Labor Smart Inc (LTNC)

[DD2Gain]

*** The CEO and delinquent payroll taxes ***

I posted the link below earlier this year about an email exchange I had with the CEO. I asked a rather direct question, but got a half answer that I foolishly perceived as acceptable. In retrospect, I should have been prepared for that and pressed for a direct and complete answer for the issue of

"Not reprting income to unemployment or paying payroll taxes."

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=104607057


I strongly suspected a problem with 2013 taxes, but did not expect it to take until the 2014 1Q (filed in May) to find out about it. And then the rather shocking amount delinquent wasn't disclosed until the 2Q (filed in August). After further digging, I only recently found out that the IRS makes installment arrangements for 10 years on a delinquency. That's something else not disclosed by Ryan Schadel. Based on the payment arrangement as described in the 10Q and the standard 10 year term the total amount owed for failing to pay $1,019,923 on time is $1,690,000. Certainly, IF the delinquency is satisfied early there will be less owed, but only through interest. At about 4% simple annual interest (currently) we can clearly see that penalties and fees are steep for being delinquent.

Some people call that nothing. I call it almost $700,000 wasted without calculating the steep costs associated with being forced to continue with toxic financing due to the tax lien.

Did the CEO lie? Technically no since he was current on "reporting requirements" in January. However, he most certainly had not paid payroll taxes and refused to inform shareholders of the delinquency until at least 5 months after the fact. He didn't even report it in the NT10K filed in May that included subsequent events through April, though the tax lien was filed at the end of January and the IRS agreement was finalized in March. That's a crap deal from a lousy CEO who couldn't care less about his shareholders.

I've said before and I stick with it: investors must pay attention to what isn't being said as much as what is said by the company.