Labor SMART, Inc. Provides Shareholder Update
October 22 2014 - 9:30AM
Access Wire
HIRAM, GA / ACCESSWIRE / October 22, 2014 /
Labor SMART, Inc. (LTNC) (the "Company"), a leader in providing
on-demand blue collar staffing primarily in the southeastern United
States, today provided information and updates on a number of
company initiatives.
"There have been a lot of
inquiries received from shareholders concerning the recent drop in
share price. As one of the most transparent companies traded on the
OTC, I wanted to provide some insight into the believed cause of
this dramatic drop, as well as some additional information I feel
long term shareholders are in need of," said Ryan Schadel,
President and CEO of Labor Smart.
"We have a number of investors who have purchased convertible
debentures. This funding has been vital to our rapid expansion. In
less than 3 years, we have built a sizeable business with
outstanding prospects. For the most part, we have had a good
experience with these funders and until recently have not
experienced an aggressive exit of their position in the open
market. However, one of these investors exited their position over
the last few weeks in a very aggressive manner, causing a vicious
drop in our stock price and market cap. This is unfortunate from a
short term perspective. As of yesterday, our public float was
trading at less than 1 week's top line revenue. It goes without
saying that this valuation is not reflective of our business. Steps
are being taken to prevent this type of event from happening again
in the future."
"There is additional fallout to the slide in the stock price.
Our debenture investors require us to over-reserve shares for
potential issuance. Sometimes this required reserve can be as much
as 5 times the amount of shares it would actually take to pay them
off should they convert. With the decline in stock price, we need
to increase the amount of shares in reserve. These are unissued
shares but must be earmarked in the treasury. Failure to
provide adequate reserve could result in a default on these
debentures, causing hundreds of millions of shares to be
issuable."
"Today, I am taking a proactive step of increasing our
authorized shares to 1 billion. I want to be clear, there is no
intent to issue this many shares and to the contrary, this move
protects shareholders from massive dilution that would occur if we
failed to reserve properly and caused a default on these
debentures. Many will ask, "But why 1 billion?" In case there are
parties who believed the company could be pushed into default of
these debentures, 1 billion authorized is such a large and unneeded
amount, I believe it insures a default for lack of reserve is now
impossible. Once these debentures are removed from our balance
sheet, the board of directors will move to reduce the authorized
shares back to a more reasonable number."
"Further steps are being taken to address the current stock
price as well as the overall market cap. Historically, October has
been the month that we issue equity and options to employees. With
the market cap as low as it is, this year's issuance will be scaled
down drastically for all but our top performers. I am personally
foregoing my equity award and have instead elected to receive
shares of preferred stock, which have super majority voting rights.
For the time being, I plan to build my equity like any other
shareholder, in the open market. These adjustments are to reduce
further dilution to current shareholders at current stock prices.
Furthermore, should our stock price languish at its current levels
for an extended period of time, the board will authorize a stock
buyback to remove shares from the public float."
"After 2.5 years as a public company, our stock is now trading
at or near our initial offering price of .02 per share. Investors
should not take the drop in stock price as a sign of a company in
distress. I believe our fundamentals are stronger than ever and
constantly improving. For example, after the first 3 weeks of
October, our revenue is already in excess of $1.6 million and
October could be our biggest revenue month in the history of the
company. Gross profit margins are holding strong and showing
dramatic improvement over last year. We recently completed an
acquisition at an amazing multiple, as described in a form 8-K
filed with the SEC on September 30, 2014."
"In addition, our management team is stronger than ever and
getting stronger. Over the next 3 weeks I expect to announce the
onboarding of a COO that brings 17 years of broad based experience,
as well as the appointment of our 3rd board member, a Silicon
Valley product manager with 14 years software and applications
development experience."
"Lastly, I am happy to announce that our new corporate office,
where construction was completed last week, was officially opened
yesterday. This new facility is three times the size of our old
headquarters and provides much needed space for next year’s growth
initiatives."
"Despite the current price of our stock, Labor Smart has a
bright future as we continue to deliver superior growth in our key
metrics. A lot of information has been provided today. I invite
shareholders with questions to reach out to us for clarity on any
items mentioned."
Labor SMART, Inc. provides On-Demand temporary labor to a
variety of industries through 30 offices. The Company's clients
range from small businesses to Fortune 100 companies. Labor SMART
was founded to provide reliable, dependable and flexible resources
for on-demand personnel to small and large businesses in areas that
include construction, manufacturing, hospitality, event-staffing,
restoration, warehousing, retailing, disaster relief and cleanup,
demolition and landscaping. Labor SMART believes it can make a
positive contribution each and every day for the benefit of its
clients and temporary employees. The Company's mission is to be the
provider of choice to its growing portfolio of customers with a
service-focused approach that enables Labor SMART to be seen as a
resource and partner to its clients.
Safe Harbor
Statement
This release contains
statements that constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These statements appear in a number of places in this release and
include all statements that are not statements of historical fact
regarding the intent, belief or current expectations of Labor
SMART, Inc., its directors or its officers with respect to, among
other things: (i) financing plans; (ii) trends affecting its
financial condition or results of operations; (iii) growth strategy
and operating strategy. The words "may", "would", "will", "expect",
"estimate", "can", "believe", "potential", and similar expressions
and variations thereof are intended to identify forward-looking
statements. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties, many of which are beyond Labor SMART,
Inc.'s ability to control, and that actual results may differ
materially from those projected in the forward-looking statements
as a result of various factors. More information about the
potential factors that could affect the business and financial
results is and will be included in Labor SMART, Inc.'s filings with
the U.S. Securities and Exchange Commission.
Contact:
Beverly Jedynak
Martin E. Janis & Company, Inc.
312-943-1123
bjedynak@janispr.com
SOURCE: Labor SMART, Inc.
Labor Smart (PK) (USOTC:LTNC)
Historical Stock Chart
From Apr 2024 to May 2024
Labor Smart (PK) (USOTC:LTNC)
Historical Stock Chart
From May 2023 to May 2024