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| 8-K - FORM 8-K - Leatt Corp | form8k.htm |
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, November 8, 2013 – 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, | December 31 | |||||
| 2013 | 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 | ) |