Here's where I'm at with LTNC as a long term investment and please spare us all the whole "YOU ARE WRONG!" drama.
Having been a long I still want LTNC to succeed. They've got the branches, they've got employees, they are expanding, and they are generating enough revenue to at least grab attention. Those alone are relatively rare qualities in a penny stock to see all together. The CEO appears to be driven with a sincere effort to build a viable company. There are far easier ways to scam people of their cash in this market than to have to deal with the headache of millions of dollars in payroll and countless labor contracts.
All that said I also believe the growth was rushed at terrible and possibly fatal cost. The convertible financing has been extremely expensive whether we look at the amortizations or the conversions. I have studied numerous companies on this market that have found less costly ways of funding operations and LaborSMART could already be be acquiring those instruments if it hadn't been for the truly stupid move of allowing a tax lien to be placed on the company's assets for failure to pay $1 million in payroll taxes. The payments on that debt over 10 years I am not particularly concerned about, but couple that with the lien and this company cornered itself with toxic financing.
We've got strong signs that a 200,000,000 OS should be anticipated in the relatively near future. Many of us predicted the AS increase to 1 billion and were scoffed at, though the increase to 1 billion came much faster than I anticipated. If 200,000,000 is where we are headed, then what of the pps? Some will say that the pps doesn't matter, but it goes hand-in-hand with convertible financing.
The CEO wants $20-40 million in acquisitions next year. How does he pay for that once we are done converting the current debt? If the pps stays flat as has been predicted, then .03 x 200,000,000 is only $6 million, yet almost 50 million shares have already been eaten up and we're not done with the convertible notes through the last Q. The CEO will be out of options and will be forced to consider a reverse split for ANY further expansion without diluting this company into the trips for far fewer additional branches than planned. Then, of course, there are the operational costs along the way that the current branches can't yet cover.
What is the light at the end of the tunnel that others claim to see?
One of the things I really don't want to hear about is that the IRS lien is subordinate to lenders. That is just not how the IRS works. POSSIBLY....MAYBE....(no proof of it) the factor financing was approved for subordination, but beyond that it is highly unlikely that either a respectable lender wants to deal with the headache or that the IRS wants to play that game with a company that was late before with payroll taxes.
