false 2023-11-06 0001456189 Leatt Corp. 0001456189 2023-11-06 2023-11-06

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2023

LEATT CORP.
(Exact name of registrant as specified in its charter)

Nevada 000-54693 20-2819367
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)

12 Kiepersol Drive, Atlas Gardens, Contermanskloof Road
 Durbanville, Western Cape, South Africa 7550
 (Address of principal executive offices) (ZIP Code)

Registrant’s telephone number, including area code: +27-21-557-7257

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class   Trading Symbols   Name of each exchange on which registered
—   —   —

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b -2 of this chapter).

Emerging growth company ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☑

 

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 6, 2023, the Company issued a press release announcing its financial results for the quarter ended September 30, 2023. A copy of the press release, which the Company is furnishing to the Securities and Exchange Commission (the "Commission") is attached as Exhibit 99.1 and incorporated by reference herein.

In accordance with General Instruction B.2 of Current Report on Form 8-K, the information contained in this Report and the exhibit attached hereto shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information or such exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 7.01 REGULATION FD DISCLOSURE.

The information set forth in Item 2.02 above is incorporated by reference herein.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

Exhibit
No.
Description
99.1 Press Release, dated November 6, 2023
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  LEATT CORPORATION
     
Dated: November 6, 2023 By: /s/ Sean Macdonald
    Sean Macdonald
    Chief Executive Officer and Chief Financial Officer

 

EXHIBIT INDEX

Exhibit
No.
Description
99.1 Press Release, dated November 6, 2023
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Leatt Corp Announces Results for the Third Quarter 2023

CAPE TOWN, South Africa, (November 6, 2023) - Leatt Corporation (OTCQB: LEAT), the leading developer and marketer of head-to-toe protective equipment for Moto, MTB, and a wide range of extreme and high-velocity sports, today announced financial results for the third quarter ending September 30, 2023. All financial numbers are in U.S. dollars.

Third Quarter and First Nine Months 2023 Snapshot

• Global revenues for the first nine months were $37.4 million, down 43% compared to the first nine months of 2022.

• Gross profit margins increased from 42% to 43% for the first nine months of 2023, compared to the same period of 2022.

• Net Income was $2.3 million, down 80%, compared to the first nine months of 2022.

• Cash flow generated from operations for the first nine months was $6.6 million, up 277%, compared to $1.7 million for the first nine months of 2022.

• Cash and cash equivalents at September 30, 2023 was $10.8 million, up 123%, compared to $4.8 million as of September 30, 2022.

• Leatt brand momentum continues at the consumer level despite constrained industry-wide ordering patterns.

• Global shipping and logistic costs continue to improve.

Chief Executive Officer Sean Macdonald commented: "Although our results for the third quarter of 2023 continued to reflect constrained ordering patterns, particularly from our international distribution partners who placed orders in early 2023 at the peak of overstocking conditions and constrained ordering sentiment, they do not reflect the current marginal uptick in sentiment that we are experiencing at the dealer and consumer level.

"Total revenues were $12.0 million, a 48% decline compared to last year's third quarter, which was one of the strongest quarters in company history. International revenues were $8.2 million, a decrease of 54% year over year.  Sales in the United States decreased by 29% to $3.9 million. Net Income for Q3 2023 was $460,474, a decrease of 89%, compared to the strong prior year.

"We continue to build a strong and talented team of product, sales, and marketing professionals and have recently invested in our MTB business, a promising growth area for us, with the addition of two new key industry professionals. We are also excited about the launch of our new ADV line at EICMA, the International Motorcycle and Accessories Exhibition, hosted in Milan, Italy. Our ADV line is a strong testament to our team's ability to develop innovative gear that appeals to a wider group of riders globally.

"Constrained market challenges have resulted in an intensified commitment from our entire team to continue our growth path and we remain enthusiastic about our ability to grow on a sustainable basis. We remain dedicated to our continued development of an innovative, multi-channel, and robust global selling organization with the ability to reach a wide consumer base of riders of all levels."

Founder and Chairman, Dr. Christopher Leatt remarked: "Our design and engineering teams are excited about our new range of ADV gear and apparel, specifically designed for motorcycle riders of all kinds who ride in all weather conditions and terrains. As always, these products, which include new boots and gloves, are developed in-house by our design and engineering professionals, and rigorously tested for safety and protection."

Financial Summary

Total revenues for the third quarter of 2023 were $12.0 million, down 48%, compared to $23.3 million for the third quarter of 2022.

The decrease in global revenues during the third quarter is attributable to a $5.1 million decrease in body armor sales, a $3.5 million decrease in other products, parts, and accessories sales, a $1.5 million decrease in helmet sales, and a $1.2 million decrease in neck brace sales.

Income from operations for the third quarter of 2023 was $620,395, down 89%, compared to $5.5 million for the third quarter of 2022.

Net income for the third quarter of 2023 was $460,474 or $0.08 per basic and $0.07 per diluted share, down 89%, as compared to net income of $4.1 million, or $0.70 per basic and $0.65 per diluted share, for the third quarter of 2022.

Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations.  At September 30, 2023, the Company had cash and cash equivalents of $10.8 million and a current ratio of 7.5:1.

Business Outlook

Mr. Macdonald added: "This has been a challenging time for our industry, but we believe that our strong commitment to growth initiatives will fuel growth as conditions continue to improve over time. Stock levels accumulated as a result of dealer and distributor response to the pandemic-driven surge in demand have resulted in adjusted ordering patterns at the dealer and distributor level to digest elevated stock levels as demand normalizes.

"We are confident that these dynamics will resolve as stock is digested with a positive inflection point on the horizon. Consumer direct selling activity in the U.S. continues to grow, increasing 16% year-to-date, compared to the same period in 2022, serving as a testament to the momentum that our products and brand have built over the last several years. This activity is also an encouraging indicator of an increase in consumer demand for our products that should further influence revenues as inventory is digested by our dealers and distributors.

"We continue to build our product, sales, and marketing teams and we are investing in the continued success of our MTB business, an area where we see a great opportunity to build market share. While some competitors seem to be pulling back, we have added two key leaders in MTB who share an infectious passion for riding and will help us bring a new level of focus to our MTB business. We have also launched our ADV range of gear for motorcycle riders. This is now a head-to-toe segment that should open more doors at the dealer level and, more importantly, reach a wide community of riders.

"We are also continuing to focus on working capital management and maintaining a robust cash flow position to fund operations and future growth initiatives. We look forward to returning to a level of growth as stock is digested and strong rider participation continues."

Conference Call

The Company will host a conference call at 10:00 am ET on Monday, November 6, 2023, to discuss the third quarter 2023 results.

Participants should dial in to the call ten minutes before the scheduled time, using the following numbers: 1-877-407-9716 (U.S.A) or +1-201-493-6779 (international) to access the call.

Audio Webcast

There will also be a simultaneous live webcast through the Company's website, www.leatt-corp.com. Participants should register on the website approximately ten minutes prior to the start of the webcast.

Replay

An audio replay of the conference call will be available for seven days and can be accessed by dialing 1-844-512-2921 (U.S.A) or +1-412-317-6671 (international) and using passcode 13742073.

For those unable to attend the call, a recording of the live webcast will be archived shortly following the event for 30 days on the Company's website.

About Leatt Corp

Driven by the science of thrill, Leatt Corporation develops head-to-toe personal protective gear for various sports, with a focus on mountain biking and extreme motorsports. This includes the award-winning Leatt-Brace®, a neck brace system considered the gold standard for neck protection when worn in conjunction with a helmet. Leatt products are designed for participants in extreme sports - more specifically - riding motorcycles, bicycles, mountain bikes, all-terrain vehicles, snowmobiles, and other open-air vehicles. For more information, visit www.leatt.com.

Follow Leatt® on Facebook, Twitter, and Instagram.

Forward-looking Statements

This press release may contain forward-looking statements regarding Leatt Corporation (the "Company") within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the likelihood that the Company's double-digit revenue growth will continue; the impact of the new ADV range on the Company's results of operations, the financial outlook of the Company, including the likelihood that customer ordering patterns will stabilize in the near term; the general ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," "anticipates," "seeks," "should," "could," "intends," or "projects" or similar expressions, and involve known and unknown risks and uncertainties. These statements are based upon the Company's current expectations and speak only as of the date hereof. Any indication of the merits of a claim does not necessarily mean the claim will prevail at trial or otherwise. Financial performance in one period does not necessarily mean continued or better performance in the future. The Company's actual results in any endeavor may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, which factors or uncertainties may be beyond our ability to foresee or control. Other risk factors include the status of the Company's common stock as a "penny stock" and those listed in other reports posted on The OTC Markets Group, Inc.

Contact:

Michael Mason

Investor Relations

Investor-info@leatt.com

(917) 841-8371

[FINANCIAL TABLES TO FOLLOW]


LEATT CORPORATION
CONSOLIDATED BALANCE SHEETS

ASSETS
             
    September 30,
2023		     December 31,
2022		  
    Unaudited     Audited  
Current Assets            
Cash and cash equivalents $ 10,783,752   $ 7,102,945  
Accounts receivable, net   10,672,812     12,839,597  
Inventory, net   18,703,347     22,805,462  
Payments in advance   633,861     1,047,137  
Deferred asset, net   100,397     1,016,815  
Income tax refunds receivable   340,492     -  
Prepaid expenses and other current assets   2,329,904     2,878,112  
Total current assets   43,564,565     47,690,068  
             
Property and equipment, net   3,571,075     3,104,336  
Operating lease right-of-use assets, net   916,922     1,092,170  
             
Other Assets            
Deposits   40,004     40,796  
             
Total Assets $ 48,092,566   $ 51,927,370  
             
LIABILITIES AND STOCKHOLDERS' EQUITY
             
Current Liabilities            
Accounts payable and accrued expenses $ 5,443,779   $ 6,011,390  
Notes payable, current   111,664     108,398  
Operating lease liabilities, current   281,591     280,743  
Deferred compensation, current   -     400,000  
Income taxes payable   -     3,382,700  
Short term loan, net of finance charges   5,247     1,030,196  
Total current liabilities   5,842,281     11,213,427  
             
Notes payable, net of current portion   59,348     141,967  
Operating lease liabilities, net of current portion   635,331     811,427  
Deferred tax liability, net   66,200     66,200  
             
Commitments and contingencies            
             
Preferred stock, $.001 par value, 1,120,000 shares authorized, 120,000 shares issued and outstanding   3,000     3,000  
Common stock, $.001 par value, 28,000,000 shares authorized, 5,971,340 and 5,971,340 shares issued and outstanding   130,309     130,309  
Additional paid - in capital   10,645,497     10,645,497  
Accumulated other comprehensive loss   (1,545,920 )   (1,081,143 )
Retained earnings   32,256,520     29,996,686  
Total stockholders' equity   41,489,406     39,694,349  
             
Total Liabilities and Stockholders' Equity $ 48,092,566   $ 51,927,370  


LEATT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2023     2022     2023     2022  
    Unaudited     Unaudited     Unaudited     Unaudited  
                         
Revenues $ 12,008,847   $ 23,258,752   $ 37,438,414   $ 65,425,170  
                         
Cost of Revenues   6,890,845     13,122,213     21,204,860     38,017,469  
                         
Gross Profit   5,118,002     10,136,539     16,233,554     27,407,701  
                         
Product Royalty Income   1,767     74,411     25,151     200,221  
                         
Operating Expenses                        
Salaries and wages   1,267,455     1,274,554     3,737,382     3,897,693  
Commissions and consulting expenses   168,299     143,691     375,548     456,911  
Professional fees   156,868     166,537     605,896     505,305  
Advertising and marketing   974,488     1,166,804     2,678,960     2,526,808  
Office lease and expenses   145,863     145,499     457,675     546,398  
Research and development costs   610,589     501,604     1,828,548     1,516,147  
Bad debt expense (recovery)   46,113     97,325     (135,108 )   101,680  
General and administrative expenses   830,145     977,796     2,516,919     2,399,899  
Depreciation   299,554     264,923     871,738     829,790  
Total operating expenses   4,499,374     4,738,733     12,937,558     12,780,631  
                         
Income from Operations   620,395     5,472,217     3,321,147     14,827,291  
                         
Other Income (Expenses)                        
Interest and other expenses, net   (1,150 )   7,784     (38,948 )   5,592  
Total other income (expenses)   (1,150 )   7,784     (38,948 )   5,592  
                         
Income Before Income Taxes   619,245     5,480,001     3,282,199     14,832,883  
                         
Income Taxes   158,771     1,391,878     1,022,365     3,795,085  
                         
Net Income Available to Common Shareholders $ 460,474   $ 4,088,123   $ 2,259,834   $ 11,037,798  
                         
Net Income per Common Share                        
Basic $ 0.08   $ 0.70   $ 0.38   $ 1.90  
Diluted $ 0.07   $ 0.65   $ 0.36   $ 1.77  
                         
Weighted Average Number of Common Shares Outstanding                        
Basic   5,971,340     5,826,892     5,971,340     5,802,771  
Diluted   6,270,691     6,261,160     6,270,691     6,237,039  
                         
Comprehensive Income                        
Net Income $ 460,474   $ 4,088,123   $ 2,259,834   $ 11,037,798  
Other comprehensive income, net of $0 deferred income taxes in 2023 and 2022                        
Foreign currency translation   (27,708 )   (431,436 )   (464,777 )   (556,484 )
                         
Total Comprehensive Income $ 432,766   $ 3,656,687   $ 1,795,057   $ 10,481,314  


LEATT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS  ENDED SEPTEMBER 30, 2023 AND 2022


    2023     2022  
             
Cash flows from operating activities            
Net income $ 2,259,834   $ 11,037,798  
Adjustments to reconcile net income to net cash provided by operating activities:            
Depreciation   871,738     829,790  
Stock-based compensation   -     443,250  
Bad debts reserve   (175,448 )   81,305  
Inventory reserve   299,942     148,901  
Deferred asset allowance   (75,971 )   -  
Gain on sale of property and equipment   (2,375 )   (23,047 )
(Increase) decrease in:            
Accounts receivable   2,342,233     (9,925,342 )
Deferred asset   992,389     -  
Inventory   3,802,173     (4,088,914 )
Payments in advance   413,276     409,186  
Prepaid expenses and other current assets   548,208     2,845,924  
Income tax refunds receivable   (340,492 )   -  
Deposits   792     (6,802 )
Increase (decrease) in:            
Accounts payable and accrued expenses   (567,611 )   (2,136,609 )
Income taxes payable   (3,382,700 )   2,073,221  
Deferred compensation   (400,000 )   60,000  
Net cash provided by operating activities   6,585,988     1,748,661  
             
Cash flows from investing activities            
Capital expenditures   (1,412,558 )   (865,204 )
Proceeds from sale of property and equipment   2,793     43,469  
Increase in short-term investments, net   -     (5 )
Net cash used in investing activities   (1,409,765 )   (821,740 )
             
Cash flows from financing activities            
Issuance of common stock   -     255,800  
Repayment of notes payable to bank   (79,353 )   (58,090 )
Repayment of short-term loan, net   (1,024,949 )   (832,089 )
Net cash used in financing activities   (1,104,302 )   (634,379 )
             
Effect of exchange rates on cash and cash equivalents   (391,114 )   (479,710 )
             
Net increase (decrease)  in cash and cash equivalents   3,680,807     (187,168 )
             
Cash and cash  equivalents - beginning of period   7,102,945     5,022,436  
             
Cash and cash equivalents - end of period $ 10,783,752   $ 4,835,268  
             
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:            
Cash paid for interest $ 56,602   $ 37,427  
Cash paid for income taxes $ 4,529,602   $ 1,721,864  
             
Other noncash investing and financing activities            
Common stock issued for services $ -   $ 443,250  

v3.23.3
Document and Entity Information Document
Nov. 06, 2023
Document Information [Line Items]  
Document Type 8-K
Document Creation Date Nov. 06, 2023
Document Period End Date Nov. 06, 2023
Amendment Flag false
Entity Registrant Name Leatt Corp.
Entity Address, Address Line One 12 Kiepersol Drive, Atlas Gardens, Contermanskloof Road
Entity Address, City or Town Durbanville
Entity Address, Country ZA
Entity Address, Postal Zip Code 7550
Entity Incorporation, State Country Name NV
City Area Code 21
Region code of country +27
Local Phone Number 557-7257
Entity File Number 000-54693
Entity Central Index Key 0001456189
Entity Emerging Growth Company true
Entity Tax Identification Number 20-2819367
Entity Ex Transition Period true
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
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