Smart Online (OTCBB: SOLN), a leading provider of Software-as-a-Service (SaaS) applications for the small business market, today reported results of operations for the first quarter ended March 31, 2008.

Total revenues were $1,423,000 for the first quarter of 2008 compared to $942,000 for the first quarter of 2007, representing an increase of $481,000, or 51 percent. Gross profit increased $367,000, or 42 percent, to $1,236,000 from $869,000. Operating expenses increased $730,000, or 34 percent, to $2,891,000 from $2,161,000. This increase in operating expenses was primarily due to increased legal, payroll and sales and marketing expense, and the cost of a legal settlement during the first quarter of 2008. Net loss grew to $1,831,000 from $1,310,000, an increase of $521,000, or 40 percent.

“We are encouraged with our year-over-year quarterly revenue growth, and even more excited about the opportunities in front of us for the remainder of the year,” said David Colburn, chief executive officer, Smart Online. “For example, we just announced our National Food Safety System as well as our solution for hosting and telecommunications companies which we expect will allow us to secure a significant number of subscribers. Additionally, our team continues its efforts to sign up partners in new small business segments that show major industry growth which we expect to talk more about in the future.”

About Smart Online, Inc.

Smart Online, Inc. (OTCBB: SOLN) delivers private-label, Software-as-a-Service (SaaS) applications designed to enable its corporate partners to acquire and retain small business customers. Smart Online’s applications help partners increase their recurring revenue, while aiding their small business customers to more efficiently start, manage and grow their businesses. To learn more, please visit www.smartonline.com.

Smart Online and the Smart Online logo are trademarks and/or registered trademarks of Smart Online Inc. in the United States. Other marks belong to their respective owners.

Forward-Looking Statements

Statements in this press release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of many factors, including, but not limited to, delays in development schedules, changes in market conditions, product announcements by other companies, the potential impact of current litigation or any future litigation, customer perception of the value of Smart Online’s enhanced products, Smart Online’s dependence on corporate partners to market its products, and its ability to effectively manage expenses. For further information regarding risks and uncertainties associated with Smart Online’s business, please refer to the Risk Factors section of Smart Online’s SEC filings, including, but not limited to, its Annual Report on Form 10-K for the year ended December 31, 2007 and the Quarterly Reports on Form 10-Q, copies of which may be obtained on the web site of the Securities and Exchange Commission. All forward-looking statements in this press release are based on information available to Smart Online on the date hereof. Smart Online undertakes no duty to update any forward-looking statement or to conform the statement to actual results or changes in Smart Online’s expectations.

Company Contact:
Smart Online, Inc.
Thomas Furr, 919-765-5000
tfurr@smartonline.com
or
Media Contact:
Fleishman-Hillard
Dana Hughens, 919-457-0749
dana.hughens@fleishman.com