8-K
Leatt Corp (LEAT)
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):
May 12, 2022
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
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 | Name of each exchange on which registered | Symbol(s) |
|---|---|---|
| — | — | — |
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 May 12, 2022, the Company issued a press release announcing its financial results for the first quarter ended March 31, 2022. 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 May 12, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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: May 12, 2022 | By: | /s/ Sean Macdonald |
| Sean Macdonald | ||
| Chief Executive Officer and Chief Financial Officer |
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, dated May 12, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Leatt Corp.: Exhibit 99.1 - Filed by newsfilecorp.com
Leatt Corp Announces Recording Breaking Results for First Quarter 2022
Strongest revenue performance to date;
Record breaking revenue for seven quarters in a row;
Net Income up 105% and strong brand development
CAPE TOWN, South Africa, (May 12, 2022) - Leatt Corporation (OTCQB: LEAT), a leading developer and marketer of protective equipment and ancillary products for many forms of sports, especially extreme high-velocity sports, today announced financial results for the first quarter ending March 31, 2022. All financial numbers are in U.S. dollars.
First Quarter 2022 Highlights
• Global revenues of $24.2 million, up 88%, compared to first quarter 2021.
• Net income of $4.2 million, up 105%, compared to first quarter 2021.
• Earnings per basic share of $0.73, up 92%, compared to first quarter 2021.
• Income from operations of $5.6 million, up 104%, compared to first quarter 2021.
• Reno, NV warehouse fully online; positioned to deliver more inventory faster in the U.S.
Chief Executive Officer, Sean Macdonald, commented: "The first quarter was another tremendous quarter for us; the 7th quarter in a row of record-breaking revenues and the 16th straight quarter of year-over-year revenue growth. We grew by double-digits in virtually all of our expanding categories and many of our products are still in their infancy, with a huge runway of potential to expand in the global market.
"Helmet sales, an increasingly important product for us, were up 269%, compared to the 2021 first quarter. Helmets accounted for 23% of our first quarter revenues and remain an area where we are investing heavily. We have fully re-designed our MOTO off-road motorcycle helmet range, and demand remains strong for our award-winning MTB line. Sales of our expanded line-up of MOTO off-road motorcycle boots and MTB mountain biking shoes exceeded our expectations. We have created a full line of boots and shoes at key price points and performance levels. Apparel sales were very encouraging, displaying our ability to not only engineer high performance products, but to create designs that appeal to a wide range of riders.
"These consistent results demonstrate that our strategy for growth and profitability remains solid. We plan to continue engineering and developing innovative products that serve a much wider global audience of riders at all levels, from professional racers to weekend riders, and to build out our multi-channel sales organization that can deliver these outstanding products to our team of distributors and dealers around the world."
Founder and Chairman Dr. Christopher Leatt remarked: "Our design and engineering teams are highly motivated by the successful launch of our new products including helmets, boots and shoes, neck and knee braces. Working closely with our marketing team, we are continuing to build a pipeline of innovative 'head-to-toe' products.'"
Financial Summary
Total revenues for the first quarter of 2022 increased to $24.2 million, up 88%, compared to $12.9 million for the first quarter of 2022. The increase was driven by a 69% increase in body armor sales, a 269% increase in helmet sales, and a 122% increase in other products, parts and accessories, that were partially offset by a 21% decrease in neck brace sales during the 2022 period.
Income from operations for the first quarter of 2022 increased to $5.6 million, up 104%, compared to $2.8 million for the first quarter of 2021.
Net income for the first quarter of 2022 increased to $ 4.2 million, or $0.73 per basic and $0.68 per diluted share, up 105%, compared to $2.1 million, or $0.38 per basic and $0.34 per diluted share, for the first quarter of 2021.
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At March 31, 2021, the Company had cash and cash equivalents of $4.2 million and a current ratio of 2.9:1.
Business Outlook
Mr. Macdonald added: "We started the year strong and continued building on the solid sales traction that we have created over the past 16 quarters. We have plenty of room to grow, with key product categories like helmets, shoes and boots, apparel and armor showing vast potential for continued expansion as we build the sales and marketing structure to bring them to market.
"We are continuing to build and invest heavily in our sales and distribution facilities in the U.S., an area that offers enormous potential for growth. Our new Reno, Nevada warehouse is now well positioned to house and quickly deliver more stock around the U.S. We are also actively growing our team of in-house sales reps to reach a wider dealer base of both MOTO and MTB dealers.
"At the same time, we are continuing to monitor and adjust for potential economic headwinds. We are closely watching consumer buying patterns, worldwide geo-political risks, the macroeconomic inflationary environment and the impact of the Covid-19 pandemic on our supply chain.
"Our entire team is excited and encouraged by our success to date, but we have plenty of work to do to realize the enormous potential of the Leatt brand."
Conference Call
The Company will host a conference call at 10:00 am ET on Thursday, May 12, 2022, to discuss the first quarter 2022 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 13729638.
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
Leatt Corporation develops personal protective equipment and ancillary products for all forms of sports, especially extreme motorsports. The Leatt-Brace® is an award-winning neck brace system considered the gold standard for neck protection for anyone wearing a crash helmet as a form of protection. It was designed for participants in extreme sports or riding motorcycles, bicycles, mountain bicycles, all-terrain vehicles, snowmobiles and other 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 momentum of record-breaking revenue growth will continue; the ability of the Company to continue to maintain its innovative and cutting edge pipeline of branded products or to financially benefit from its sales and marketing efforts; the ability of the Company's global supply chain to withstand any adverse impact on global supply chains and remain sufficiently stable to fulfill the Company's customer demand; the financial outlook of the Company; 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
[FINANCIAL TABLES TO FOLLOW]
LEATT CORPORATION
CONSOLIDATED BALANCE SHEETS
| ASSETS | |||||
|---|---|---|---|---|---|
| March 31, 2022 | December 31, 2021 | ||||
| Unaudited | Audited | ||||
| Current Assets | |||||
| Cash and cash equivalents | 4,245,676 | $ | 5,022,436 | ||
| Short-term investments | 58,263 | 58,262 | |||
| Accounts receivable, net | 17,743,659 | 12,660,936 | |||
| Inventory, net | 19,916,817 | 21,081,481 | |||
| Payments in advance | 1,541,775 | 1,610,640 | |||
| Prepaid expenses and other current assets | 3,900,500 | 4,178,427 | |||
| Total current assets | 47,406,690 | 44,612,182 | |||
| Property and equipment, net | 3,147,973 | 3,128,086 | |||
| Operating lease right-of-use assets, net | 1,287,949 | 1,393,213 | |||
| Other Assets | |||||
| Deposits | 49,750 | 33,339 | |||
| Total Assets | 51,892,362 | $ | 49,166,820 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Current Liabilities | |||||
| Accounts payable and accrued expenses | 11,410,067 | $ | 14,617,671 | ||
| Note payable, current | 88,168 | 83,270 | |||
| Operating lease liabilities, current | 279,148 | 318,621 | |||
| Income taxes payable | 4,146,521 | 2,738,818 | |||
| Short term loan, net of finance charges | 661,067 | 975,025 | |||
| Total current liabilities | 16,584,971 | 18,733,405 | |||
| Deferred compensation | 340,000 | 320,000 | |||
| Note payable, net of current portion | 169,957 | 189,249 | |||
| Operating lease liabilities, net of current portion | 1,008,801 | 1,074,592 | |||
| Deferred tax liability, net | 228,600 | 228,600 | |||
| 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, 5,791,683 and 5,673,683 shares issued | |||||
| and outstanding | 130,280 | 130,162 | |||
| Additional paid - in capital | 9,689,299 | 9,230,847 | |||
| Accumulated other comprehensive loss | (521,534 | ) | (779,268 | ) | |
| Retained earnings | 24,258,988 | 20,036,233 | |||
| Total stockholders' equity | 33,560,033 | 28,620,974 | |||
| Total Liabilities and Stockholders' Equity | 51,892,362 | $ | 49,166,820 |
All values are in US Dollars.
The accompanying notes are an integral part of these consolidated financial statements.
LEATT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
| Three Months Ended | ||||
|---|---|---|---|---|
| March 31 | ||||
| 2022 | 2021 | |||
| Unaudited | Unaudited | |||
| Revenues | 24,228,108 | $ | 12,896,475 | |
| Cost of Revenues | 14,601,018 | 6,844,521 | ||
| Gross Profit | 9,627,090 | 6,051,954 | ||
| Product Royalty Income | 78,839 | 24,810 | ||
| Operating Expenses | ||||
| Salaries and wages | 1,297,962 | 924,537 | ||
| Commissions and consulting expenses | 162,586 | 220,662 | ||
| Professional fees | 259,115 | 337,755 | ||
| Advertising and marketing | 613,890 | 517,580 | ||
| Office lease and expenses | 207,021 | 87,373 | ||
| Research and development costs | 533,700 | 405,105 | ||
| Bad debt expense | 18,324 | 65,825 | ||
| General and administrative expenses | 711,752 | 528,599 | ||
| Depreciation | 276,924 | 236,535 | ||
| Total operating expenses | 4,081,274 | 3,323,971 | ||
| Income from Operations | 5,624,655 | 2,752,793 | ||
| Other Income (Expenses) | ||||
| Interest and other expenses, net | 6,157 | (4,007 | ) | |
| Total other income (expenses) | 6,157 | (4,007 | ) | |
| Income Before Income Taxes | 5,630,812 | 2,748,786 | ||
| Income Taxes | 1,408,057 | 687,948 | ||
| Net Income Available to Common Shareholders | 4,222,755 | $ | 2,060,838 | |
| Net Income per Common Share | ||||
| Basic | 0.73 | $ | 0.38 | |
| Diluted | 0.68 | $ | 0.34 | |
| Weighted Average Number of Common Shares Outstanding | ||||
| Basic | 5,765,461 | 5,430,374 | ||
| Diluted | 6,246,325 | 6,118,129 | ||
| Comprehensive Income | ||||
| Net Income | 4,222,755 | $ | 2,060,838 | |
| Other comprehensive income, net of 0 and (1,000) deferred | ||||
| income taxes in 2022 and 2021 | ||||
| Foreign currency translation | 257,734 | (28,352 | ) | |
| Total Comprehensive Income | 4,480,489 | $ | 2,032,486 |
All values are in US Dollars.
The accompanying notes are an integral part of these consolidated financial statements.
LEATT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
| 2022 | 2021 | |||||
|---|---|---|---|---|---|---|
| Cash flows from operating activities | ||||||
| Net income | $ | 4,222,755 | $ | 2,060,838 | ||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||
| Depreciation | 276,924 | 236,535 | ||||
| Stock-based compensation | 202,770 | 55,020 | ||||
| Bad debts reserve | 14,526 | 63,111 | ||||
| Inventory reserve | 13,656 | (23,044 | ) | |||
| (Gain) loss on sale of property and equipment | (21,590 | ) | 457 | |||
| (Increase) decrease in: | ||||||
| Accounts receivable | (5,097,249 | ) | 2,950,042 | |||
| Inventory | 1,151,008 | (236,474 | ) | |||
| Payments in advance | 68,865 | 82,168 | ||||
| Prepaid expenses and other current assets | 277,927 | (1,938,074 | ) | |||
| Income tax refunds receivable | - | 2,964 | ||||
| Deposits | (16,411 | ) | 125 | |||
| Increase (decrease) in: | ||||||
| Accounts payable and accrued expenses | (3,207,604 | ) | (2,301,718 | ) | ||
| Income taxes payable | 1,407,703 | 137,197 | ||||
| Deferred compensation | 20,000 | 20,000 | ||||
| Net cash provided by (used in) operating activities | (686,720 | ) | 1,109,147 | |||
| Cash flows from investing activities | ||||||
| Capital expenditures | (260,912 | ) | (34,272 | ) | ||
| Proceeds from sale of property and equipment | 35,848 | - | ||||
| Increase in short-term investments, net | (1 | ) | (1 | ) | ||
| Net cash used in investing activities | (225,065 | ) | (34,273 | ) | ||
| Cash flows from financing activities | ||||||
| Issuance of common stock | 255,800 | - | ||||
| Repayment of note payable to bank | (14,394 | ) | - | |||
| Repayment of short-term loan, net | (313,958 | ) | (237,767 | ) | ||
| Net cash used in financing activities | (72,552 | ) | (237,767 | ) | ||
| Effect of exchange rates on cash and cash equivalents | 207,577 | (18,225 | ) | |||
| Net increase (decrease) in cash and cash equivalents | (776,760 | ) | 818,882 | |||
| Cash and cash equivalents - beginning of period | 5,022,436 | 2,967,042 | ||||
| Cash and cash equivalents - end of period | $ | 4,245,676 | $ | 3,785,924 | ||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||
| Cash paid for interest | $ | 16,133 | $ | 9,323 | ||
| Cash paid for income taxes | $ | 354 | $ | 550,000 | ||
| Other noncash investing and financing activities | ||||||
| Common stock issued for services | $ | 202,770 | $ | 55,020 |
The accompanying notes are an integral part of these consolidated financial statements.