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Labor SMART, Inc Reports Best July Revenue in History

Company Sheds Low-Margin, Higher Risk Business

HIRAM, GA -- (Marketwired) -- 07/28/14 -- Labor SMART, Inc. (OTCQB: LTNC) (the "Company"), a leader in providing on-demand blue collar staffing primarily in the southeastern United States, today announced that the Company posted record revenue for July. Additionally, the Company provided some details regarding recent changes implemented in its growth strategy.

Company-wide revenue for the month ended July 25, 2014 was $2,068,532 a 30.4% increase compared to July 2013 revenue of $1,586,351. Among the 14 branches open one year or more at July, 2014 revenue was $1,595,534, essentially flat in a year over year comparison. However, revenue in branches that were open one year or more were impacted by the company's decision to discontinue low-margin, higher risk business, which represented an average of $320,000 in monthly revenue. "We have cleaned out a book of business that does not fit squarely with our new growth plan," said Ryan Schadel, President and CEO of Labor SMART.

He added, "July has been a transition month for Labor SMART as we begin to implement changes that will strengthen the company as a result of our becoming substantially self-insured in 14 states. This is a very important step in positioning Labor SMART for future growth and profitability. Our growth continues, as evidenced by our ability to meet last year's same branch revenues while cutting a sizable amount of unhealthy business from our revenue stream in our older branches. However, our growth strategy and priorities are changing. We have grown rapidly in a very short period of time. In July 2012, our monthly revenue was just $583,228. Two years later, we now consistently deliver revenue above $2 million monthly. We have executed our growth strategy with little regard for profitability, as scale and market share were more important early on. Now, with our new insurance, our risk tolerance has changed and so must our growth strategy. We are implementing a plan to grow even faster, but it will include a focus on driving top line growth, profitability, and shareholder value. As a result, we made the decision to stop carrying business that posed significant risk," Schadel explained.

Mr. Schadel advised that the company is revising its yearly revenue projection to reflect the change. "We expect that revenue for 2014 will come in around $25-27 million with a significant improvement on gross margins and cash flow. Our new projection is to reach gross margins of 23.5% for all of 2014, achieving gross margins of 25% in the fourth quarter compared to our original goal of 22% in the fourth quarter. More importantly, we have reduced our risk exposure from a safety and credit perspective and intend to continue to take a risk adverse position in regards to safety."

Schadel added that the company will provide more details regarding new strategy initiatives in a conference call to be announced later this week. Going forward, the company will also host a quarterly earnings call.

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.

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.

Contact:

Beverly Jedynak
Martin E. Janis & Company, Inc.
312-943-1123
[email protected]

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