Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 03, 2020 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2020 | |
Entity Registrant Name | Leatt Corp | |
Entity Central Index Key | 0001456189 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 5,386,723 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Ex Transition Period | true |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 2,627,438 | $ 2,072,864 |
Short-term investments | 58,251 | 58,239 |
Accounts receivable | 2,478,014 | 2,956,012 |
Inventory | 5,647,774 | 8,655,176 |
Payments in advance | 655,931 | 447,476 |
Prepaid expenses and other current assets | 2,024,321 | 1,129,067 |
Total current assets | 13,491,729 | 15,318,834 |
Property and equipment, net | 2,078,940 | 2,431,061 |
Operating lease right-of-use assets, net | 303,424 | 411,956 |
Other Assets | ||
Deposits | 25,431 | 26,642 |
Total other assets | 25,431 | 26,642 |
Total Assets | 15,899,524 | 18,188,493 |
Current Liabilities | ||
Accounts payable and accrued expenses | 2,426,936 | 5,425,681 |
Note payable to bank | 300,000 | |
Operating lease liabilities, current | 174,545 | 190,765 |
Income tax payable | 868,312 | 592,661 |
Short term loan, net of finance charges | 322,892 | 576,474 |
Total current liabilities | 3,792,685 | 7,085,581 |
Paycheck Protection Program loan | 210,732 | |
Deferred Compensation | 200,000 | 160,000 |
Operating lease liabilities, net of current portion | 128,879 | 221,191 |
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, 5,386,723 shares issued and outstanding | 130,068 | 130,068 |
Additional paid - in capital | 8,145,716 | 8,079,774 |
Accumulated other comprehensive loss | (786,435) | (529,045) |
Retained earnings | 4,074,879 | 3,037,924 |
Total stockholders' equity | 11,567,228 | 10,721,721 |
Total Liabilities and Stockholders' Equity | $ 15,899,524 | $ 18,188,493 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
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 | 5,386,723 | 5,386,723 |
Common Stock, Shares, Outstanding | 5,386,723 | 5,386,723 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Operations [Abstract] | ||||
Revenues | $ 6,943,130 | $ 5,277,066 | $ 14,485,004 | $ 11,367,994 |
Cost of Revenues | 3,688,623 | 2,646,430 | 7,707,044 | 5,875,256 |
Gross Profit | 3,254,507 | 2,630,636 | 6,777,960 | 5,492,738 |
Product Royalty Income | 3,182 | 6,995 | 4,659 | 15,696 |
Operating Expenses | ||||
Salaries and wages | 622,846 | 713,736 | 1,467,452 | 1,590,640 |
Commissions and consulting expenses | 103,906 | 80,499 | 187,342 | 158,560 |
Professional fees | 213,318 | 131,569 | 534,905 | 384,537 |
Advertising and marketing | 357,028 | 471,888 | 981,231 | 1,035,882 |
Office lease and expenses | 72,386 | 68,546 | 146,200 | 138,538 |
Research and development costs | 336,608 | 366,219 | 724,812 | 706,315 |
Bad debt expense (recovery) | 41,900 | (7,022) | 26,920 | 9,499 |
General and administrative expenses | 410,128 | 521,420 | 930,243 | 988,654 |
Depreciation | 190,749 | 188,300 | 382,801 | 377,995 |
Total operating expenses | 2,348,869 | 2,535,155 | 5,381,906 | 5,390,620 |
Income from Operations | 908,820 | 102,476 | 1,400,713 | 117,814 |
Other Expenses | ||||
Interest and other expenses, net | (9,477) | (572) | (18,106) | (3,593) |
Total other expenses | (9,477) | (572) | (18,106) | (3,593) |
Income Before Income Taxes | 899,343 | 101,904 | 1,382,607 | 114,221 |
Income Taxes | 224,836 | 28,204 | 345,652 | 31,283 |
Net Income Available to Common Shareholders | $ 674,507 | $ 73,700 | $ 1,036,955 | $ 82,938 |
Net Income per Common Share | ||||
Basic | $ 0.13 | $ 0.01 | $ 0.19 | $ 0.02 |
Diluted | $ 0.12 | $ 0.01 | $ 0.19 | $ 0.01 |
Weighted Average Number of Common Shares Outstanding | ||||
Basic | 5,386,723 | 5,386,723 | 5,386,723 | 5,383,751 |
Diluted | 5,548,476 | 5,548,176 | 5,548,476 | 5,545,204 |
Comprehensive Income | ||||
Net Income | $ 674,507 | $ 73,700 | $ 1,036,955 | $ 82,938 |
Other comprehensive income, net of $-0- and $-0- deferred income taxes in 2020 and 2019 | ||||
Foreign currency translation | 54,897 | 34,858 | (257,390) | 33,165 |
Total Comprehensive Income | $ 729,404 | $ 108,558 | $ 779,565 | $ 116,103 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Operations [Abstract] | ||
Deferred income taxes | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - 6 months ended Jun. 30, 2020 - 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, 2019 | $ 3,000 | $ 130,068 | $ 8,079,774 | $ (529,045) | $ 3,037,924 | $ 10,721,721 |
Beginning Balance (Shares) at Dec. 31, 2019 | 120,000 | 5,386,723 | ||||
Compensation cost recognized in connection with stock options | 65,942 | 65,942 | ||||
Net income | 1,036,955 | 1,036,955 | ||||
Foreign currency translation adjustment | (257,390) | (257,390) | ||||
Ending Balance at Jun. 30, 2020 | $ 3,000 | $ 130,068 | $ 8,145,716 | $ (786,435) | $ 4,074,879 | $ 11,567,228 |
Ending Balance (Shares) at Jun. 30, 2020 | 120,000 | 5,386,723 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities | ||
Net income | $ 1,036,955 | $ 82,938 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 382,801 | 377,995 |
Stock-based compensation | 65,942 | 166,250 |
Bad debts reserve | 24,975 | 2,094 |
Inventory reserve | (17,729) | (6,098) |
Gain on sale of property and equipment | (351) | |
(Increase) decrease in: | ||
Accounts receivable | 453,023 | 250,284 |
Inventory | 3,025,131 | (485,696) |
Payments in advance | (208,455) | (184,889) |
Prepaid expenses and other current assets | (895,254) | (69,997) |
Deposits | 1,212 | (265) |
Increase (decrease) in: | ||
Accounts payable and accrued expenses | (2,998,745) | 52,608 |
Income taxes payable | 275,651 | 3,555 |
Deferred compensation | 40,000 | 40,000 |
Net cash provided by operating activities | 1,185,156 | 228,779 |
Cash flows from investing activities | ||
Capital expenditures | (107,570) | (191,888) |
Proceeds from sale of property and equipment | 351 | |
Increase in short-term investments, net | (12) | (3) |
Net cash used in investing activities | (107,231) | (191,891) |
Cash flows from financing activities | ||
Issuance of common stock | 15,000 | |
Repayment of note payable to bank, net | (300,000) | |
Proceeds from Paycheck Protection Program loan | 210,732 | |
Repayments of short-term loan, net | (253,582) | (291,296) |
Net cash used in financing activities | (342,850) | (276,296) |
Effect of exchange rates on cash and cash equivalents | (180,501) | 21,855 |
Net increase (decrease) in cash and cash equivalents | 554,574 | (217,553) |
Cash and cash equivalents - beginning of period | 2,072,864 | 1,709,900 |
Cash and cash equivalents - end of period | 2,627,438 | 1,492,347 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 19,883 | 10,815 |
Cash paid for income taxes | 70,000 | 26,600 |
Other noncash investing and financing activities | ||
Common stock issued for services | $ 65,942 | $ 166,250 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Basis of presentation [Abstract] | |
Basis of Presentation [Text Block] | Note 1 - Basis of presentation The consolidated balance sheet as of December 31, 2019 was audited and appears in the Form 10-K filed by the Company with the Securities and Exchange Commission on March 24, 2020. The consolidated balance sheet as of June 30, 2020 and the consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2020 and 2019, changes in stockholders' equity for the six months ended June 30, 2020, cash flows for the six months ended June 30, 2020 and 2019, 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 June 30, 2020 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, 2019 as filed with the Securities and Exchange Commission in the Company's Form 10-K. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory [Text Block] | Note 2 - Inventory Inventory is stated at the lower of cost or net realizable value. 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 was $91,398 at June 30, 2020 and $109,127 at December 31, 2019. |
Operating Leases - Right-of-Use
Operating Leases - Right-of-Use Assets and Lease Liability Obligations | 6 Months Ended |
Jun. 30, 2020 | |
Lessee Disclosure [Abstract] | |
Operating Leases - Right-of-Use Assets and Lease Liability Obligations [Text Block] | Note 3 - Operating Leases - Right-of-Use Assets and Lease Liability Obligations The Company has three non-cancelable operating leases, two for office space and one for office machinery, that expire in December 2020, March 2022 and April 2022. Rent expense for these operating leases is recognized over the term of the lease on a straight-line basis. The Company obtained a rent deferral from one of its landlords that provides for a $5,000 reduction in the monthly rent payment from April 1, 2020 through September 30, 2020, with the deferred amount to be paid over the ensuing twelve-month period ending September 30, 2021. The Company elected not to take advantage of the negotiated rent deferral and has paid their rent pursuant to the original lease obligation. Below is a summary of the Company's Operating Right-of-Use Assets and Operating Lease liabilities as of March 31, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Assets Operating lease ROU assets $ 303,424 $ 411,956 Liabilities Operating lease liabilities, current $ 174,545 $ 190,765 Operating lease liabilities, net of current portion 128,879 221,191 Total operating lease liabilities $ 303,424 $ 411,956 During the six months ended June 30, 2020, and 2019 the Company recognized $100,429 and $86,344, respectively, in operating lease expenses, which are included in office lease and expenses in the Company's consolidated statements of operations and comprehensive income. Generally, the Company's lease agreements do not specify an implicit rate. Therefore, the Company estimates the incremental borrowing rate, which is defined as the interest rate the Company would pay to borrow on a collateralized basis, considering such factors as length of lease term and the risks of the economic environment in which the leased asset operates. As of June 30, 2020, the following disclosures for remaining lease term and incremental borrowing rates were applicable: Supplemental disclosure June 30, 2020 Weighted average remaining lease term 2 years Weighted average discount rate 5.02% Maturities of lease liabilities as of June 30, 2020 were as follows: Year ended December 31, Amounts under Operating Leases Remaining 2020 $ 108,164 2021 175,659 2022 58,973 Total minimum lease payments $ 342,796 Less: amount representing interest $ (39,372 ) Total operating lease liabilities $ 303,424 Supplemental cash flow information for the six months ended June 30, 2020 and 2019 are as follows: Six Months Six Months Ended June 30, Ended June 30, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities $ 110,137 $ 91,816 Right-of-use assets obtained in exchange for lease obligations $ — $ 500,956 |
Note Payable to Bank
Note Payable to Bank | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Note Payable to Bank [Text Block] | Note 4 — Note Payable to Bank On November 19, 2018, the Company entered into a $1,000,000 revolving line of credit agreement with a bank. Payments for the advances under the line bear interest at the LIBOR Daily Floating Rate plus 2.5 percentage points commencing January 1, 2019. The line of credit matures on November 19, 2020, at which time the unpaid principal, interest, or other charges outstanding under the agreement are due and payable. Obligations under the line of credit are secured by equipment and fixtures in the United States of America, accounts receivable and inventory of Leatt Corporation and Two-Eleven Distribution, LLC. The revolving line of credit was fully repaid on May 4, 2020 and the balance of $1,000,000 is available. |
Paycheck Protection Program Loa
Paycheck Protection Program Loan | 6 Months Ended |
Jun. 30, 2020 | |
Paycheck Protection Program Loan [Abstract] | |
Paycheck Protection Program Loan [Text Block] | Note 5 - Paycheck Protection Program Loan On May 4, 2020, the Company applied for and received a $210,732 loan under the Paycheck Protection Program ("PPP"), established under the CARES Act. The PPP loan has a maturity date of May 4, 2022, a stated interest rate of 1.0% per annum, and has payments of principal and interest that are due monthly after an initial six-month deferral period where interest accrues, but no payments are due. The Promissory Note provides for customary events of default, including, among others, those relating to failure to make payment when due and breaches of representations. The Company may prepay the principal of the Promissory Note at any time without incurring any prepayment charges. In June 2020, the Payroll Protection Program Flexibility Act ("PPPFA") was signed into law adjusting certain key terms of loans issued under the PPP. In accordance with the PPPFA, the initial deferral period may be extended from six to up to ten months and the loan maturity may be extended from two to five years. The PPPFA also provided for certain other changes, including the extent to which the loan may be forgiven. The loan's principal and accrued interest are forgivable to the extent that the proceeds are used for eligible purposes, subject to certain limitations, and that the Company maintains its payroll levels over an eight or twenty-four-week period following the loan date. The Company intends to use the proceeds for eligible purposes consistent with the provisions of the PPPFA. However, there can be no assurance that any portion of the loan will be forgiven and that the Company will not have to repay the loan in full. |
Short-term Loan
Short-term Loan | 6 Months Ended |
Jun. 30, 2020 | |
Short-term Debt [Abstract] | |
Short-term Loan [Text Block] | Note 6 - Short-term Loan The Company carries product liability insurance policies with a U.S. and South African-based insurance carrier. The Company finances payment of both of its product liability insurance premiums over the period of coverage which is generally twelve months. The U.S. short-term loan is payable in monthly installments of $70,468 over eleven months including interest at 5.740% and the South African short-term loan is payable in monthly installments of $3,738, over a ten-month period at a flat interest rate of 4.10%. The Company carries various short-term insurance policies in the U.S. 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 ten payments of $11,634 at 4.950% annual interest rate. |
Revenue and Cost Recognition
Revenue and Cost Recognition | 6 Months Ended |
Jun. 30, 2020 | |
Revenue Recognition [Abstract] | |
Revenue and Cost Recognition [Text Block] | Note 7 - Revenue and Cost Recognition The Company recognizes revenue in accordance with ASC 606. As such, the Company has and will continue to review its performance obligations in terms of material customer contractual arrangements in order to verify that revenue is recognized when performance obligations are satisfied on a periodic basis. All manufacturing of Leatt-Brace products is performed by third party subcontractors in China. The Company's products are sold worldwide to a global network of distributors and dealers, and directly to consumers when there are no dealers or distributors in their geographic area or where consumers choose to purchase directly via the Company's e-commerce website (collectively the "customers"). Revenues from product sales are recognized when earned, net of applicable provisions for discounts and returns and allowances in the event of product defect where no exchange of product is possible. Revenues are recognized when our performance obligations are satisfied as evidenced by transfer of control of promised goods to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Product royalty income, representing less than 1% of total revenues, is recorded as the underlying product sales occur, in accordance with the related licensing arrangements. Our distributor payment terms range from pre-payment in full to 60 days after shipment and subsequent sales of our products by distributors have no effect on the amount and timing of payments due to us. Furthermore, products purchased by distributors may not be returned to us in the event that any such distributor relationship is terminated. Since the Company (through its wholly-owned subsidiary) serves as the distributor of Leatt products in the United States, the Company records its revenue and related cost of revenue for its product sales in the United States upon shipment of the merchandise to the dealer or to the ultimate consumer when there is no dealer in the geographic area or the consumer chooses to purchase directly from the Company's e-commerce website and the sales order was received directly from, and paid by, the ultimate consumer. Since the Company (through its South African branch) serves as the distributor of Leatt products in South Africa, the Company records its revenue and related cost of revenue for its product sales in South Africa upon shipment of the merchandise from the branch to the dealer. The Company's standard terms and conditions of sale for non-consumer direct or web-based sales do not allow for product returns other than under warranty. International sales (other than in the United States and South Africa) are generally drop-shipped directly from the third-party manufacturer to the international distributors. Revenue and related cost of revenue is recognized at the time of shipment from the manufacturer's port when the shipping terms are Free On Board ("FOB") shipping point, Cost and Freight ("CFR") or Cost and Insurance to named place ("CIP") as legal title and risk of loss to the product pass to the distributor. Sales to all customers (distributors, dealers and consumers) are generally final; however, in limited instances, product may be returned and exchanged due to product quality issues. Historically, returns due to product quality issues have not been material and there have been no distributor terminations that resulted in product returns. Cost of revenues also includes royalty fees associated with sales of Leatt-Brace products. Product royalty income is recorded as the underlying product sales occur, in accordance with the related licensing arrangements. In the following table, revenue is disaggregated by the source of revenue: Six months ended June 30, 2020 % of Revenues 2019 % of Revenues Consumer and athlete direct revenues $ 1,263,586 9% $ 666,471 6% Dealer direct revenues 4,643,646 32% 4,133,289 36% International distributor revenues 8,577,772 59% 6,568,234 58% $ 14,485,004 100% $ 11,367,994 100% The Company reviews the reserves for customer returns at each reporting period and adjusts them to reflect data available at that time. To estimate reserves for returns, the Company estimates the expected returns and claims based on historical rates as well as events and circumstances that indicate changes to historical rates of product returns and claims. Historically, returns due to product quality issues have not been material and there have been no distributor terminations that resulted in product returns. The provision for estimated returns at June 30, 2020 and December 31, 2019 was $0, and $0, respectively. Accounts receivable consist of amounts due to the Company from normal business activities. Credit is granted to substantially all distributors on an unsecured basis. The Company continuously monitors collections and payments from customers and maintains an allowance for doubtful accounts receivable based upon historical experience and any specific customer collection issues that have been identified. The allowance of doubtful accounts was $129,679 at June 30, 2020 and $104,704 at December 31, 2019. Sales commissions are expensed when incurred, which is generally at the time of sale, because the amortization period would have been one year or less. These costs are recorded in commissions and consulting expenses within operating expense in the accompanying consolidated statements of operations and comprehensive income. Shipping and handling activities associated with outbound freight, after control over a product has transferred to a customer, are accounted for as a fulfillment cost and are included in revenues and cost of revenues in the accompanying consolidated statements of operations and comprehensive income. Revenue recognized from contracts with customers is recorded net of sales taxes, value added taxes, or similar taxes that are collected on behalf of local taxing authorities. For the six months ended June 30, 2020, revenue recognized from performance obligations related to prior periods was not material. Revenue expected to be recognized in any future period related to remaining performance obligations is not material. As of June 30, 2020, contract liabilities, if any, were not material. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes [Text Block] | Note 8 - 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 June 30, 2020, the Company has no unrecognized tax benefits. |
Net Income Per Share of Common
Net Income Per Share of Common Stock | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income Per Share of Common Stock [Text Block] | Note 9 - 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 six months ended June 30, 2020, the Company had 847,000 potential common shares, consisting of 120,000 preferred shares, options to purchase 169,000 shares, outstanding that were dilutive, and options to purchase 558,000 shares that were anti-dilutive and therefore, not included in diluted net income per share. |
Common Stock
Common Stock | 6 Months Ended |
Jun. 30, 2020 | |
Compensation Related Costs [Abstract] | |
Common Stock [Text Block] | Note 10 – Common Stock Stock-based compensation expense related to vested stock options during the six months ended June 30, 2020 was $65,942. As of June 30, 2020, there was $137,550 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a 2-year vesting period. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements [Text Block | Note 11 - Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-13, "Fair Value Measurements", which eliminates, adds or modifies certain disclosure requirements for fair value measurements. The amendments of ASU No. 2018-13 are effective for companies for fiscal years beginning after December 15, 2019. The Company adopted the new standard effective January 1, 2020, and it did not have a material impact on the Company's consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", and in November 2018 issued ASU 2018-19, which amended the standard. The ASU including its amendments are effective for companies for fiscal years beginning after December 15, 2019 and modify existing guidance related to the measurement of credit losses on financial instruments, including trade and loan receivables. The new guidance requires credit losses to be measured based on expected losses over the life of the asset rather than incurred losses. The Company adopted the new standard effective January 1, 2020, using a modified retrospective approach, and it did not have a material impact on the consolidated financial statements. Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): "Simplifying the Accounting for Income Taxes", which is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance to improve consistent application. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. Certain amendments within this ASU are required to be applied on a retrospective basis, certain other amendments are required to be applied on a modified retrospective basis and all other amendments on a prospective basis. The Company is currently evaluating the impact the adoption of this standard will have on the consolidated financial statements. |
Litigation
Litigation | 6 Months Ended |
Jun. 30, 2020 | |
Litigation Settlement [Abstract] | |
Litigation [Text Block] | Note 12 - 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. |
Risks and Uncertainties
Risks and Uncertainties | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties [Text Block] | Note 13 - Risks and Uncertainties As the COVID-19 pandemic continues to evolve, the Company believes the extent of the impact to its operations will be primarily driven by the severity and duration of the COVID-19 pandemic, the pandemic's impact on the U.S. and global economies and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic. While we have not seen any significant material impact of COVID-19 on our results of operations for the six months ended June 30, 2020, we expect that the spread of the virus throughout Europe and the U.S., and the extended global quarantine that commenced at the tail of the first quarter, will result in a decrease in revenues for the next several quarters. We have reviewed all operating costs, adjusted our budgets, accordingly, streamlined staffing requirements in line with expected decreases in revenues, negotiated favorable working capital terms and obtained government assistance where applicable. The continued spread of the virus and its reemergence during the third and fourth quarters in areas that have previously eased quarantine requirements, or the occurrence of any other catastrophic events, could have a negative impact our sales revenue for the remainder of 2020 and beyond. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Note 14 - Subsequent Events The Company has evaluated all subsequent events through the date the financial statements were released. |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recently Adopted Accounting Pronouncements [Policy Text Block] | Recently Adopted Accounting Pronouncements In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-13, "Fair Value Measurements", which eliminates, adds or modifies certain disclosure requirements for fair value measurements. The amendments of ASU No. 2018-13 are effective for companies for fiscal years beginning after December 15, 2019. The Company adopted the new standard effective January 1, 2020, and it did not have a material impact on the Company's consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", and in November 2018 issued ASU 2018-19, which amended the standard. The ASU including its amendments are effective for companies for fiscal years beginning after December 15, 2019 and modify existing guidance related to the measurement of credit losses on financial instruments, including trade and loan receivables. The new guidance requires credit losses to be measured based on expected losses over the life of the asset rather than incurred losses. The Company adopted the new standard effective January 1, 2020, using a modified retrospective approach, and it did not have a material impact on the consolidated financial statements. |
Accounting Pronouncements Not Yet Adopted [Policy Text Block] | Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): "Simplifying the Accounting for Income Taxes", which is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance to improve consistent application. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. Certain amendments within this ASU are required to be applied on a retrospective basis, certain other amendments are required to be applied on a modified retrospective basis and all other amendments on a prospective basis. The Company is currently evaluating the impact the adoption of this standard will have on the consolidated financial statements. |
Operating Leases Right-of-Use
Operating Leases Right-of-Use Assets and Lease Liability Obligations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Lessee Disclosure [Abstract] | |
Schedule of operating right-of-use assets and operating lease liabilities [Table Text Block] | June 30, 2020 December 31, 2019 Assets Operating lease ROU assets $ 303,424 $ 411,956 Liabilities Operating lease liabilities, current $ 174,545 $ 190,765 Operating lease liabilities, net of current portion 128,879 221,191 Total operating lease liabilities $ 303,424 $ 411,956 |
Schedule of remaining lease term and incremental borrowing rates [Table Text Block] | Supplemental disclosure June 30, 2020 Weighted average remaining lease term 2 years Weighted average discount rate 5.02% |
Schedule of maturities of lease liabilities [Table Text Block] | Year ended December 31, Amounts under Operating Leases Remaining 2020 $ 108,164 2021 175,659 2022 58,973 Total minimum lease payments $ 342,796 Less: amount representing interest $ (39,372 ) Total operating lease liabilities $ 303,424 |
Schedule of supplemental cash flow information of operating leases [Table Text Block] | Six Months Six Months Ended June 30, Ended June 30, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities $ 110,137 $ 91,816 Right-of-use assets obtained in exchange for lease obligations $ — $ 500,956 |
Revenue and Cost Recognition (T
Revenue and Cost Recognition (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue Recognition [Abstract] | |
Schedule of revenue by major customers by reporting segments [Table Text Block] | Six months ended June 30, 2020 % of Revenues 2019 % of Revenues Consumer and athlete direct revenues $ 1,263,586 9% $ 666,471 6% Dealer direct revenues 4,643,646 32% 4,133,289 36% International distributor revenues 8,577,772 59% 6,568,234 58% $ 14,485,004 100% $ 11,367,994 100% |
Inventory (Narrative) (Details)
Inventory (Narrative) (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Inventory reserve for obsolescence | $ 91,398 | $ 109,127 |
Operating Leases Right-of-U_2
Operating Leases Right-of-Use Assets and Lease Liability Obligations (Narrative) (Details) - USD ($) | 6 Months Ended | ||
Sep. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Lessee Disclosure [Abstract] | |||
Rent deferral, amount of reduction in monthly rent payment | $ 5,000 | ||
Operating lease expense | $ 100,429 | $ 86,344 |
Note Payable to Bank (Narrative
Note Payable to Bank (Narrative) (Details) - Revolving line of credit [Member] - USD ($) | 1 Months Ended | |
Nov. 19, 2018 | Jun. 30, 2020 | |
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | $ 1,000,000 | |
Line of Credit Facility, Interest Rate Description | LIBOR Daily Floating Rate plus 2.5 percentage points | |
Line bear interest at the LIBOR daily floating rate | 2.50% | |
Line of credit balance | $ 1,000,000 |
Paycheck Protection Program L_2
Paycheck Protection Program Loan (Narrative) (Details) - USD ($) | May 04, 2020 | Jun. 30, 2020 |
Short-term Debt [Line Items] | ||
Proceeds from Paycheck Protection Program loan | $ 210,732 | |
Paycheck Protection Program, CARES Act [Member] | ||
Short-term Debt [Line Items] | ||
Proceeds from Paycheck Protection Program loan | $ 210,732 | |
Debt Instrument, Maturity Date | May 4, 2022 | |
Debt Instrument, Interest Rate, Stated Percentage | 1.00% |
Short-term Loan (Narrative) (De
Short-term Loan (Narrative) (Details) | Jun. 30, 2020USD ($) |
Current U.S. short-term loan [Member] | |
Short-term Debt [Line Items] | |
Short-term loan, monthly payment | $ 70,468 |
Debt instrument, interest rate, stated percentage | 5.74% |
Current South African short-term loan [Member] | |
Short-term Debt [Line Items] | |
Short-term loan, monthly payment | $ 3,738 |
Debt instrument, interest rate, stated percentage | 4.10% |
Various short-term insurance policies in the U.S. [Member] | |
Short-term Debt [Line Items] | |
Short-term loan, monthly payment | $ 11,634 |
Debt instrument, interest rate, stated percentage | 4.95% |
Revenue and Cost Recognition (N
Revenue and Cost Recognition (Narrative) (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Revenue Recognition [Abstract] | ||
Product royalty income, revenue percentage | 1.00% | |
Provision for estimated returns | $ 0 | $ 0 |
Allowance for doubtful accounts | $ 129,679 | $ 104,704 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) | Jun. 30, 2020 |
Income Tax Disclosure [Abstract] | |
Maximum likelihood of being sustained | 50.00% |
Net Income Per Share of Commo_2
Net Income Per Share of Common Stock (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2020shares | |
Earnings Per Share [Abstract] | |
Weighted average number diluted shares outstanding adjustment | 847,000 |
Incremental common shares attributable to dilutive effect of conversion of preferred stock | 120,000 |
Incremental common shares attributable to dilutive effect of call options and warrants | 169,000 |
Antidilutive securities excluded from computation of earnings per share, amount | 558,000 |
Common Stock (Narrative) (Detai
Common Stock (Narrative) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Compensation Related Costs [Abstract] | ||
Stock-based compensation expense related to vested stock options | $ 65,942 | $ 166,250 |
Unrecognized compensation cost related to unvested stock options | $ 137,550 | |
Vesting period of unrecognized compensation cost related to unvested stock options | 2 years |
Operating Leases-Right-of-Use A
Operating Leases-Right-of-Use Assets and Lease Liability Obligations -Schedule of Right-of- Use Assets and Lease Liability Obligations (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Operating lease ROU assets | $ 303,424 | $ 411,956 |
Liabilities | ||
Operating lease liabilities, current | 174,545 | 190,765 |
Operating lease liabilities, net of current portion | 128,879 | 221,191 |
Total operating lease liabilities | $ 303,424 | $ 411,956 |
Operating Leases-Right-of-Use_2
Operating Leases-Right-of-Use Assets and Lease Liability Obligations - Schedule of Remaining lease term and incremental borrowing rates of Operating leases (Details) | Jun. 30, 2020 |
Lessee Disclosure [Abstract] | |
Weighted average remaining lease term | 2 years |
Weighted average discount rate | 5.02% |
Operating Leases-Right-of-Use_3
Operating Leases-Right-of-Use Assets and Lease Liability Obligations - Schedule of Maturities of lease liabilities (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Lessee Disclosure [Abstract] | ||
Remaining 2020 | $ 108,164 | |
2021 | 175,659 | |
2022 | 58,973 | |
Total minimum lease payments | 342,796 | |
Less: amount representing interest | (39,372) | |
Total operating lease liabilities | $ 303,424 | $ 411,956 |
Operating Leases-Right-of-Use_4
Operating Leases-Right-of-Use Assets and Lease Liability Obligations - Schedule of Supplemental cash flow information of Operating Leases (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Lessee Disclosure [Abstract] | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 110,137 | $ 91,816 |
Right-of-use assets obtained in exchange for lease obligations | $ 0 | $ 500,956 |
Revenue and Cost Recognition -
Revenue and Cost Recognition - Schedule of revenue by major customers by reporting segments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 6,943,130 | $ 5,277,066 | $ 14,485,004 | $ 11,367,994 |
% of Revenues | 100.00% | 100.00% | ||
Consumer and athlete direct revenues [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 1,263,586 | $ 666,471 | ||
% of Revenues | 9.00% | 6.00% | ||
Dealer direct revenues [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 4,643,646 | $ 4,133,289 | ||
% of Revenues | 32.00% | 36.00% | ||
International distributor revenues [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 8,577,772 | $ 6,568,234 | ||
% of Revenues | 59.00% | 58.00% |