Leatt Corp Reports Third Quarter Results

REVENUE SURGES BY MORE THAN 50%; NECK BRACE AND BODY ARMOR SALES UP

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Nov 13, 2014, 08:00 ET

CAPE TOWN, South Africa, Nov. 13, 2014 /PRNewswire/ -- Leatt Corporation (OTCQB: LEAT) today announced its financial results for the third quarter and nine months ended September 30, 2014. Leatt Corporation develops and markets protective equipment and ancillary products for all forms of sports, especially extreme high-velocity sports. All financial numbers are in US dollars.

Financial Performance

Third Quarter

During the quarter ended September 30, 2014, revenue grew to $3.5 million, versus $2.2 million for the third quarter of 2013. Gross profit margins held steady from the second quarter at 54%, and were up from the 52% reported for the third quarter of 2013. The net loss dropped to $263,191, or $0.05 loss per share, from the third-quarter net loss in 2013 of $568,931, or $0.11 loss per share. The 2013 third-quarter loss included a tax credit of $253,785, so the improvement on an operating basis was even stronger than it appears.

The strong upsurge in sales was due to increased customer demand for the Company's Fusion 2.0 Junior and 5.5 Neck Brace product line in the United States and abroad. Neck Brace sales were $1.6 million, compared to $1.3 million in last year's third quarter. Body Armor sales saw strong growth at $1.7 million, up from $720,000 in 2013, primarily because of the Company's new C Frame Knee Brace, which has been enthusiastically accepted by the marketplace. The strong demand for Knee Brace has raised the Company's overall Body Armor gross profit margin.

Nine Months

For the first three quarters of 2014, revenues were $11.2 million, up 23%, as compared to $9.1 million in the previous year. As with the third quarter, the nine months benefitted from increased customer demand for both major categories of products: Neck Braces and Body Armor. Overall, Neck Braces accounted for $6.1 million and Body Armor for $4.5 million. Body Armor was buoyed not only by increased overall demand, but also by the introduction of the C Frame Knee Brace, which has had strong uptake since first shipments were made in the third quarter. Gross profit for the nine months was 55%, up from 50% for the first nine months of 2013. For the nine months, operating expenses were down by 3% overall compared to the previous year, on stronger sales and stronger margins.

The net loss for the nine months was $633,911, an improvement of 68% from the $2.0 million net loss for the nine months of 2013. R&D costs were up for the nine months by 8%, but other expense categories were either virtually flat or down. Cash generated by operations for the nine months was $1,023,866 million, as compared to $837,517 generated cash during the 2013 period. The Company has no bank debt.

Founder and Director of R&D, Dr. Christopher Leatt, commented, "Our R&D and product design team has done it again. The Fusion 2.0 Junior and 5.5 Neck Brace have been met by great reviews and robust demand, the C Frame Knee Brace – an entirely new category for us – has been in high demand, and with the recent announcement of the first Leatt helmets, we are almost a head-to-foot company. Our Neck Braces have long been considered the gold standard for athletes in the industry and we expect that our new lines of protective safety gear will soon be viewed in the same light."

Dr. Leatt further commented, "As we hoped, our children's products are also finding a very receptive market. Leatt Corp. was founded and our first neck brace was designed to protect athletes from catastrophic cervical trauma, in response to a fatal accident that occurred at a motocross racing event attended by my son and I. We have come a long way since our first neck brace. We have now expanded that protection to helmets, body armor, and knee braces, as well as various kinds of ancillary products like hydration systems and athletic apparel."

Business Outlook

CEO and Director, Sean Macdonald, commented, "as sales grow and the number of sports we serve increases, we hope to see a steady climb in demand for our products that will help create a safer world for athletes, and create increased value for our shareholders. Indications are that the fourth quarter will be a good one.

"We believe that we have a much stronger story to tell now than we had a few years back," he said, "and we will be taking our story to investors and analysts in the United States next year, while we continue taking our protective safety gear to Main Street."

Earnings Call

Leatt's management team will host a conference call to discuss the Company's financial results at 10 am ET today. Participants should dial in to the call ten minutes before the scheduled time, using the following numbers: 1-877-300-8521 (USA) or +1-412-317-6026 (international) to access the call. 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.

For those unable to attend the call, an audio replay of the conference call will be available for seven days and can be accessed by dialing 1-877-870-5176 (USA) or +1-858-384-5517 (international) and using passcode 10055881. A recording of the live webcast will also be archived for 30 days on the Company's website.

About Leatt Corporation

Leatt Corporation develops and sells protective equipment and ancillary products for all forms of sports, especially extreme high-velocity sports. The Leatt-Brace® is an award-winning neck brace system considered to be the gold standard in neck protection for anyone wearing a crash helmet as a form of protection. The latest generation of the Leatt-Brace, the Five.Five neck brace, is also designed for participants in high-velocity sports such as motorcycling, bicycling, mountain bicycling, driving all-terrain vehicles, snowmobiles and other vehicles, and have potential applications in any downhill or freestyle high-velocity sports. For more information, visit: www.leatt-corp.com | www.leatt.com

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 financial outlook of the Company and the likelihood that gross margins will continue to increase; the general ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries, including its plan to develop more products for more sports and create increased value for shareholders; 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.

Contacts:

Leatt Corporation
Sean Macdonald
Chief Executive Officer
[email protected]
+ (27) 21 557 7257

Allen & Caron, Inc.
Michael Mason (Investors)
[email protected]
(212) 691-8087

Len Hall (Media)
[email protected]
(949) 474-4300

– Financial Tables Follow –

LEATT CORPORATION CONSOLIDATED BALANCE SHEETS ASSETS

		September 30, 2014		December 31, 2013
		Unaudited		Audited
Current Assets
Cash and cash equivalents	$	820,371	$	835,012
Short-term investments		58,147		58,130
Accounts receivable		1,464,776		3,139,273
Inventory		3,123,104		3,259,274
Payments in advance		395,239		144,302
Income tax refunds receivable		25,299		299
Deferred tax asset		110,000		110,000
Prepaid expenses and other current assets		382,117		1,092,450
Total current assets		6,379,053		8,638,740

Property and equipment, net		834,482		891,728

Other Assets
Other receivables		240,000		330,000
Deposits		16,893		19,469
Intangible assets		83,795		89,960
Total other assets		340,688		439,429

Total Assets	$	7,554,223	$	9,969,897

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued expenses	$	1,183,727	$	2,076,809
Short-term loan, net of finance charges		36,187		833,735
Total current liabilities		1,219,914		2,910,544

Deferred tax liabilities		40,300		40,680

Commitments and contingencies

Stockholders' Equity
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, 5,200,623 shares issued and outstanding		130,008		130,008
Additional paid - in capital		7,309,942		7,307,515
Accumulated other comprehensive loss		(205,044)		(111,864)
Accumulated deficit		(943,897)		(309,986)
Total stockholders' equity		6,294,009		7,018,673

Total Liabilities and Stockholders' Equity	$	7,554,223	$	9,969,897

LEATT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2014		2013		2014		2013
		Unaudited		Unaudited		Unaudited		Unaudited
Revenues	$	3,468,761	$	2,243,598	$	11,159,630	$	9,108,243

Cost of Revenues		1,584,460		1,071,522		5,070,624		4,555,276

Gross Profit		1,884,301		1,172,076		6,089,006		4,552,967

Product Royalty Income		65,083		105,328		136,346		285,014

Operating Expenses
Salaries and wages		547,955		508,641		1,651,178		1,640,282
Commissions and consulting expenses		134,692		142,866		441,943		426,035
Professional fees		209,168		197,672		823,690		1,013,783
Advertising and marketing		320,449		339,578		995,502		1,069,903
Office rent and expenses		61,807		62,528		183,792		195,342
Research and development costs		288,904		274,218		903,231		839,823
Bad debt expense		16,357		-		38,652		-
General and administrative expenses		565,004		518,537		1,611,242		1,619,221
Depreciation		67,075		60,585		214,583		252,040
Total operating expenses		2,211,411		2,104,625		6,863,813		7,056,429

Loss from Operations		(262,027)		(827,221)		(638,461)		(2,218,448)

Other Income (Expense)
Interest and other income (expense), net		(914)		4,505		4,680		5,647
Total other income (expense)		(914)		4,505		4,680		5,647

Loss Before Income Taxes		(262,941)		(822,716)		(633,781)		(2,212,801)

Income Taxes		250		(253,785)		130		(252,865)

Net Loss Available to Common Shareholders	$	(263,191)	$	(568,931)	$	(633,911)	$	(1,959,936)

Net Loss per Common Share
Basic	$	(0.05)	$	(0.11)	$	(0.12)	$	(0.38)
Diluted	$	(0.05)	$	(0.11)	$	(0.12)	$	(0.38)
Weighted Average Number of Common
Shares Outstanding
Basic		5,200,623		5,200,623		5,200,623		5,200,623
Diluted		5,200,623		5,200,623		5,200,623		5,200,623

Comprehensive Loss
Net Loss	$	(263,191)	$	(568,931)	$	(633,911)	$	(1,959,936)
Other comprehensive loss, net of $-0- deferred income taxes in 2014 and 2013
Foreign currency translation		(102,235)		(7,271)		(93,180)		(223,805)

Total Comprehensive Loss	$	(365,426)	$	(576,202)	$	(727,091)	$	(2,183,741)