LEAT 8-K
Leatt Corp (LEAT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM
CURRENT REPORT
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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 March 28, 2023, the Company issued a press release announcing its financial results for the year ended December 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 March 28, 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: March 28, 2023 | By: | /s/ Sean Macdonald |
| Sean Macdonald | ||
| Chief Executive Officer and Chief Financial Officer | ||
EXHIBIT INDEX
| Exhibit No. | Description |
| 99.1 | Press Release, dated March 28, 2023 |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
Leatt Corp Announces Record Breaking Revenue; Reports Results for
Fourth Quarter and Full Year 2022
Global Revenues Increase to $76.3 million
CAPE TOWN, South Africa, (March 28, 2023) - 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 record financial results for the fourth quarter and full year ending December 31, 2022. All financial numbers are in U.S. dollars.
Full Year 2022 and Recent Highlights
• Record full year revenues of $76.3 million, up 5%, compared to 2021.
• International sales of $59.02 million, up 13%, compared to 2021.
• Net Income of $9.96 million or $ 1.71 per share.
• Award-winning helmet category sales increase by 60%, compared to 2021.
• Cash and cash equivalents increased 41% to $7.1 million, compared to $5.02 million in 2021.
• Winner of 2023 Design & Innovation Award for Mono Suit MTB HydraDri 5.0 and MTB 3.0 Enduro Helmet.
• Partnership with Orbea Leatt Speed Company Racing Team and Expansion into Marathon Endurance Segment.
Leatt Chief Executive Officer Sean Macdonald commented: "By many important measures, 2022 was the best year in our Company's history. Total global revenues were $76.3 million, a 5% increase over 2021 which was itself a strong record year with a 88% increase over the prior year period. International sales grew by $6.68 million, or 13%, despite challenging market dynamics. Sales of some of our most innovative product categories, including helmets, footwear and technical apparel, all increased during the 2022 by double digits over 2021. These products showcase our engineering and design teams ability to build exceptional products that appeal to large addressable global markets. We believe that our successes in these critical product areas bode very well for our future.
"The second half of 2022 proved to be a difficult period for the global MTB and MOTO industry. Covid supply chain dynamics, global geo-political issues, inflation, the strengthening of the US dollar and the resultant moderation in consumer demand have resulted in over-stocked inventory across brands at the global distribution and dealer level, and have caused a reduction in product purchases. Changes in our customer buying patterns have begun to filter through in the fourth quarter of 2022.
"Although many consumers, distributors and dealers have noted that the Leatt brand continues to gain momentum backed by cutting-edge product innovation, the industry must digest stocking positions before it can return to the buying levels that will support the growth that we have experienced over the last several quarters.
"These market and economic conditions, directly affected our fourth quarter and year-end results, compared to 2021. Although full fiscal year 2022 sales of our more established neck brace and body armor categories were down by 36% and 6%, respectively, when compared to exceptionally strong 2021 sales, helmet sales increased by 60% and other products, parts and accessory sales that include our apparel category increased by 28% Net income for the year was $9.96 million, down 21% with a return on revenue of 13%. Earnings per share for the full year 2022 was $1.71 per basic share.
"Fourth quarter 2022 revenues were $10.9 million, a decrease of 53 percent compared to a very strong fourth quarter of 2021. Net loss for the fourth quarter was $1.1 million, based on the decrease in revenues and a 17% increase in total operating costs driven by our investments in sales, product development and marketing of our growing product range and the development of a globally recognized consumer brand."
Founder and Chairman Dr. Christopher Leatt remarked: "Our design and engineering team, along with our team of test riders, continue to innovate and enthusiastically create products that are recognized by the industry for their design excellence. In recent weeks we received yet another Design & Innovation award for our Mono Suit MTB HydraDri 5.0 and our MTB 3.0 Enduro Helmet, the eighth time that Leatt has been honored for products, suited not only for the best racers in the world, but for a wide range of riders."
Financial Summary
Total revenues for the fourth quarter of 2022 were $10.9 million, down 53%, compared to $23.2 million for the fourth quarter of 2021.
Net loss for the fourth quarter of 2022 was ($1.1) million or ($0.18) per basic and ($0.17) per diluted share, as compared to net income of $3.8 million, or $0.68 per basic and $0.62 per diluted share, for the fourth quarter of 2021.
Total revenues for the full year 2022 were $76.3 million, up 5%, as compared to $72.5 million for the full year of 2021. The increase in global revenue is attributable to a 60% increase in helmet sales, and a 28% in increase in other products, parts and accessories sales that were partially offset by a 36% decrease in neck brace sales and a 6% decrease in body armor sales.
Net income for the full year 2022 was $9.9 million, or $1.71 per basic share and $1.62 per diluted share, down 21%, compared to $12.6 million or $2.29 per basic share and $2.07 per diluted share, for 2021.
Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations. At December 31, 2022, the Company had cash and cash equivalents of $7.1 million and a current ratio of 4.25:1.
Business Outlook
Mr. Macdonald added: "While the current market dynamics are expected to continue for several quarters as our customers continue to digest inventory, with varying impacts on the different markets and geographical locations we sell to, we believe Leatt as a company and a brand is resilient and well-positioned for future growth and increased shareholder value. Despite the moderation in the exceptional consumer demand levels that the MOTO and MTB industry has experienced over the last several quarters, consumers are still riding and actively participating in outdoor activities - a trend we expect to continue.
"The second half of the year will also see Leatt's expansion into new areas in the global MTB and MOTO marketplace with well differentiated product categories that showcase innovation and our dedication to consumer adventure. We believe that this continued expansion will appeal to very large total addressable markets.
"Our first partnership with a professional endurance mountain biking team - The Orbea Leatt Speed Racing Company (SCR), a competitive force in cross country marathon and gravel racing, is an ideal partner for our shared vision of excellence in performance, innovation and design, and marks our entry into the endurance mountain biking world. In the coming year, SCR team athletes will showcase Leatt helmets and apparel as they compete in the Epic Series and select UCI MTB World Cup events.
"Our customers, dealers and distributors remain enthusiastic about the tremendous momentum and penetration that the Leatt brand and head-to-toe offering of exceptional protective gear have achieved over the last several quarters. Many of our innovative products are still in their infancy in terms of market share.
"As always, we remain focused on our strategy of bringing exceptional protective gear to a wider rider community."
Conference Call
The Company will host a conference call at 10:00 am ET on Tuesday, March 28, 2023, to discuss the 2022 fourth quarter and full-year 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 13737398.
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 in two-wheeled sports 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 to meet 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:
Investor Relations
[email protected]
(917)-841-8371
[FINANCIAL TABLES TO FOLLOW]
LEATT CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2022 AND 2021
| ASSETS | |||||||
| 2022 | 2021 | ||||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 7,102,945 | $ | 5,022,436 | |||
| Short-term investments | - | 58,262 | |||||
| Accounts receivable, net | 12,839,597 | 12,660,936 | |||||
| Inventory, net | 22,805,462 | 21,081,481 | |||||
| Payments in advance | 1,047,137 | 1,610,640 | |||||
| Deferred asset, net | 1,016,815 | - | |||||
| Prepaid expenses and other current assets | 2,878,112 | 4,178,427 | |||||
| Total current assets | 47,690,068 | 44,612,182 | |||||
| Property and equipment, net | 3,104,336 | 3,128,086 | |||||
| Operating lease right-of-use assets, net | 1,092,170 | 1,393,213 | |||||
| Other Assets | |||||||
| Deposits | 40,796 | 33,339 | |||||
| Total Assets | $ | 51,927,370 | $ | 49,166,820 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable and accrued expenses | $ | 6,011,390 | $ | 14,617,671 | |||
| Note payable, current | 108,398 | 83,270 | |||||
| Operating lease liabilities, current | 280,743 | 318,621 | |||||
| Deferred compensation, current | 400,000 | - | |||||
| Income taxes payable | 3,382,700 | 2,738,818 | |||||
| Short term loan, net of finance charges | 1,030,196 | 975,025 | |||||
| Total current liabilities | 11,213,427 | 18,733,405 | |||||
| Deferred compensation, net of current portion | - | 320,000 | |||||
| Note payable, net of current portion | 141,967 | 189,249 | |||||
| Operating lease liabilities, net of current portion | 811,427 | 1,074,592 | |||||
| Deferred tax liability, net | 66,200 | 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, 5,971,340 and 5,673,683 shares issued | |||||||
| and outstanding | 130,309 | 130,162 | |||||
| Additional paid - in capital | 10,645,497 | 9,230,847 | |||||
| Accumulated other comprehensive loss | (1,081,143 | ) | (779,268 | ) | |||
| Retained earnings | 29,996,686 | 20,036,233 | |||||
| Total stockholders' equity | 39,694,349 | 28,620,974 | |||||
| Total Liabilities and Stockholders' Equity | $ | 51,927,370 | $ | 49,166,820 | |||
The accompanying notes are an integral part of these consolidated financial statements.
LEATT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
| 2022 | 2021 | |||||
| Revenues | $ | 76,335,539 | $ | 72,475,813 | ||
| Cost of Revenues | 45,202,712 | 41,029,710 | ||||
| Gross Profit | 31,132,827 | 31,446,103 | ||||
| Product Royalty Income | 240,044 | 182,698 | ||||
| Operating Expenses | ||||||
| Salaries and wages | 6,148,179 | 5,003,640 | ||||
| Commissions and consulting expenses | 563,689 | 812,097 | ||||
| Professional fees | 586,474 | 1,072,912 | ||||
| Advertising and marketing | 3,342,791 | 2,170,788 | ||||
| Office lease and expenses | 689,068 | 428,608 | ||||
| Research and development costs | 2,179,996 | 1,826,846 | ||||
| Bad debt expense | 474,019 | 222,250 | ||||
| General and administrative expenses | 3,273,346 | 2,450,376 | ||||
| Depreciation | 1,098,433 | 1,025,536 | ||||
| Total operating expenses | 18,355,995 | 15,013,053 | ||||
| Income from Operations | 13,016,876 | 16,615,748 | ||||
| Other Expenses | ||||||
| Interest and other expenses, net | (13,550 | ) | (163 | ) | ||
| Total other expenses | (13,550 | ) | (163 | ) | ||
| Income Before Income Taxes | 13,003,326 | 16,615,585 | ||||
| Income Taxes | 3,042,873 | 4,041,148 | ||||
| Net Income Available to Common Shareholders | $ | 9,960,453 | $ | 12,574,437 | ||
| Net Income per Common Share | ||||||
| Basic | $ | 1.71 | $ | 2.29 | ||
| Diluted | $ | 1.62 | $ | 2.07 | ||
| Weighted Average Number of Common Shares Outstanding | ||||||
| Basic | 5,821,119 | 5,480,375 | ||||
| Diluted | 6,136,781 | 6,068,276 | ||||
| Comprehensive Income | ||||||
| Net Income | $ | 9,960,453 | $ | 12,574,437 | ||
| Other comprehensive income, net of ($14,700) and ($1,000) deferred | ||||||
| income taxes in 2022 and 2021 | ||||||
| Foreign currency translation | (301,875 | ) | (216,568 | ) | ||
| Total Comprehensive Income | $ | 9,658,578 | $ | 12,357,869 |
The accompanying notes are an integral part of these consolidated financial statements.
LEATT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
| 2022 | 2021 | |||||
| Cash flows from operating activities | ||||||
| Net income | $ | 9,960,453 | $ | 12,574,437 | ||
| Adjustments to reconcile net income to net cash provided by | ||||||
| operating activities: | ||||||
| Depreciation | 1,098,433 | 1,025,536 | ||||
| Deferred income taxes | (162,400 | ) | 307,300 | |||
| Stock-based compensation | 1,158,997 | 866,740 | ||||
| Bad debts reserve | 452,037 | 189,699 | ||||
| Inventory reserve | (11,111 | ) | (408 | ) | ||
| Deferred asset allowance | 105,071 | - | ||||
| (Gain) loss on sale of property and equipment | (23,006 | ) | 5,040 | |||
| (Increase) decrease in: | ||||||
| Accounts receivable | (630,698 | ) | (5,676,806 | ) | ||
| Deferred asset | (1,121,886 | ) | - | |||
| Inventory | (1,712,870 | ) | (11,411,037 | ) | ||
| Payments in advance | 563,503 | (805,542 | ) | |||
| Prepaid expenses and other current assets | 1,300,315 | (2,069,237 | ) | |||
| Income tax refunds receivable | - | 2,964 | ||||
| Deposits | (7,457 | ) | 360 | |||
| Increase (decrease) in: | ||||||
| Accounts payable and accrued expenses | (8,606,281 | ) | 6,608,746 | |||
| Income taxes payable | 643,882 | 1,084,618 | ||||
| Deferred compensation | 80,000 | 80,000 | ||||
| Net cash provided by operating activities | 3,086,982 | 2,782,410 | ||||
| Cash flows from investing activities | ||||||
| Capital expenditures | (1,144,173 | ) | (1,139,298 | ) | ||
| Proceeds from sale of property and equipment | 43,469 | 1,966 | ||||
| (Increase) decrease in short-term investments, net | 58,262 | (5 | ) | |||
| Net cash used in investing activities | (1,042,442 | ) | (1,137,337 | ) | ||
| Cash flows from financing activities | ||||||
| Issuance of common stock | 255,800 | 26,000 | ||||
| Proceeds from note payable | 58,075 | 272,519 | ||||
| Repayment of note payable to bank | (80,229 | ) | - | |||
| Proceeds from short-term loan, net | 55,171 | 297,424 | ||||
| Net cash provided by financing activities | 288,817 | 595,943 | ||||
| Effect of exchange rates on cash and cash equivalents | (252,848 | ) | (185,622 | ) | ||
| Net increase in cash and cash equivalents | 2,080,509 | 2,055,394 | ||||
| Cash and cash equivalents - beginning of year | 5,022,436 | 2,967,042 | ||||
| Cash and cash equivalents - end of year | $ | 7,102,945 | $ | 5,022,436 | ||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||
| Cash paid for interest | $ | 58,825 | $ | 28,276 | ||
| Cash paid for income taxes | $ | 2,576,091 | $ | 2,680,978 | ||
| Other noncash investing and financing activities | ||||||
| Common stock issued for services | $ | 1,158,997 | $ | 866,740 | ||
The accompanying notes are an integral part of these consolidated financial statements.