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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
Bid Ask Day's Range
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
LTNC News: Notification That Annual Report Will Be Submitted Late (ntn 10k) 03/28/2016 03:07:44 PM
#60471  Sticky Note INSIDER BUYING IN, REVENUE INCREASE $304,100 FREEBANDZ 05/01/16 07:39:56 PM
#59907  Sticky Note WHERE ARE THE FINANCIALS WHAT ALL IS HE HIDING? [ cpw13154 04/27/16 11:23:47 AM
#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
#60619   Shady is on the TCA countdown to get lam86 05/02/16 09:56:54 PM
#60618   Will Shady inform investors about the Federal Tax I-Glow 05/02/16 09:54:05 PM
#60617   I think shady will have a dismal 10-K I-Glow 05/02/16 09:38:44 PM
#60616   Yes it's the wild Wild West and Walleye24 05/02/16 09:27:51 PM
#60615   Cool... Just trying to separate. He clearly Walleye24 05/02/16 09:26:33 PM
#60614   Cinco de Mayo!!!!!!!!!!! Miami Sun 05/02/16 09:07:39 PM
#60613   LOL if the Q1 was so great he cpw13154 05/02/16 08:43:40 PM
#60612   I'm an investor, who's been here way longer Prime-Time 05/02/16 08:32:25 PM
#60610   Not on that news moreira23 05/02/16 07:38:54 PM
#60609   What's going to happen is.... 10k comes out and Walleye24 05/02/16 07:30:02 PM
#60608   News update Thursday. I expect big jump in Prime-Time 05/02/16 07:28:04 PM
#60607   LMAO!!! Is Kimmy the LTNC IR? I-Glow 05/02/16 06:09:06 PM
#60606   So when do we get to use some cpw13154 05/02/16 05:47:07 PM
#60605   ya its coming traderpie 05/02/16 05:09:38 PM
#60604   IR said "soon" here GreenHarvest 05/02/16 05:08:20 PM
#60603   i think its bout time the 10k comes traderpie 05/02/16 04:59:38 PM
#60602   nah put the k will be out "soon" traderpie 05/02/16 04:58:50 PM
#60601   Not news... Internal sales comp.. Don't think it is news..... Walleye24 05/02/16 04:35:27 PM
#60600   ~You're referring to the YouTube post? Did Greedy G 05/02/16 04:27:15 PM
#60599   $LTNC NEWS May 5th per Ryan ScottAllen 05/02/16 04:05:26 PM
#60598   Hopefully the 5s are falling into Ryan's hands. GreenHarvest 05/02/16 03:59:30 PM
#60597   Announcement : hopefully will get things moving here! $$ TRLRPRK-TRADER 05/02/16 03:34:20 PM
#60596   What happened to all that volume and "massive" agribusiness72 05/02/16 03:33:50 PM
#60595   ha ha ha Ho ho ho - looks janeyH 05/02/16 02:57:37 PM
#60594   The question is when will the 4's appear agribusiness72 05/02/16 02:37:30 PM
#60593   How many 6's are there ???? md90210 05/02/16 02:06:48 PM
#60592   no you cant refill your 1 million at 5... gh0st 05/02/16 02:00:05 PM
#60591   smart money waiting for 0.000000000000005 (again) janeyH 05/02/16 01:58:52 PM
#60590   17.5mm sell - OW!!!!!!!! janeyH 05/02/16 01:57:53 PM
#60589   wow all these o.ooo5s must be sucking for janeyH 05/02/16 01:56:24 PM
#60588   K and Q coming longs hold strong traderpie 05/02/16 12:35:04 PM
#60587   Holding up well here TRLRPRK-TRADER 05/02/16 12:23:05 PM
#60586   Someone needed money... Dumb time to sell, with Prime-Time 05/02/16 12:16:29 PM
#60585   And smart money is grabbing all of them. OTC Knight 05/02/16 11:56:32 AM
#60584   5s 5s and more 5s this AM janeyH 05/02/16 11:55:56 AM
#60583   LTNC - 11 milly slap on 6s this OTC Knight 05/02/16 11:42:11 AM
#60582   loaded like a freight train :) traderpie 05/02/16 11:36:18 AM
#60581   sweeeet traderpie 05/02/16 11:34:27 AM
#60580   100 million on the bid $$$$$$$$$$$ gh0st 05/02/16 11:24:38 AM
#60579   ouch, dude, even more o.ooo5s this morning, ltnc janeyH 05/02/16 11:22:37 AM
#60578   Schameful Schady schure does reach new lows - janeyH 05/02/16 11:21:41 AM
#60577   the upside is massive, huge insider buying/form 4s gh0st 05/02/16 11:17:27 AM
#60576   Loaded, Holding, Willing to wait this out... Huge Prime-Time 05/02/16 11:16:43 AM
#60575   Schadel seems to disregard such things as paying I-Glow 05/02/16 11:05:22 AM
#60573   Shady says that LTNC should consider themselves owners I-Glow 05/02/16 10:58:57 AM
#60572   more and more 0.0005s going off - ouch janeyH 05/02/16 10:57:19 AM
#60570   chart is stronger than ever, new 52 week gh0st 05/02/16 10:55:30 AM
#60569   would a letter from an attorney compel Schady janeyH 05/02/16 10:55:22 AM
#60568   chart looks realllly week here janeyH 05/02/16 10:54:13 AM
#60567   massive insider buying gh0st 05/02/16 10:53:40 AM