Leatt Corp Financial Results for the Fourth Quarter and Full Year 2012

CAPE TOWN, South Africa, March 28, 2013 /PRNewswire/ -- Leatt Corporation (OTCQB: LEAT) today announced its financial results for 2012, including the fourth quarter ended December 31, 2012.  Leatt is a global developer, marketer and distributor of personal protective equipment for all forms of sports, especially extreme motor sports; products include the flagship Leatt-Brace®, a widely recognized neck brace system designed to help prevent potentially devastating injuries to the cervical spine (neck) for helmeted sports. All financial numbers are in US dollars.

CEO Sean Macdonald commented, "2012 was a transitional year, where we continued our leap from being a company with one well-known product to being a company with multiple product lines for multiple sports.  We have introduced a number of new products, including our 3DF® soft protection products, which were shipped to distributors for the first time during the fourth quarter.  Overall sales were lower, due to a decrease in neck-brace sales, as distribution channels were re-worked and some new OEM distributors came on board, in some cases replacing other distributors whose capabilities did not match our goals for the expanded product lines.  However our new products performed well, with 131% growth in body protection products. We expect that our introduction of new products to the marketplace will continue in the near term.  We believe that our worldwide reputation for laboratory proven, innovative safety products will help us gain market share in markets that are already being served by other companies, but we expect that more competitive pricing will continue to result in lower, though acceptable margins, compared to the Leatt-Brace."

Fourth Quarter Highlights:

The Company had a number of successes during the Fourth Quarter of 2012, including the following highlights:

  • In October, our Leatt Brace patent was challenged in the European Patent Office and emerged stronger than ever.
  • In November, we received SFI certification of our new race-car neck brace, potentially a very large new market entry.
  • Body protection expert Jorn Steffens joined our product development team.
  • We shipped our first 3DF® soft protection products to distributors.  The 3DF line protects more areas of the body, including the knees and elbows, while providing our usual safety and comfort.  We believe that the 3DF line is a logical extension of our brace and body protection products, and can be sold along with better-known Leatt products to professional athletes, as well as to everyday enthusiasts riding bicycles, skateboards, snowboards, motorbikes and a host of other sporting activities.

Fourth Quarter 2012 Financial Performance

For the three months ended December 31, 2012, revenues were $6.1 million, with a net profit of $630,847 or $0.12 per share, as compared to $6.4 million, with net income of $445,924, or $0.09 per share, for the fourth quarter of 2011.  We were pleased that our return on sales exceeded 10% for the fourth quarter.

Our cash and cash equivalents decreased to $667,671 at year-end, largely due to a steep increase in accounts receivable, a situation that can be anticipated with new products and new distributors.  Our current ratio was at 3.2:1, slightly up from 3.1:1 at the end of 2011. We have no long-term debt and a short-term note that is used solely to finance our product liability insurance premium.

Mr. Macdonald added, "We held our operating costs down despite significant costs related to increased product liability insurance premium expense and litigation, as well as the costs of becoming  and maintaining our status as a U.S. public company. In January 2013, our Leatt Chest Protector Pro Lite® was named 2012 Product of the Year by Transworld Motocross magazine.  We are focusing on innovative ways to improve margins while maintaining our award-winning standards for safety and quality products."

Fiscal Year 2012 Financial Performance

Revenue for the year ended December 31, 2012 decreased by $1.3 million (or 7%), to $16.6 million, compared to $17.9 million in the same period a year ago.  Gross profit for 2012 was $8.9 million or 54%, down from 58% for 2011. In spite of improved performance in the fourth quarter, our operating income was $65,524, down from an operating income of $858,530 in 2011, as professional fees rose steeply due to litigation and the push to be a fully reporting public company in the US, including the recently gained DTC eligibility for our common stock, which will make it easier for US investors to buy and hold Leatt shares. We reported a net profit of $78,643 for 2012, representing a decrease of $685,856 (or 90%) from a net income of $764,499 for 2011. Fully diluted income per share was $0.015 compared to fully diluted income per share of $0.15 for 2011.

Business Outlook

Mr. Macdonald said, "We anticipate that demand for our products, especially the new protective products, will increase through 2013, and we intend to continue to add innovative new products to our catalog. Our mission is to be a broad-spectrum provider for sporting-goods and specialty sports stores in the U.S. and around the world.

"We expect to continue strengthening our brand to represent quality and safety balanced with comfort and competitive pricing.  We have substantially grown our development team to include team members with international product development experience and they are continuing to focus on developing additional brace and protection lines that will protect more people in more sports.

"We also have scheduled a week of investor road show meetings in June for New York City, Boston, Chicago and San Francisco where we plan to introduce Leatt to more investors and analysts. We look forward to telling the Leatt story across the US."

Conference Call:

The Company will host a conference call at 11:00 am Eastern Time on March 28, 2013, to discuss fourth quarter and fiscal year 2012 results and answer questions from investors. Participants may access the call by dialing 1-877-317-6789 (USA) or +1-412-317-6789 (international).

Audio Webcast:

There will also be a simultaneous live webcast through the Company's website, http://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 1-877-344-7529 (USA) or +1-412-317-0088 (international) and using passcode 10026676.

For those unable to attend to the live webcast, it will be archived shortly following the event for 30 days in the Investors section of the Company's website.

About Leatt Corporation

Leatt Corporation develops, distributes and markets personal protective equipment and ancillary products for all forms of sports, especially extreme motor sports. 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-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; the general ability of the Company to achieve its commercial objective; 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, 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
Sean.Macdonald@leatt-brace.com
+ (27) 21 557 7257

Allen & Caron, Inc.
Rudy Barrio (Investors) 
r.barrio@allencaron.com
(212) 691-8087

Len Hall (Media)
len@allencaron.com 
(949) 474-4300

- Financial Tables Follow -


LEATT CORPORATION

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2012 AND 2011

 

ASSETS



2012


2011

Current Assets





  Cash and cash equivalents


$            667,671


$         1,084,806

  Short-term investments


311,263


310,329

  Accounts receivable


3,532,811


2,993,681

  Inventory


3,770,932


3,679,223

  Payments in advance


168,710


179,653

  Deferred tax asset


47,000


47,000

  Prepaid expenses and other current assets


874,113


825,817

    Total current assets


9,372,500


9,120,509






Property and equipment, net


1,127,707


1,372,521






Other Assets





  Deposits


44,495


33,509

  Intangible assets


111,358


116,230

   Total other assets


155,853


149,739






Total Assets


$       10,656,060


$       10,642,769






LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities





   Accounts payable and accrued expenses


$         2,000,554


$         2,171,456

   Customer deposits


-


265

   Income taxes payable


115,000


148,000

   Short term loan, net of finance charges


837,721


617,010

      Total current liabilities


2,953,275


2,936,731






Deferred tax liabilities


38,000


100,000

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


7,302,352


7,286,865

   Accumulated other comprehensive income


164,235


199,618

   Retained earnings (accumulated deficit)


65,190


(13,453)

      Total stockholders' equity


7,664,785


7,606,038






Total Liabilities and Stockholders' Equity


$       10,656,060


$       10,642,769









LEATT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011








2012


2011

Revenues


$    16,577,350


$    17,878,727

Cost of Revenues


7,668,054


7,469,581

Gross Profit


8,909,296


10,409,146

Product Royalty Income


262,566


99,268

Operating Expenses





   Salaries and wages


2,261,349


2,369,666

   Commissions and consulting expenses


512,690


499,482

   Professional fees


1,145,227


769,628

   Advertising and marketing


1,528,949


1,578,346

   Office rent and expenses


264,264


256,714

   Research and development costs


1,107,042


1,224,965

   Bad debt expense (recovery)


(257,223)


326,507

   General and administrative expenses


2,123,270


2,226,187

   Depreciation


420,770


398,389

       Total operating expenses


9,106,338


9,649,884






Income from Operations


65,524


858,530

Other Income





   Interest and other income, net


60,817


23,142

      Total other income


60,817


23,142

Income Before Income Taxes


126,341


881,672

Income Taxes


47,698


117,173

Net Income Available to Common Shareholders


$           78,643


$         764,499

Net Income per Common Share





   Basic


$             0.015


$               0.15

   Diluted


$             0.015


$               0.15

Weighted Average Number of Common Shares Outstanding





   Basic


5,200,623


5,208,398

   Diluted


5,200,623


5,208,398

Comprehensive Income





    Net Income


$           78,643


$         764,499

    Other comprehensive income (loss), net of $-0- deferred





        income taxes in 2012 and 2011





       Foreign currency translation


(35,383)


(326,663)

       Total Comprehensive Income


$           43,260


$         437,836















 

LEATT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011








2012


2011

Cash flows from operating activities





   Net income


$        78,643


$      764,499

   Adjustments to reconcile net income to net cash provided by





     (used in) operating activities:





     Depreciation


420,770


398,389

     Deferred income taxes


(62,000)


(5,100)

     Stock-based compensation


15,487


-

     Bad debts


7,787


36,463

     Gain on sale of property and equipment


(7,712)


(8,553)

    (Increase) decrease in:





       Accounts receivable


(546,917)


(182,331)

       Inventory


(91,709)


(922,027)

       Payments in advance


10,943


(59,503)

       Prepaid expenses and other current assets


(48,296)


(14,014)

       Income tax refunds receivable


-


40,300

       Deposits


(10,986)


(953)

    Increase (decrease) in:





       Accounts payable and accrued expenses


(170,902)


430,443

       Income taxes payable


(33,000)


148,000

       Customer deposits


(265)


(69,723)

          Net cash provided by (used in) operating activities


(438,157)


555,890

Cash flows from investing activities





    Capital expenditures


(213,098)


(477,683)

    Proceeds from sale of property and equipment


7,712


20,013

    Increase in short-term investments, net


(934)


(1,094)

          Net cash used in investing activities


(206,320)


(458,764)

Cash flows from financing activities





    Repurchase of common stock


-


(81,417)

    Proceeds from (repayments of) short-term loan, net


220,711


(14,420)

          Net cash provided by (used in) financing activities


220,711


(95,837)

Effect of exchange rates on cash and cash equivalents


6,631


(151,590)

Net decrease in cash and cash equivalents


(417,135)


(150,301)

Cash and cash  equivalents - beginning of year


1,084,806


1,235,107

Cash and cash equivalents - end of year


$      667,671


$   1,084,806

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:





  Cash paid for interest


$        11,103


$        10,197

  Cash paid for income taxes


$      143,207


$          1,600

  Other noncash investing and financing activities





    Common stock issued for services


$        15,487


$                  -

 

 

SOURCE Leatt Corporation



RELATED LINKS
http://www.leatt-corp.com

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