Leatt (LEAT) 10-Q 10 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 10, 2015
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Trading Symbol	leatpk
Entity Registrant Name	Leatt Corp
Entity Central Index Key	1,456,189
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,231,823
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Current Assets
Cash and cash equivalents	$ 647,191	$ 724,707
Short-term investments	58,159	58,153
Accounts receivable	3,708,170	4,239,298
Inventory	3,646,222	3,403,854
Payments in advance	310,136	345,406
Income tax refunds receivable	299	25,299
Deferred tax asset	108,000	108,000
Prepaid expenses and other current assets	439,044	994,003
Total current assets	8,917,221	9,898,720
Property and equipment, net	903,888	995,537
Other Assets
Other receivables	120,000	210,000
Deposits	16,879	17,980
Intangible assets	67,294	81,323
Total other assets	204,173	309,303
Total Assets	10,025,282	11,203,560
Current Liabilities
Accounts payable and accrued expenses	1,859,720	2,980,885
Income taxes payable	399,000	331,000
Short term loan, net of finance charges	37,226	626,129
Total current liabilities	2,295,946	3,938,014
Deferred tax liabilities	87,603	88,468
Commitments and contingencies	0	0
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, 5,231,823 and 5,200,623 shares issued and outstanding as of September 30, 2015 and December 31, 2014	130,040	130,008
Additional paid - in capital	7,346,782	7,314,136
Accumulated other comprehensive loss	(603,462)	(378,431)
Retained earnings	765,373	108,365
Total stockholders' equity	7,641,733	7,177,078
Total Liabilities and Stockholders' Equity	$ 10,025,282	$ 11,203,560

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Preferred Stock, Par Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	1,120,000	1,120,000
Preferred Stock, Shares Issued	120,000	120,000
Preferred Stock, Shares Outstanding	120,000	120,000
Common Stock, Par Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	28,000,000	28,000,000
Common Stock, Shares, Issued	5,231,823	5,200,623
Common Stock, Shares, Outstanding	5,231,823	5,200,623

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues	$ 4,655,450	$ 3,468,761	$ 13,869,961	$ 11,159,630
Cost of Revenues	2,201,924	1,584,460	6,407,946	5,070,624
Gross Profit	2,453,526	1,884,301	7,462,015	6,089,006
Product Royalty Income	75,268	65,083	147,469	136,346
Operating Expenses
Salaries and wages	501,156	547,955	1,649,801	1,651,178
Commissions and consulting expenses	108,020	134,692	445,396	441,943
Professional fees	126,407	209,168	587,572	823,690
Advertising and marketing	504,017	320,449	1,128,772	995,502
Office rent and expenses	60,775	61,807	183,826	183,792
Research and development costs	298,200	288,904	884,583	903,231
Bad debt expense	59,314	16,357	78,775	38,652
General and administrative expenses	435,517	565,004	1,349,849	1,611,242
Depreciation	95,677	67,075	279,953	214,583
Total operating expenses	2,189,083	2,211,411	6,588,527	6,863,813
Income (Loss) from Operations	339,711	(262,027)	1,020,957	(638,461)
Other Income (Expense)
Interest and other income (expense), net	18,840	(914)	26,821	4,680
Total other income (expense)	18,840	(914)	26,821	4,680
Income (Loss) Before Income Taxes	358,551	(262,941)	1,047,778	(633,781)
Income Taxes	179,585	250	390,770	130
Net Income (Loss) Available to Common Shareholders	$ 178,966	$ (263,191)	$ 657,008	$ (633,911)
Net Income (Loss) per Common Share
Basic	$ 0.03	$ (0.05)	$ 0.13	$ (0.12)
Diluted	$ 0.03	$ (0.05)	$ 0.12	$ (0.12)
Weighted Average Number of Common Shares Outstanding
Basic	5,231,823	5,200,623	5,211,370	5,200,623
Diluted	5,542,844	5,200,623	5,522,391	5,200,623
Comprehensive Income (Loss)
Net Income (Loss)	$ 178,966	$ (263,191)	$ 657,008	$ (633,911)
Other comprehensive income (loss), net of $0 and $0 deferred income taxes in 2015 and 2014
Foreign currency translation	(138,140)	(102,235)	(225,031)	(93,180)
Total Comprehensive Income (Loss)	$ 40,826	$ (365,426)	$ 431,977	$ (727,091)

CONSOLIDATED STATEMENTS OF OPE5

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Deferred Income Taxes	$ 0	$ 0	$ 0	$ 0

CONSOLIDATED STATEMENT OF CHANG

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($)	Preferred Stock A [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Loss [Member]	Retained Earnings [Member]	Total
Beginning Balance at Dec. 31, 2014	$ 3,000	$ 130,008	$ 7,314,136	$ (378,431)	$ 108,365	$ 7,177,078
Beginning Balance (Shares) at Dec. 31, 2014	120,000	5,200,623
Compensation cost recognized in connection with stock options			1,478			1,478
Exercise of stock options		$ 32	31,168			31,200
Exercise of stock options (Shares)		31,200
Net income (loss)					657,008	657,008
Foreign currency translation adjustment				(225,031)		(225,031)
Ending Balance at Sep. 30, 2015	$ 3,000	$ 130,040	$ 7,346,782	$ (603,462)	$ 765,373	$ 7,641,733
Ending Balance (Shares) at Sep. 30, 2015	120,000	5,231,823

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities
Net income (loss)	$ 657,008	$ (633,911)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	279,953	214,583
Deferred income taxes	(865)	(380)
Stock-based compensation	1,478	2,427
Bad debts	44,666	9,000
Inventory reserve	205,994	181,569
Gain on sale of property and equipment	(23,664)	(3,410)
(Increase) decrease in:
Accounts receivable	486,462	1,665,497
Inventory	(448,362)	(45,399)
Payments in advance	35,270	(250,937)
Prepaid expenses and other current assets	554,959	710,333
Income tax refunds receivable	25,000	(25,000)
Other receivables	90,000	90,000
Deposits	1,101	2,576
Increase (decrease) in:
Accounts payable and accrued expenses	(1,121,165)	(893,082)
Income taxes payable	68,000	0
Net cash provided by operating activities	855,835	1,023,866
Cash flows from investing activities
Capital expenditures	(266,439)	(199,469)
Proceeds from sale of property and equipment	29,867	6,699
Increase in short-term investments, net	(6)	(17)
Net cash used in investing activities	(236,578)	(192,787)
Cash flows from financing activities
Proceeds from exercise of stock options	31,200	0
Repayments of short-term loan, net	(588,903)	(797,548)
Net cash used in financing activities	(557,703)	(797,548)
Effect of exchange rates on cash and cash equivalents	(139,070)	(48,172)
Net decrease in cash and cash equivalents	(77,516)	(14,641)
Cash and cash equivalents - beginning	724,707	835,012
Cash and cash equivalents - ending	647,191	820,371
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	9,301	11,818
Cash paid for income taxes	322,770	130
Other noncash investing and financing activities
Common stock issued for services	$ 1,478	$ 2,427

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2015
Basis of Presentation [Text Block]	Note 1 - Basis of presentation The consolidated balance sheet as of December 31, 2014 was audited and appears in the Form 10-K filed by the Company with the Securities and Exchange Commission on March 26, 2015. The consolidated balance sheet as of September 30, 2015 and the consolidated statements of operations and comprehensive income (loss) for the three months and nine months ended September 30, 2015 and 2014, changes in stockholders’ equity for the nine months ended September 30, 2015, cash flows for the nine months ended September 30, 2015 and 2014, and the related information contained in these notes have been prepared by management without audit. In the opinion of management, all adjustments (which include only normal recurring items) necessary to present fairly the financial position, results of operations and cash flows in conformity with generally accepted accounting principles as of September 30, 2015 and for all periods presented have been made. Interim operating results are not necessarily indicative of operating results for a full year. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. While management of the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these condensed consolidated financial statements be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2014 as filed with the Securities and Exchange Commission in the Company’s Form 10-K.

Inventory

Inventory	9 Months Ended
	Sep. 30, 2015
Inventory [Text Block]	Note 2 - Inventory Inventory is stated at the lower of cost or market. Cost is determined using the first-in first-out (FIFO) method. Inventory consists primarily of finished goods. Shipping and handling costs are included in the cost of inventory. In assessing the inventory value, the Company must make estimates and judgments regarding reserves required for product obsolescence, aging of inventory and other issues potentially affecting the saleable condition of products. In performing such evaluations, the Company utilizes historical experience as well as current market information. The reserve for obsolescence as of the nine months ended September 30, 2015 and 2014 was $367,587 and $313,224, respectively.

Intangible Assets

Intangible Assets	9 Months Ended
	Sep. 30, 2015
Intangible Assets [Text Block]	Note 3 - Intangible Assets The Company’s intangible assets consist of acquired patents with an indefinite useful life and are thus not amortized. Intangible assets are carried at cost less impairment. Amortization expense for the nine months ended September 30, 2015 was zero. There was no impairment of intangible assets at September 30, 2015.

Short-term Loan

Short-term Loan	9 Months Ended
	Sep. 30, 2015
Short-term Loan [Text Block]	Note 4 - Short-term Loan The Company carries two product liability insurance policies; one with a U.S. insurance carrier and a second with a South African insurance carrier. The Company finances payment of its short-term insurance premiums over the period of coverage, which is generally twelve months. The U.S. short-term loan was payable in monthly installments of $68,273 over an 11 month period at an APR of 2.647% and the South African short-term loan is payable in monthly installments of $1,668 over a 10 month period at a flat interest rate of 3.60%. The Company repaid the U.S. short-term loan in full effective September 1, 2015. The Company also carries directors and officers’ liability insurance. The Company finances payment of its short-term insurance premiums over the period of coverage, which is generally twelve months. The short-term loan is payable in eleven payments of $5,162 at a 2.897% annual interest rate.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2015
Income Taxes [Text Block]	Note 5- Income Taxes The Company uses the asset and liability approach to account for income taxes. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax basis of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The provision for income taxes included taxes currently payable, if any, plus the net change during the period in deferred tax assets and liabilities recorded by the Company. The Company applies the provisions of FASB ASC Topic 740-10, Accounting for Uncertainty in Income Taxes (“Standard”), which provides that the tax effects from an uncertain tax position can be recognized in the consolidated financial statements only if the position is more likely than not of being sustained upon an examination by tax authorities. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, the standard provides guidance on derecognition, classification, interest and penalties; accounting in interim periods, disclosure and transition, and any amounts when incurred would be recorded under these provisions. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of September 30, 2015, the Company has no unrecognized tax benefits. The Company’s 2011 income tax return is under examination by the Internal Revenue Service.

Net Income Per Share of Common

Net Income Per Share of Common Stock	9 Months Ended
	Sep. 30, 2015
Net Income Per Share of Common Stock [Text Block]	Note 6 - Net Income Per Share of Common Stock Basic net income per common share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted–average number of common stock shares and dilutive potential common shares outstanding during the period. For the nine months ended September 30, 2015, the Company had 379,000 potential common shares, consisting of 120,000 preferred shares and options to purchase 259,000 shares, outstanding that were dilutive and included in diluted net income per share.

Litigation

Litigation	9 Months Ended
	Sep. 30, 2015
Litigation [Text Block]	Note 7 - Litigation In the ordinary course of business, the Company is involved in various legal proceedings involving product liability and personal injury and intellectual property litigation. The Company is insured against loss for certain of these matters. The Company will record contingent liabilities resulting from asserted and unasserted claims against it when it is probable that the liability has been incurred and the amount of the loss is reasonably estimable. The Company will disclose contingent liabilities when there is a reasonable possibility that the ultimate loss will exceed the recorded liability. While the outcome of currently pending litigation is not yet determinable, the ultimate exposure with respect to these matters cannot be ascertained. However, based on the information currently available to the Company, the Company does not expect that any liabilities or costs that might be incurred to resolve these matters will have a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2015
Subsequent Events [Text Block]	Note 8 – Subsequent Events The company has evaluated all subsequent events through the date the financial statements were released. The company entered into a Premium Finance Agreement with AFCO Acceptance Corporation “AFCO,” dated October 19, 2015, to finance its U.S. short-term insurance over the period of the coverage. The company is obligated to pay AFCO an aggregate sum of $852,081 in eleven payments of $71,952, at an annual interest rate of 2.897%, commencing on November 1, 2015 and ending on September 1, 2016. Any late payment during the term of the agreement will be assessed a late penalty of 5% of the payment amount due, and in the event of default AFCO has the right to accelerate the payment due under the agreement.

Inventory (Narrative) (Details)

Inventory (Narrative) (Details)	9 Months Ended
	Sep. 30, 2015USD ($)
Inventory 1	$ 367,587
Inventory 2	$ 313,224

Short-term Loan (Narrative) (De

Short-term Loan (Narrative) (Details)	9 Months Ended
	Sep. 30, 2015USD ($)mo
Short-term Loan 1	$ 68,273
Short-term Loan 2 | mo	11
Short-term Loan 3	2.647%
Short-term Loan 4	$ 1,668
Short-term Loan 5 | mo	10
Short-term Loan 6	3.60%
Short-term Loan 7	$ 5,162
Short-term Loan 8	2.897%

Income Taxes (Narrative) (Detai

Income Taxes (Narrative) (Details)	9 Months Ended
	Sep. 30, 2015
Income Taxes 1	50.00%

Net Income Per Share of Commo19

Net Income Per Share of Common Stock (Narrative) (Details)	9 Months Ended
	Sep. 30, 2015shares
Net Income Per Share Of Common Stock 1	379,000
Net Income Per Share Of Common Stock 2	120,000
Net Income Per Share Of Common Stock 3	259,000

Subsequent Events (Narrative) (

Subsequent Events (Narrative) (Details)	9 Months Ended
	Sep. 30, 2015USD ($)
Subsequent Events 1	$ 852,081
Subsequent Events 2	$ 71,952
Subsequent Events 3	2.897%
Subsequent Events 4	5.00%