Labor Smart Inc (LTNC)

[DD2Gain]

Really good post. Like some have somewhat accurately pointed out, financing options are limited on the OTC. If a company can only get toxic convertible financing, then the pps is going to be a reflection of that regardless of fundamentals. The reason for that is if the fundamentals were truly awesome, then the note holders would have no reason to want to sell into a dropping pps or increasing AS and the terms of the notes would be relatively favorable (NOT 50% premium). However, an increasing AS with a stable pps can be a good ONLY IF three things happen:

1) Current toxic notes go away
2) Toxic notes are no longer acquired
4) The company demonstrates a consistent trend toward earnings

The difference between 1 billion AS and 5 billion AS at .03 is only $30 million if the reserve is supposed to be 5x obligation as the CEO has put out. It doesn't take long to get there when 1/3 of that is just to cover the cost of financing and the likelihood of the pps staying as high as .03 would be next to none in the event of that kind of dilution. Ryan Schadel's only hope is to stop expansion and let the company demonstrate net profit to convince lenders to offer more favorable financing and actually INVEST in the COMPANY rather than invest in the transaction.