Leatt Corp Reports Third Quarter and Nine Month Results Riders Offer Positive Reports on New Products including 'Five.Five' Neck Brace; New Products Expected on US Shelves for Black Friday.

CAPE TOWN, South Africa, Nov. 8, 2013 /PRNewswire/ -- Leatt Corporation (OTCQB: LEAT) today announced financial results for the third quarter and nine months ended September 30, 2013. 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 introduced this year, 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 has potential applications in any downhill or freestyle high-velocity sports. All financial numbers are in US dollars.

CEO Sean Macdonald commented, "The third quarter included some extraordinarily important milestones for Leatt Corp.  As those who follow us closely know, 2012 and 2013 have been transitional years for Leatt as we are expanding our product offering by several hundred percent and have introduced a new neck brace system.  The largest increase in new products occurred in the second half of this year, and an important test of market acceptance for some of those products will be the holiday gift-giving season between Black Friday and the end of the year.  Our Leatt product catalog has more than quadrupled in size in recent years and we expect to introduce additional new products early in 2014.

"We believe our innovative neck brace system will stimulate neck brace sales again. Those sales have declined for a variety of reasons, including that our overwhelming market share has decreased the size of the market of those who do not already have our neck braces.  So we closed out some of our older stock earlier this year, and have introduced a neck brace that we call Five.Five. Five.Five has the classic Leatt protective features, plus a host of innovative improvements that have earned positive reports from professional and amateur athletes and riders, as well as the media. We are told the Five.Five is a significant improvement to the classic Leatt-Brace.

"We have also seen very good early buying patterns for our Fusion Vest Junior in July of this year. Although we cannot predict what the sell-through will be, the order rates are encouraging.  These and other products should be in stores in the US – our largest market – by Black Friday, the day after the US Thanksgiving Day and the traditional start of the shopping season."

Sales of the classic neck brace system fell in the 2013 third quarter as compared to the 2012 third quarter, primarily due to on-going restructuring of our bicycle distribution network in the US and the timing of stocking orders in Australasia.  In 2012 those stocking orders were shipped in the third quarter, while this year the same stocking orders will fall into the fourth quarter ending December 31.  Sales of new products grew rewardingly, as exemplified by body armor products, which grew 17% year-over year for the third quarter.

For the 2013 third quarter, sales were $ 2.2 million, with a net loss of $568,931 or $0.11 loss per share, as compared to sales of $2.7 million with a net loss of $755,584 or $0.15 loss per share in the 2012 third quarter. In spite of lower sales, the net loss was 25% lower in the 2013 third quarter due to expense reductions and improving margins.  Operating expense decreased by 10% from 2012 to 2013 in spite of a 7% increase in R&D and product development.  Litigation expense was down, which is primarily reflected in a 36% decrease in professional fees during the quarter.

For the nine months ended September 30, 2013, sales were $9.1 million with a net loss of $1.96 million or $0.38 loss per share, versus sales of $10.5 million with a net loss of $552,204 or $0.11 loss per share in the first nine months of 2012.  It is worth noting that the largest portion of the loss year-to-date was incurred prior to the third quarter and reported in the first two quarters of the year.

Gross profit margin improved in the third quarter, partly as a result of improved freight costs and conditions.  The newer products continued to produce lower gross profit margins than the classic neck brace system, but we believe that the newly introduced Five.Five neck brace and body armor products should improve on that trend. 

Macdonald further commented, "We have already announced our plan to bring a revolutionary knee brace to market early in 2014, and our expectation is that this product will also produce a better margin than the body armor products.  In short, we are approximately where we thought we would be at this time, and our new-product introductions and the uptake trends are encouraging.  As with most consumer products, the fourth quarter is anticipated to be our most important and largest quarter."

At September 30, the company had no outstanding bank debt or amounts owed to lenders, other than in connection with our premium financing.  Cash was down modestly from the opening balance sheet for 2013, but that is largely due to an increase in inventory to support the expected shipment of larger amounts of product during the autumn months. The current ratio at September 30, 2013 was a robust 3.12:1, which is in keeping with the conservative management of cash and assets that has been a primary goal of management. 

Conference Call:
On Friday, November 8, 2013 at 10:00 am ET, a conference call will be held to review the Leatt third quarter 2013 results. Interested parties should dial into 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.

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 1-877-870-5176 (USA) or +1-858-384-5517 (international) and using passcode 10036512.

For those unable to attend the live webcast, it will be archived shortly following the event 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 the introduction of the innovative Five.Five will stimulate neck brace sales; the general ability of the Company to achieve its commercial objectives, including its transition to a diverse consumer sporting goods company; 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.

Contacts:

Leatt Corporation
Sean Macdonald
Chief Executive Officer
Sean.Macdonald@leatt-brace.com
+ (27) 21 557 7257

Allen & Caron, Inc.
Michael Mason (Investors) 
michaelm@allencaron.com 
(212) 691-8087

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

– Financial Tables Follow –

 


LEATT CORPORATION

CONSOLIDATED BALANCE SHEETS











ASSETS



September 30, 2013


December 31, 2012



Unaudited


Audited

Current Assets





  Cash and cash equivalents


$       369,947


$       667,671

  Short-term investments


311,574


311,263

  Accounts receivable


1,572,004


3,532,811

  Inventory


3,537,828


3,770,932

  Payments in advance


152,824


168,710

  Deferred tax asset


300,785


47,000

  Prepaid expenses and other current assets


135,773


874,113

    Total current assets


6,380,735


9,372,500






Property and equipment, net 


985,811


1,127,707






Other Assets





  Deposits


22,134


44,495

  Intangible assets


93,764


111,358

   Total other assets


115,898


155,853






Total Assets


$    7,482,444


$  10,656,060






LIABILITIES AND STOCKHOLDERS' EQUITY






Current Liabilities





   Accounts payable and accrued expenses


$    1,834,682


$    2,000,554

   Income taxes payable


113,501


115,000

   Short term loan, net of finance charges


16,302


837,721

      Total current liabilities


1,964,485


2,953,275






Deferred tax liabilities


36,915


38,000






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


7,302,352

   Accumulated other comprehensive income (loss)


(59,570)


164,235

   Retained earnings (accumulated deficit)


(1,894,746)


65,190

      Total stockholders' equity


5,481,044


7,664,785






Total Liabilities and Stockholders' Equity


$    7,482,444


$  10,656,060

 

              LEATT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS










Three Months Ended


Nine Months Ended


September 30,


September 30,


2013


2012


2013


2012


Unaudited


Unaudited


Unaudited


Unaudited









Revenues

$ 2,243,598


$ 2,689,157


$  9,108,243


$ 10,481,585









Cost of Revenues

1,071,522


1,317,056


4,555,276


4,715,416









Gross Profit

1,172,076


1,372,101


4,552,967


5,766,169









Product Royalty Income

105,328


82,729


285,014


156,162









Operating Expenses








   Salaries and wages

508,641


547,144


1,640,282


1,613,684

   Commissions and consulting expenses

142,866


122,987


426,035


371,057

   Professional fees 

197,672


310,696


1,013,783


864,448

   Advertising and marketing

339,578


429,421


1,069,903


968,501

   Office rent and expenses

62,528


66,015


195,342


206,348

   Research and development costs

274,218


255,982


839,823


777,437

   Bad debt expense (recovery)

-


(19,242)


-


(143,080)

   General and administrative expenses

518,537


528,407


1,619,221


1,574,650

   Depreciation 

60,585


102,496


252,040


318,390

       Total operating expenses

2,104,625


2,343,906


7,056,429


6,551,435









Loss from Operations

(827,221)


(889,076)


(2,218,448)


(629,104)









Other Income








   Interest and other income, net

4,505


28,492


5,647


77,860

      Total other income

4,505


28,492


5,647


77,860









Loss Before Income Taxes

(822,716)


(860,584)


(2,212,801)


(551,244)









Income Taxes

(253,785)


(105,000)


(252,865)


960









Net Loss Available to Common Shareholders

$  (568,931)


$  (755,584)


$ (1,959,936)


$    (552,204)









Net Loss per Common Share








   Basic

$        (0.11)


$        (0.15)


$          (0.38)


$          (0.11)

   Diluted

$        (0.11)


$        (0.15)


$          (0.38)


$          (0.11)









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

$  (568,931)


$  (755,584)


$ (1,959,936)


$    (552,204)

    Other comprehensive loss, net of $-0- deferred








        income taxes 








       Foreign currency translation 

(7,271)


5,293


(223,805)


(3,369)









       Total Comprehensive Loss

$  (576,202)


$  (750,291)


$ (2,183,741)


$    (555,573)

 

 

 

SOURCE Leatt Corporation



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

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