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Labor Smart, Inc (LTNC)

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Labor Smart, Inc


Company Overview:

Labor SMART, Inc. provides On-Demand temporary labor to a variety of industries. Their clients range from small businesses to fortune 100 companies. Labor SMART was founded to provide a reliable, dependable, and flexible resources for on-demand personnel to small and large businesses.
Every day they provide manpower for jobs in construction, manufacturing, hospitality, events, restoration, warehousing, retail, disaster relief and more. As one of the fastest growing temporary labor providers, their goal is to become a
nationwide resource and partner for their clients. Labor SMART takes pride in the belief that they can make a positive impact each and every day for the benefit of both their clients and temporary employees.


CEO Currently Owns: 2.185billion Shares

Labor SMART Issues Open Letter to The Staffing Group CEO

Company Seeks to Form Strategic Alliance

ATLANTA, GA -- (Marketwired) -- 12/01/15 -- Labor SMART, Inc. (OTCQB: LTNC) (the "Company"), a leader in providing on-demand blue collar staffing primarily in the southeastern United States, today delivered via email the following open letter to the President and Chief Executive Officer of The Staffing Group, Ltd. (TSGL).

December 1, 2015
400 Poydras St., Suite 1165 
New Orleans La 70130
Delivered Via Email

RE: 13D Filing by Labor Smart, Inc.

Mr. McLoone,

As you are now aware, our purchase of 2,000,000 shares of The Staffing Group Ltd. common stock on November 30, 2015 was followed by a Schedule 13D filing with the SEC, due to our previously unannounced acquisition of 1,758, 618 shares of common stock in the open market and the nature of our intentions. The purpose of this letter to you today is to clearly state what those intentions are and seek common ground for a mutually beneficial discussion.

Having launched Labor SMART, Inc. as a publicly traded startup, I am sensitive to the challenges of building a sustainable business from scratch with the added fun of engaging the public markets and all that entails. I am quite familiar with the history of your company and we've had some discussions over the last two years regarding potential opportunities, business combinations, etc. I'm also aware of the burdens you were handed almost immediately upon becoming CEO of a public company. Given those challenges, I commend you for the successes you've been able to claim along the way. 

At this time, we have three separate, but related proposals that we would like to discuss with you in a formal setting.

Leveraging Synergies

In your Form 10-Q for the quarter ended June 30, 2015, you discuss improved gross margins after shedding some high volume business. This is a tough and gutsy decision to make for the long term health of the company, and again, I commend you for taking this action. Still, with gross profit margins under 19%, a lot of profitability is left on the table. As you may know, Labor SMART attained a large deductible workers compensation policy in 2014 that drastically reduced our cost of sales. A business combination with Labor SMART could unlock value and profits hidden behind the high cost of workers compensation you are incurring. I propose that we work together to prepare a detailed analysis of the potential gains that could be had with Labor SMART's strong workers compensation program as the backbone of a reduction in cost of sales. This analysis should start with an examination of your loss runs for the last three years. There may also be a number of synergies that could be obtained leveraging Labor SMART's corporate support structure and your company's footprint. Additionally, there are undoubtedly vertical sales opportunities given the combined size of our respective customer bases. 

Leveraging Experience

Having worked with you at WTS before it was sold to MDT (and subsequently TrueBlue), I know that you are a solid operator with a conservative approach to risk. It is my belief that our combined teams and their experience would offer much to our collective customers, shareholders, and employees. The first component of this proposal is that we work together to create a joint venture, or similar structure, to license the Labor SMART brand, processes, and methods in addition to a management service agreement whereby Labor SMART will provide the necessary infrastructure to facilitate an aggressive growth plan and The Staffing Group provides the day to day management. 

Any growth plan will require capital. I've encountered a number of challenges to raising capital as a publicly traded company. Raising startup capital itself is expensive and as our share structure indicates, extremely dilutive without a substantial amount of financial engineering from the beginning. I've raised a small amount of money for Labor SMART and we successfully grew our business to over $20 million in less than three years. I'm grateful that we were able to get funding to build the company, but I would do it differently knowing what I know now. I've expended the better part of 2015 playing defensive and trying to protect LaborSMART's shareholders from massive dilution. Fortunately, we have been able to renegotiate the mechanics of our convertible debt and believe we can repair the share structure now that we have better control of conversion rights, but the time lost can never be recovered. And that leads me to the second part of this specific proposal.

Should we reach mutually beneficial terms to have Labor SMART license its systems to The Staffing Group, I propose that we take a "fund from the ground up" approach. Crowd funding legislation is due to go in to affect next year. I believe there is an opportunity to crowd fund the startup capital for each new individual branch that's opened. Labor SMART will agree to be the lead investor with a minority ownership percentage of each branch opened under the licensing agreement, but with an option to acquire the branch at its discretion in the future for a predetermined multiple of earnings. This structure would insulate your shareholders from massive dilution and still allow for continued growth of the Labor SMART brand. For The Staffing Group, this structure offers a runway to ramp up sales and branch network in a meaningful way and an equity event as licensed branches are acquired by Labor SMART. 

Expand the Board

Lastly, we propose that The Staffing Group increase its Board of Directors from two directors to a total of five directors, two of whom will be appointed by Labor SMART, Inc. and a third by mutual agreement of Labor SMART and The Staffing Group. I do not expect that this request would be obliged without some consideration. We are open to exploring a number of different options to get this request effectuated in a swift manner. I believe you would agree that one of the most important tasks you currently face is getting your Form 10-Q filed for the period ended September 30, 2015. We do not wish to upend that process with added procedural burdens. To be clear, Labor SMART will take steps to protect its investment if necessary, but we do not have the intent of becoming a hostile suitor. Our industry is built on relationships and Labor SMART believes in creating partnerships and opportunity, not enemies. 

In summary, both companies can benefit greatly by engaging in a mutual partnership, even if the structure is somewhat different from the ones we have proposed. I believe it is in the best interest of The Staffing Group's shareholders, with Labor SMART, Inc. as one of the largest holders, to explore any and every opportunity that may be present to build value and sustainable profitability for the benefit of all. As two sizeable regional players in our industry, we must act boldly to create opportunities for the future. 

I look forward to scheduling a meeting with at your earliest convenience,


C. Ryan Schadel
President & CEO - Labor SMART, Inc.

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: Labor SMART, Inc.

Source: Labor SMART, Inc. 


44 Darby's Crossing Drive
Suite 116
Hiram, GA 30141
Phone: 770-222-5888
Fax: 770-222-5550

Founded 5/31/2011





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Current Price
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LTNC News: National Council on Compensation Insurance Improves Labor SMART, Inc. RatingsSignificant Improvement in Gross Profit Margins 05/03/2016 09:30:00 AM
LTNC News: Labor SMART, Inc. First Quarter 2016 Revenue Jumps $304,100 04/28/2016 11:00:00 AM
LTNC News: Statement of Changes in Beneficial Ownership (4) 04/27/2016 06:08:52 AM
LTNC News: Statement of Changes in Beneficial Ownership (4) 04/20/2016 04:09:10 PM
LTNC News: Current Report Filing (8-k) 04/18/2016 02:42:52 PM
#61904  Sticky Note Ryan tweet: Looking into potential aquisition on May 18 whizent1 05/17/16 08:24:02 PM
#61204  Sticky Note The mere fact that this discussion is happening GreenHarvest 05/10/16 05:05:30 AM
#60471  Sticky Note INSIDER BUYING IN, REVENUE INCREASE $304,100 FREEBANDZ 05/01/16 07:39:56 PM
#59873  Sticky Note $LTNC Form 4 MOMO 04/27/16 08:43:14 AM
#57064  Sticky Note $3M toxic credit line from....CAYMAN ISLANDS! DD2Gain 04/07/16 11:53:55 PM
#49239  Sticky Note Promises. Address share structure. Action. Buy Tmyz 02/27/16 12:03:51 PM
#47868  Sticky Note Please stay on topic. The only topic to IH Admin [Dan] 02/14/16 12:22:26 AM
#62443   That's what I'm thinking 55cruiser 05/26/16 02:17:29 PM
#62442   I hope you are kidding - you have I-Glow 05/26/16 02:14:39 PM
#62441   Well then I guess he's ashamed we LTNC ScottAllen 05/26/16 02:14:04 PM
#62440   And you know very well had that been hearagainusa 05/26/16 01:38:36 PM
#62438   He's paid to lie you know that 55cruiser 05/26/16 01:35:05 PM
#62437   The motion will be granted it's easy to hearagainusa 05/26/16 01:34:17 PM
#62436   No he did ur proof...and I'm quite hearagainusa 05/26/16 01:33:07 PM
#62435   Gotta link to that? trader guy 05/26/16 01:33:02 PM
#62434   Man I think that's aiming a little high 55cruiser 05/26/16 01:31:33 PM
#62433   Yes indeed, Schadel collected the payroll taxes and I-Glow 05/26/16 01:28:40 PM
#62432   Dollarland by tomorrow Weeeee Figures 05/26/16 01:28:06 PM
#62431   I'm thinking it was. He was on my 55cruiser 05/26/16 01:27:41 PM
#62430   LOL!!! The LTNC Attorney is pretty incompetent - I-Glow 05/26/16 01:11:54 PM
#62429   All of the other stuff in the Motion I-Glow 05/26/16 01:07:20 PM
#62428   For one he didn't take any money that hearagainusa 05/26/16 12:39:55 PM
#62427   I have a feeling that wasn't even really ScottAllen 05/26/16 12:32:18 PM
#62426   nice move, 1 paragraph out of how many imhereforthehaul 05/26/16 10:51:54 AM
#62425   So I guess Ryan puts him on his cpw13154 05/26/16 10:47:52 AM
#62424   According to the Motion filed - let's see I-Glow 05/26/16 10:42:01 AM
#62423   It is a Motion filed with the Court I-Glow 05/26/16 10:40:37 AM
#62422   Entertaining indeed. Judge Judy would be envious. trader guy 05/26/16 09:59:49 AM
#62421   So I am way off and need to cpw13154 05/26/16 09:37:03 AM
#62420   You're way off. You should look up the OnTheJuice 05/26/16 09:22:48 AM
#62418   LOL lets see we are talking about 15 cpw13154 05/26/16 09:00:20 AM
#62417   It was awarded based on false statements... OnTheJuice 05/26/16 08:53:38 AM
#62416   LOL the fact of the matter is its cpw13154 05/26/16 08:50:59 AM
#62414   LOL so now we want to spend all cpw13154 05/26/16 07:43:16 AM
#62412   Where is Steven Maese? Have not heard from imhereforthehaul 05/26/16 05:16:49 AM
#62411 imhereforthehaul 05/26/16 05:07:32 AM
#62406   Good luck with that. A lying, non-filing CEO DD2Gain 05/26/16 01:22:44 AM
#62404   I told everyone this is how it would ScottAllen 05/26/16 12:42:40 AM
#62403   Again, quote the part where he insults the WhiteFish 05/26/16 12:37:37 AM
#62401   The court awarded a TRO AGAINST LTNC. DD2Gain 05/26/16 12:35:59 AM
#62399   Well feel free to quote the part it WhiteFish 05/26/16 12:33:12 AM
#62398   It was a link to the legal filing WhiteFish 05/26/16 12:31:41 AM
#62397   What? Yeah, ok....SMH DD2Gain 05/26/16 12:31:34 AM
#62396   JFC, I have no desire to spoon feed DD2Gain 05/26/16 12:30:54 AM
#62395   If you read it, it states that Prometheus WhiteFish 05/26/16 12:30:26 AM
#62394   I'm surprised to see IFT challenge Schady like DD2Gain 05/26/16 12:29:09 AM
#62393   Btw, please easily reference it WhiteFish 05/26/16 12:28:21 AM
#62392   I believe he admitted to tailwinds debt being WhiteFish 05/26/16 12:28:02 AM
#62391   ROTFLMAO!!! The court AWARDED the TRO! Is DD2Gain 05/26/16 12:26:30 AM
#62390   The tweets "no longer exist"...what did they say? DD2Gain 05/26/16 12:23:21 AM
#62389   Funny how Ryan Schadel admitted the debt to DD2Gain 05/26/16 12:21:20 AM
#62388   So what? Even if it is true DD2Gain 05/26/16 12:19:45 AM
#62387   That is not true in the slightest. DD2Gain 05/26/16 12:17:43 AM
#62386   Good! No response to SCHADEL IS A FRAUD! DD2Gain 05/26/16 12:13:12 AM
#62385   he is a broke and finished criminal gh0st 05/25/16 10:52:39 PM
#62384   Funny how you call it a legitimate debt WhiteFish 05/25/16 10:23:51 PM
#62382   yay the stock went no where janeyH 05/25/16 10:14:26 PM