Shares of Labor Smart (OTCMKTS:LTNC) have struggled as of late as nervous shareholders fret over share dilution. Like many OTC companies and in order to raise money and fund its growth, LTNC entered into convertible debt arrangements with toxic financiers. As a result, these investors ended up shorting shares of LTNC because their cost basis is lower than the current share price. Thus, this explains the current weakness of LTNC's share price.The good news is that CEO Ryan Schnadel seems like a pretty good guy and now realizes what a mistake this was. Like many small cap CEOs, they were unaware of how the penny stock market really works. This ends up costing the company and its shareholders a great deal in the short run. However, if the company can grow its business, it will overcome this. This is what LTNC is attempting to do.Just this month, CEO Ryan Schnadel cancelled 706,867,658 personally owned shares that were purchased in November 2015. Additionally, he announced that Labor SMART, Inc. had filed a Form 14C with the U.S. Securities and Exchange Commission to reduce the Company's authorized capital stock by up to twelve billion shares.We are hoping this will go a long way to appeasing the market. Many are overlooking that LTNC is an exciting story in small caps. LTNC provides On-Demand temporary labor to a variety of industries. 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.Learning from the mistakes made with the toxic debt, LTNC is now turning to crowdfunding in order to fund its next stage of growth. As CEO Ryan Schnadel said:
"Through recently enacted crowdfunding legislation, commonly known as the JOBS Act, I believe there is an opportunity for Labor SMART to keep its balance sheet restructuring initiatives on track without sacrificing long term growth opportunities. I was shocked from the quick interest The Staffing Group, Ltd. received when launching this new funding model to open a branch location under the licensing agreement with Labor SMART, Inc. We intend to deploy this same model, or some slight variation of it, for our next leg of expansion. This approach will conserve precious Labor SMART, Inc. financial resources while at the same time offsetting corporate overhead costs, will boost assets on the balance sheet, and add substantial growth to revenue. Equally important, this new funding model will allow the Company to fund a large portion of its growth plan without the need to issue new Labor SMART, Inc. stock or take on high cost debt."
In December, LTNC signed a licensing agreement with The Staffing Group. This agreement allows The Staffing Group to utilize the already established brand of Labor Smart in all future openings as well as grow their footprint in the Southeast United States. This agreement creates a platform that will allow for greater serviceability of customers as well as improve efficiencies. This agreement follows the purchase of 2,000,000 shares of The Staffing Group Ltd. common stock on November 30, 2015 by LTNC and was followed by a Schedule 13D filing with the SEC.
Get the latest updates on LTNC by signing up for our email alerts
We Have a Monster Pick Coming Soon!
Don't Miss Out!
Sign Up Below!
Currently trading at a $5.83 million valuation, LTNC has minimal assets and a significant debt problem that has resulted in the current pps. However, LTNC is an exciting story developing in small caps. The company is growing very quickly and fast emerging as a revenue powerhouse on a level that very few OTC stocks ever achieve. It is little surprise the stock has quickly attracted a massive shareholder base who, along with the CEO are buying up the float. We will be updating on LTNC when more details emerge so make sure you are subscribed to Insider Financial so you know what’s going on with LTNC.
Disclosure: We have no position in LTNC either long or short. We have not been compensated for this article.
Discover Hidden Gems
Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.
