Illinois 60201.
Item 2(c). Citizenship
i) Magnetar Financial is a Delaware limited liability company;
ii) Magnetar Capital Partners is a Delaware limited partnership;
iii) Supernova Management is a Delaware limited liability company;
and
iv) Mr. Litowitz is a citizen of the United States of America.
Page 7 of 11 Pages
Item 2(d). Title of Class of Securities:
Common Stock, $.001 par value per share (the "Shares")
Item 2(e). CUSIP Number:
83171V100
Item 3. If This Statement is Filed Pursuant to ss.ss.240.13d-1(b) or
240.13d-2(b) or (c), Check Whether the Person Filing is a:
(a) [ ] Broker or dealer registered under Section 15 of the
Exchange Act.
(b) [ ] Bank as defined in Section 3(a)(6) of the Exchange Act.
(c) [ ] Insurance company as defined in Section 3(a)(19) of the
Exchange Act.
(d) [ ] Investment company registered under Section 8 of the
Investment Company Act.
(e) [X] An investment adviser in accordance with Rule
13d-1(b)(1)(ii)(E);
(f) [ ] An employee benefit plan or endowment fund in accordance
with Rule 13d-1(b)(1)(ii)(F).
(g) [ ] A parent holding company or control person in accordance
with Rule 13d-1(b)(1)(ii)(G).
(h) [ ] A savings association as defined in Section 3(b) of the
Federal Deposit Insurance Act.
(i) [ ] A church plan that is excluded from the definition of an
investment company under Section 3(c)(14) of the
Investment Company Act.
Item 4. Ownership:
Item 4(a) Amount Beneficially Owned:
(i) As of December 31, 2007, each of Magnetar Capital Partners,
Supernova Management and Mr. Litowitz may be deemed to be the beneficial owner
of: (A) 842,747 Shares held for the account of Magnetar Capital Master Fund; (B)
588,903 Shares issuable upon the conversion of warrants held for Magnetar
Capital Master Fund; and (C) 426,380 Shares held for the accounts of the Managed
Accounts. This figure excludes additional warrants to purchase 195,411 Shares
held for the account of Magnetar Capital Master Fund which are subject to
so-called "blocker" provisions prohibiting the holder from exercising the
warrants to the extent that such exercise or conversion would result in the
holder being deemed the beneficial owner of more than 9.99% of the Shares then
issued and outstanding.
(ii) As of December 31, 2007, Magnetar Financial may be deemed to be
the beneficial owner of: (A) 842,747 Shares held for the account of Magnetar
Capital Master Fund and (B) 588,903 Shares issuable upon the conversion of
warrants held for Magnetar Capital Master Fund.
Item 4(b) Percent of Class:
(i) The number of Shares of which each of Magnetar Capital
Partners, Supernova Management and Mr. Litowitz may be deemed to be the
beneficial owner constitutes approximately 9.99% the total number of Shares
outstanding.
Page 8 of 11 Pages
(ii) The number of Shares of which Magnetar Financial may be deemed
to be the beneficial owner constitutes approximately 7.70% of the total number
of Shares outstanding.
This figure includes 588,903 Shares that the Reporting Person is entitled
to obtain upon exercise of warrant to purchase the Shares. In addition, each of
Magnetar Financial, Magnetar Capital Partners, Supernova Management and Mr.
Litowitz may also be deemed to be the beneficial owner of the warrants held for
the account of Magnetar Capital Master Fund. This figure excludes additional
warrants to purchase 195,411 shares held for the account of Magnetar Capital
Master Fund which are subject to so called "blocker" provisions prohibiting the
holder from exercising the warrants to the extent that such exercise or
conversion would result in the holder being deemed the beneficial owner of more
than 9.99% of the shares then issued and outstanding. Since the Reporting
Persons currently own 9.99% of the Shares, the remaining warrants are not
currently exercisable and thus, the Shares underlying the remaining warrants
have not been included in the calculations of the Reporting Person's beneficial
ownership of the Shares.
Item 4(c) Number of Shares of which such person has:
Magnetar Financial:
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(i) Sole power to vote or direct the vote: 0
(ii) Shared power to vote or direct the vote: 1,431,650/1/
(iii) Sole power to dispose or direct the disposition of: 0
(iv) Shared power to dispose or direct the disposition of: 1,431,650/1/
Magnetar Capital Partners, Supernova Management, and Mr. Litowitz:
-----------------------------------------------------------------
(i) Sole power to vote or direct the vote: 0
(ii) Shared power to vote or direct the vote: 1,858,030/1/
(iii) Sole power to dispose or direct the disposition of: 0
(iv) Shared power to dispose or direct the disposition of: 1,858,030/1/
/1/ This figure includes 588,903 Shares that the Reporting Person is entitled to
obtain upon exercise of warrants to purchase the Shares. In addition, the holder
owns warrants to purchase 195,411 Shares held for the account of Magnetar
Capital Master Fund. The warrants, which are exercisable immediately at the
option of the holder, are subject to so-called "blocker" provisions prohibiting
the holder from exercising the warrants to the extent that such exercise or
conversion would result in the holder being deemed the beneficial owner of more
than 9.99% of the Shares then issued and outstanding. See Item 4(a).
Item 5. Ownership of Five Percent or Less of a Class:
This Item 5 is not applicable.
Item 6. Ownership of More than Five Percent on Behalf of Another Person:
This Item 6 is not applicable.
Item 7. Identification and Classification of the Subsidiary Which Acquired
the Security Being Reported on By the Parent Holding Company:
See disclosure in Item 2 hereof.
Item 8. Identification and Classification of Members of the Group:
This Item 8 is not applicable.
Item 9. Notice of Dissolution of Group:
This Item 9 is not applicable.
Item 10. Certification:
By signing below each of the Reporting Persons certifies that, to
the best of their knowledge and belief, the securities referred to above were
not acquired and are not held for the purpose of or with the effect of changing
or influencing the control of the issuer of the securities and were not acquired
and are not held in connection with or as a participant in any transaction
having that purpose or effect.
Page 9 of 11 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: February 13, 2008 MAGNETAR FINANCIAL LLC
By: Magnetar Capital Partners LP
As Sole Member
By: /s/ Alec N. Litowitz
-----------------------------
Name: Alec N. Litowitz
Title: Manager of Supernova Management LLC,
as General Partner of Magnetar Capital
Partners LP
Date: February 13, 2008 MAGNETAR CAPITAL PARTNERS LP
By: /s/ Alec N. Litowitz
-----------------------------
Name: Alec N. Litowitz
Title: Manager of Supernova Management LLC,
as General Partner of Magnetar Capital
Partners LP
Date: February 13, 2008 SUPERNOVA MANAGEMENT LLC
By: /s/ Alec N. Litowitz
-----------------------------
Name: Alec N. Litowitz
Title: Manager
Date: February 13, 2008 ALEC N. LITOWITZ
/s/ Alec N. Litowitz
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Page 10 of 11 Pages
EXHIBIT INDEX
Ex. Page No.
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A. Joint Filing Agreement, dated February 13, 2008 by and among
Magnetar Financial LLC, Magnetar Capital Partners LP, Supernova
Management LLC, and Alec N. Litowitz........................... 11
Page 11 of 11 Pages
EXHIBIT A
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule 13G with
respect to the Common Stock of Smart Online, Inc. dated as of February 13, 2008
is, and any amendments thereto (including amendments on Schedule 13D) signed by
each of the undersigned shall be, filed on behalf of each of us pursuant to and
in accordance with the provisions of Rule 13d-1(k) under the Securities Exchange
Act of 1934, as amended.
Date: February 13, 2008 MAGNETAR FINANCIAL LLC
By: Magnetar Capital Partners LP
As Sole Member
By: /s/ Alec N. Litowitz
----------------------------
Name: Alec N. Litowitz
Title: Manager of Supernova Management LLC, as
General Partner of Magnetar Capital
Partners LP
Date: February 13, 2008 MAGNETAR CAPITAL PARTNERS LP
By: /s/ Alec N. Litowitz
----------------------------
Name: Alec N. Litowitz
Title: Manager of Supernova Management LLC, as
General Partner of Magnetar Capital
Partners LP
Date: February 13, 2008 SUPERNOVA MANAGEMENT LLC
By: /s/ Alec N. Litowitz
----------------------------
Name: Alec N. Litowitz
Title: Manager
Date: February 13, 2008 ALEC N. LITOWITZ
/s/ Alec N. Litowitz
--------------------