Oct 22, 2014 (ACCESSWIRE via COMTEX) -- HIRAM, GA

Oct 22, 2014 (ACCESSWIRE via COMTEX) -- HIRAM, GA / ACCESSWIRE / October 22, 2014 / Labor SMART, Inc. (LTNC) (the "Company", a leader in providing on-demand blue collar staffing primarily in the southeastern United States, today provided information and updates on a number of company initiatives.
"There have been a lot of inquiries received from shareholders concerning the recent drop in share price. As one of the most transparent companies traded on the OTC, I wanted to provide some insight into the believed cause of this dramatic drop, as well as some additional information I feel long term shareholders are in need of," said Ryan Schadel, President and CEO of Labor Smart.

"We have a number of investors who have purchased convertible debentures. This funding has been vital to our rapid expansion. In less than 3 years, we have built a sizeable business with outstanding prospects. For the most part, we have had a good experience with these funders and until recently have not experienced an aggressive exit of their position in the open market. However, one of these investors exited their position over the last few weeks in a very aggressive manner, causing a vicious drop in our stock price and market cap. This is unfortunate from a short term perspective. As of yesterday, our public float was trading at less than 1 week's top line revenue. It goes without saying that this valuation is not reflective of our business. Steps are being taken to prevent this type of event from happening again in the future."

"There is additional fallout to the slide in the stock price. Our debenture investors require us to over-reserve shares for potential issuance. Sometimes this required reserve can be as much as 5 times the amount of shares it would actually take to pay them off should they convert. With the decline in stock price, we need to increase the amount of shares in reserve. These are unissued shares but must be earmarked in the treasury. Failure to provide adequate reserve could result in a default on these debentures, causing hundreds of millions of shares to be issuable."

"Today, I am taking a proactive step of increasing our authorized shares to 1 billion. I want to be clear, there is no intent to issue this many shares and to the contrary, this move protects shareholders from massive dilution that would occur if we failed to reserve properly and caused a default on these debentures. Many will ask, "But why 1 billion?" In case there are parties who believed the company could be pushed into default of these debentures, 1 billion authorized is such a large and unneeded amount, I believe it insures a default for lack of reserve is now impossible. Once these debentures are removed from our balance sheet, the board of directors will move to reduce the authorized shares back to a more reasonable number."

"Further steps are being taken to address the current stock price as well as the overall market cap. Historically, October has been the month that we issue equity and options to employees. With the market cap as low as it is, this year's issuance will be scaled down drastically for all but our top performers. I am personally foregoing my equity award and have instead elected to receive shares of preferred stock, which have super majority voting rights. For the time being, I plan to build my equity like any other shareholder, in the open market. These adjustments are to reduce further dilution to current shareholders at current stock prices. Furthermore, should our stock price languish at its current levels for an extended period of time, the board will authorize a stock buyback to remove shares from the public float."

"After 2.5 years as a public company, our stock is now trading at or near our initial offering price of .02 per share. Investors should not take the drop in stock price as a sign of a company in distress. I believe our fundamentals are stronger than ever and constantly improving. For example, after the first 3 weeks of October, our revenue is already in excess of $1.6 million and October could be our biggest revenue month in the history of the company. Gross profit margins are holding strong and showing dramatic improvement over last year. We recently completed an acquisition at an amazing multiple, as described in a form 8-K filed with the SEC on September 30, 2014."

"In addition, our management team is stronger than ever and getting stronger. Over the next 3 weeks I expect to announce the onboarding of a COO that brings 17 years of broad based experience, as well as the appointment of our 3rd board member, a Silicon Valley product manager with 14 years software and applications development experience."

"Lastly, I am happy to announce that our new corporate office, where construction was completed last week, was officially opened yesterday. This new facility is three times the size of our old headquarters and provides much needed space for next year's growth initiatives."

"Despite the current price of our stock, Labor Smart has a bright future as we continue to deliver superior growth in our key metrics. A lot of information has been provided today. I invite shareholders with questions to reach out to us for clarity on any items mentioned."

Labor SMART, Inc. provides On-Demand temporary labor to a variety of industries through 30 offices. The Company's clients range from small businesses to Fortune 100 companies. Labor SMART was founded to provide reliable, dependable and flexible resources for on-demand personnel to small and large businesses in areas that include construction, manufacturing, hospitality, event-staffing, restoration, warehousing, retailing, disaster relief and cleanup, demolition and landscaping. Labor SMART believes it can make a positive contribution each and every day for the benefit of its clients and temporary employees. The Company's mission is to be the provider of choice to its growing portfolio of customers with a service-focused approach that enables Labor SMART to be seen as a resource and partner to its clients.