Labor Smart Inc (OTCMKTS:LTNC) Is Glued To The Bottom
Triple zero stocks are sometimes appealing to investors both because they’re affordable and because they tend to be volatile and exciting. There are traders who specialize in these sort of OTC tickers and some will probably tell you that the ones who sit at the absolute bottom of $0.0001 are the best ones because even a pip in the right direction will allow you to double your money. And surely, sooner or later, a $0.0001 stock must add a pip or two, right? Labor Smart Inc (OTCMKTS:LTNC) showed us yesterday that this is not necessarily the case.
About two and a half hours before Wednesday’s opening bell, LTNC announced that they are about to sell five of their branch offices. That doesn’t sound too exciting at first. After all, the deal means that a sixth of LTNC‘s branches are going to stop functioning. The management team were quick to point out that things aren’t so bad, though. They said that the profit margins at the offices being sold are much lower compared to the ones that will continue to operate under the company’s wings. LTNC will receive about $1 million for the offices and it will also retain about $811 thousand worth of accounts receivable.
This, coupled with a $38,500 promotional campaign that started after Tuesday’s closing bell resulted in a truly remarkable 1.5 billion (with a “b”) shares changing hands in a matter of just six and a half hours. Sadly, LTNC remained welded to the bottom of the chart. Despite the massive volume, the stock was unable to move in the right direction and it closed the day at the painfully familiar price of $0.0001 per share.
That, especially to those of you who aren’t big fans of extensive due diligence, might seem a bit strange. As we mentioned already, the news is good and once you open the latest 10-Q, you’ll see figures that you don’t normally associate with companies that are traded deep in the triple-zero levels. Here’s what we’re talking about:
- cash: $111,608
- current assets: $3,028,043
- current liabilities: $7,444,573
- quarterly revenues: $4,711,167
- quarterly net loss: $1,481,069
There’s a lot that is wrong with LTNC‘s financial report. The working capital deficit is quite huge and the losses are massive. There might just be a potential for improvement, though, and in any case, $0.0001 OTC companies usually don’t have seven figures under the revenues section. So, what’s the problem, then?
It’s all about the toxic debt and the absolutely crushing dilution. We tried to warn you about the potential consequences of all the convertible notes way back in November of last year. Back then, LTNC was already showing some signs of exuberant stock printing and the ticker wasn’t holding up so well. This, however, was absolutely nothing compared to what happened during the first three months of 2015.
LTNC‘s O/S count grew from 180,485,103 on December 26, 2014 all the way to 2,960,721,735 on March 27. All of the newly printed shares (all 2,780,266,632 of them) saw the light of day as a conversion of debt at an average rate of…. yes, you guessed it, $0.0001 per share.
Are you still surprised that LTNC is refusing to lift itself off the bottom? We aren’t.
