Labor Smart, Inc. (OTC:LTNC) Hypes Revenue, Gets Pump

On Saturday several promoters got to touting Labor Smart, Inc. (OTC:LTNC) stock. The pumpers were focusing primarily on the PR buzz the company is making in its press releases.

Pumpers Awesome Penny Pick, one of the parties promoting LTNC, disclosed their emails were part of a three-week promotional campaign focused on the company. The promoters did not disclose their compensation as allegedly none was received as of the time of the email, but the disclaimer states that they expect to receive compensation for their effort and have been retained by a third party, so this will not be a charity job.

The pump emails tout the 2012 revenue of the company which supposedly reached $7.1 million. Additionally, the press releases from LTNC are bubbling with optimism, as the company announced January revenue of over $580 thousand, or a 118% increase. Cool-headed investors will probably want to take a step back and consider what the company has made publicly available through its latest filings.

The most current financial report available is for fiscal Q3 of 2012 and it contains the following figures:

• $0 cash
• $863 thousand in current liabilities
• $5 million revenue for the period Jan-Sep 2012
• $108 thousand net loss for the period Jan-Sep 2012

It would be much better if traders had some official filings in the form of a 10-K, to at least cover the last quarter of 2012 and prove the pump’s revenue claims. Obviously, it’s going to be even longer before the statements made by the company for its January revenue are going to be officially released in a filing.

In the first three months of 2012 LTNC issued promissory notes amounting to a total of $210 thousand. The notes were issued to the company’s President and all mature at their respective dates in the first quarter of 2013. In September 2012, LTNC issued a convertible note to Evolution Capital, LLC for the sum of $130 thousand. The note is toxic, with no fixed conversion price and converts at a 50% discount of the three lowest trading prices over a ten-day period prior to conversion.

Pumpers Awesome Penny Pick previously ran other pump jobs that turned sour. Since they stopped promoting Great China Mania Holdings, Inc. (OTC:GMEC) in early February, the stock has gone down about 50%.

Investors are advised to be careful with penny stocks targeted by promotions, that also happen to have toxic convertible debt lying around. Do your own due diligence and don’t trade on advertisements that end up in your email.