SOURCE: Labor SMART, Inc.

May 15, 2014 13:45 ET

Labor SMART Narrows First Quarter Operating Loss

Revenue Up 91% and Margins Improve by 65% Year Over Year

HIRAM, GA--(Marketwired - May 15, 2014) - Labor SMART, Inc. (OTCQB: LTNC) (the "Company"), an emerging provider of on-demand blue collar staffing primarily in the southeastern United States, today reported revenue of $4,792,941 for the quarter ending March 31, 2014. This represents a 91 percent increase over the $2,503,872 in revenue reported for the quarter ending March 31, 2013. For the March 31, 2014 quarter, the company's operating loss narrowed to $276,275 compared to an operating loss of $406,485 reported for the same period one year ago. 

Ryan Schadel, Labor SMART's CEO, stated, "This quarter saw significant improvements over our results of a year ago and provides further confirmation that our expansion strategy and business model are working as expected. While I think most were expecting the stellar revenue growth, the tremendous improvement in gross margins is very exciting as it clearly demonstrates our ability to get higher margin business as we grow revenues and reach profitability. Very few startups can deliver 65% margin improvements in one year while also increasing revenue by 91%. I credit our operations team for this dramatic improvement and expect further growth in margins. We continue to see 2014 as a major year of growth for the company, with continued increases in revenue, gross margins, and cost-savings that will be brought to the bottom line as a result of scaling."

For the quarter ending March 31, 2014, cost of services represented 77 percent of revenue, compared to 86 percent of revenue for the like period one year ago. Cost of services consists mainly of payroll related and worker's compensation expense for laborers. Gross profit margins increased to 23.11% as a percentage of revenue compared to 14.03% for the same period one year ago. Much of the company's net loss is attributable to non-cash charges connected with servicing corporate debt.

"During the second quarter we will complete the majority of our organic expansion for 2014 and begin looking for more acquisition opportunities that fit our model and culture. During the upcoming quarters, our focus is to deliver higher operating income through continued execution of our business plan and improving our financing options to drive profitability," said Schadel.

Labor SMART's strategy of organic growth, new offices and acquisitions is reflected in its continuing revenue increases. At the end of the quarter the company had 19 branch offices, compared to 15 at the end of the December 2013 quarter.

Labor SMART, Inc. provides On-Demand temporary labor to a variety of industries. 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.

Safe Harbor Statement

This release contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements appear in a number of places in this release and include all statements that are not statements of historical fact regarding the intent, belief or current expectations of Labor SMART, Inc., its directors or its officers with respect to, among other things: (i) financing plans; (ii) trends affecting its financial condition or results of operations; (iii) growth strategy and operating strategy. The words "may", "would", "will", "expect", "estimate", "can", "believe", "potential", and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond Labor SMART, Inc.'s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. More information about the potential factors that could affect the business and financial results is and will be included in Labor SMART, Inc.'s filings with the U.S. Securities and Exchange Commission.

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