My thoughts....
I have no problem calling a spade, a spade, when it comes to OTC companies. Some I think are gems like Labor SMART and some I think are pure scams like Pleasant Kids. I take a considerable amount of time and do a considerable amount of due diligence before wasting my time on any OTC company. My experience in dealing with the OTC market goes back to 1988. Throughout my career, I have developed an expertise in the market previous holding series 3, 5, 6, 7, 24 and 62 licenses. My background is in business and private investment banking.
My personal due diligence on this company includes physically going to Georgia twice to meet the CEO and his administrative staff as well as go to several branches to speak with those managers.
Without a doubt, this Labor SMART is a real company. They took themselves public through a 15C-211 so there were no skeletons from reverse merging into a shell. Their business model is cloned after Labor Ready which was a penny stock that started trading in the OTC market in 1995 and is now known as True Blue (NYSE TBI) a $1.4 billion dollar leader in their industry.
This company does what it says it is going to do, hits virtually every single projection they put out, and if you understand aggressive growth companies, has done an outstanding job in showing triple digit growth every year that they have been in business. Their upper level management corporate infrastructure has no less than a dozen season executives from Labor Ready who all have proven track records. The previous COO of Labor Ready, Matt Rodgers, sits on the Advisory Board and is a close confidant to the CEO. Mr. Rodgers was responsible for growing Labor Ready from $300 million to close to $1 billion while also expanding that company into international territories.
Has their business been perfect? Absolutely not. Have they made mistakes along the way? Of course. After all, that's how companies learn. They learn from their mistakes, become stronger and take those negatives and turn them into positives.
This company spent its first three years trying to go out and raise capital through conventional means. One would think that with their operations, financials and operating history that it would not be a problem. What they didn't count on was being victimized because they trade as an OTC company. Because they trade on the OTC, the ONLY type of funding they could find in order to supplement their growth was convertible debt. Trust me, they spent tens of thousands of dollars and countless hours in attempting to raise capital the right way. I personally introduced them to several middle tier investment banking firms and the only way the CEO could raise capital was if he was willing to give up control of the company because they would only value the company based on its current market cap and their was no was this CEO was going to sell off 75% of his company for a few million dollars.
To make a long story short, they are now paying the price from raising capital through convertible notes. The stock is trading at its lowest level ever while their operations are producing record numbers. Because of this, it has created an excellent buying opportunity for long term investors. I say long term because it is going to take a few more months to clear out the remaining debt through these convertible notes. But make no mistake, once the notes are satisfied, this stock trades much higher. Additionally, it is a major priority for this company to uplist on to a major exchange. Once this happens, they will actually be treated with respect from mutual funds, institutional groups, broker dealers and investment bankers.
Below I will list some of their current highlights.....
-2011: $165,000 revenues (audited)
-2012: $7,100,000 revenues (audited)
-2013: $16,100,000 revenues (audited)
- Revenue for the nine months ended September 26, 2014 increased 52% to $18.1 million as compared to $11.9 million for the nine months ended September 30, 2013.
-2014: $25,000,000 revenues (PROJECTED) with the company showing $4 million in A/R, $1.5 million cash (PROJECTED) and positive EBITDA
-Growth from 2 to 30 branches in just three years
As of 11 November 2014:
-Increased gross profit margins from 15% to 25% over the last 12 months
-Revenues up 28% to $6.8 million vs. $5.3 million a year ago
- Same branch revenue up 12.5% year-over-year
- Gross profit margins improve to 25% vs. 17% a year ago
- Added 315 new customers
- EBITDA of $121,577
- Adjusted EBITDA of $344,731
Outstanding shares as of November 4, 2014: 55.5 million.
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