Leatt (LEAT) details 2025 growth, global sales mix and strategy
Rhea-AI Filing Summary
Leatt Corporation reports 2025 revenue of $61.91 million, driven largely by protective gear for motorcycle, adventure and cycling markets. International customers contributed $44,644,239, or 72% of sales, reflecting the company’s strong global distributor network and growing direct-to-consumer channels in the U.S. and South Africa.
The company continues to broaden its product portfolio across neck braces, helmets, body armor, boots, goggles, apparel, shoes and new MTB components, backed by extensive safety certifications and awards. Leatt invested $2,704,071 in research and development and $4,563,919 in advertising and marketing, and employed 135 people as of December 31, 2025.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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For the fiscal year ended:
For the transition period from _____________ to _____________
Commission File No.
(Exact name of registrant as specified in its charter)
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(Address of Principal Executive Offices; Zip Code)
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Securities registered pursuant to Section 12(b) of the Exchange Act:
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Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act. [
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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As of June 30, 2025 (the last business day of the registrant's most recently completed second fiscal quarter), the aggregate market value of the shares of the registrant's common stock held by non-affiliates was approximately $
Common Stock, $0.001 par value per share:
DOCUMENTS INCORPORATED BY REFERENCE
None.
Annual Report on Form 10-K
For the Year Ended December 31, 2025
TABLE OF CONTENTS
| PART I | ||
| Item 1. | Business | 5 |
| Item 1A. | Risk Factors | 20 |
| Item 1B. | Unresolved Staff Comments | 28 |
| Item 2. | Properties | 29 |
| Item 3. | Legal Proceedings | 30 |
| Item 4. | Mine Safety Disclosures | 30 |
| PART II | ||
| Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 30 |
| Item 6. | Selected Financial Data | 32 |
| Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 32 |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 42 |
| Item 8. | Financial Statements and Supplementary Data | 43 |
| Item 9. | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure. | 43 |
| Item 9A. | Controls and Procedures | 43 |
| Item 9B. | Other Information | 44 |
| PART III | ||
| Item 10. | Directors, Executive Officers and Corporate Governance | 44 |
| Item 11. | Executive Compensation | 47 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 52 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 54 |
| Item 14. | Principal Accounting Fees and Services | 56 |
| PART IV | ||
| Item 15. | Exhibits, Financial Statement Schedules | 56 |
Special Note Regarding Forward Looking Statements
This report contains forward-looking statements that are contained principally in the sections entitled "Our Business," "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned "Risk Factors" in this report. In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should," "would" and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements include, among other things, statements relating to:
• our expectations regarding growth in the motor sports and bicycle market;
• our expectation regarding increasing demand for protective equipment used in the motor sports and bicycle market;
• our belief that we will be able to effectively compete with our competitors and increase our market share;
• our expectations with respect to increased revenue growth and our ability to achieve profitability resulting from increases in our production volumes; and
• our future business development, results of operations and financial condition.
Also, forward-looking statements represent our estimates and assumptions only as of the date of this annual report. You should read this annual report and the documents that we reference and filed as exhibits to the annual report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
Use of Certain Defined Terms
Except as otherwise indicated by the context, references in this annual report to:
• "Leatt," "we," "us," "our," the "Registrant" or the "Company" are to the combined business of Leatt Corporation, a Nevada corporation, its South African branch, Leatt SA, and its direct, wholly-owned subsidiary, Two Eleven;
• "Leatt Prop" refers to Leatt Prop (Pty) Ltd, a South African Company incorporated under the laws of South Africa with registration number: 2022/523867/07;
• "Leatt SA" are to the Company's branch office known as 'Leatt Corporation (Incorporated in the State of Nevada)' incorporated under the laws of South Africa with registration number: 2007/032780/10;
• "Leatt USA" are to Leatt USA, LLC, a Nevada Limited Liability Company;
• "PRC", and "China" are to the People's Republic of China;
• "Two Eleven" refers to Two Eleven Distribution, LLC, a Nevada Limited Liability Company;
• "Securities Act" are to the Securities Act of 1933, as amended, and to "Exchange Act" are to Securities Exchange Act of 1934, as amended;
• "South Africa" are to the Republic of South Africa;
• "U.S. dollar," "$" and "US$" are to the legal currency of the United States.
• "Xceed Holdings" refers to Xceed Holdings CC., a close corporation incorporated under the laws of South Africa, and wholly-owned by The Leatt Family Trust, of which Dr. Christopher J. Leatt, the Company's chairman, is a Trustee and Beneficiary; and
• "ZAR" refers to the South African Rand, the legal currency of South Africa. For all ZAR amounts reported, the dollar amount has been calculated on the basis that $1 = ZAR16.6287 for its December 31, 2025 balance sheet.
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PART I
ITEM 1. BUSINESS
Business Overview
We were incorporated in the State of Nevada on March 11, 2005, under the name Treadzone, Inc. We were a shell company with little or no operations until March 1, 2006, when we acquired the exclusive global manufacturing, distribution, sale and use rights to the Leatt-Brace®, pursuant to a license agreement between the Company and Xceed Holdings, a company controlled by the Company's Chairman and founder, Dr. Christopher Leatt. On May 25, 2005, we changed our name to Leatt Corporation in connection with our anticipated acquisition of the Leatt-Brace® rights. Leatt designs, develops, markets and distributes personal protective equipment for participants in all forms of motor sports and leisure activities, including riders of motorcycles, bicycles, snowmobiles and ATVs. The Company sells its products to customers worldwide through a global network of distributors and retailers. Leatt also acts as the original equipment manufacturer for personal protective equipment sold by other international brands.
The Company's flagship products are based on the Leatt-Brace® system, a patented injection molded neck protection system owned by Xceed Holdings, designed to prevent potentially devastating injuries to the cervical spine and neck. The Company has the exclusive global manufacturing, distribution, sale and use rights to the Leatt-Brace®, pursuant to a license agreement between the Company and Xceed Holdings, a company owned and controlled by the Company's Chairman and founder, Dr. Christopher Leatt. The Company also has the right to use apparatus embodying, employing and containing the Leatt-Brace® technology and has designed, developed, marketed and distributed other personal protective equipment using this technology, as well as its own developed technology, including the Company's body protection products, and helmets which it markets under the Leatt® brand.
The Company's research and development efforts are conducted at its research facilities, located at its executive headquarters in Cape Town, South Africa. The Company employs 4 full-time employees who are dedicated exclusively to research, development, and testing. The Company also utilizes consultants, academic institutions and engineering companies as independent contractors or consultants, from time to time, to assist it with its research and development efforts. Leatt products have been tested and reviewed internally and by external bodies. All Leatt products are compliant with applicable European Union directives, or CE certified, where appropriate. Depending on the market, we have other certifications outside of CE. Specifically, all our motorcycle helmets comply with the Economic Commission for Europe (ECE) UN Regulation No. 22 r06, and our bicycle helmet complies with the European Committee for Standardization (CEN) EN-1078 standard. For the US market, our motorcycle helmets comply with the US Department of Transportation (DOT) FMVSS 218 helmet safety standard and our bicycle helmets comply with the US Consumer Product Safety Commission (CPSC) 1203 standard for helmet safety. Our downhill-specific bicycle helmets also comply with the American Society for Testing and Materials (ASTM) F1952 standard for downhill racing safety. For the UK market, substantially all of our motorcycle helmets comply with the Auto Cycle Union (ACU) gold standard, for the Japanese market, our Moto 3.5 helmet with the Japanese Standard Association (JSA) JIS T 8133 standard for protective helmets, and for the Brazilian market our Moto 9.5, Moto 7.5, Moto 3.5, and Moto 2.5 helmets comply with The Brazilian Association of Technical Standards (ABNT) NBR 7471 safety standard. Moto 9.5, Moto 8.5, Moto 7.5, Moto 3.5 and Moto 2.5 ADV 9.5, ADV 8.5 and ADV 7.5 have CCC approval for the market in China. Our Enduro 4.0 helmet, All-Mountain 4.0 helmet and Gravity 5.0 helmet have acquired NTA8776 certification, a new e-bike helmet certification required in the Dutch Technical Agreement (NTA) 8776. The Moto 9.5 has been homologated to FRHPhe-02-2023 for us in FIMsanctioned off-road racing events. We are also working on getting some of our high-end MTB helmets tested at Virginia Polytechnic Institute and State University (V-Tech) in the United States, according to their rating system. In addition to our helmet portfolio, our goggles and sunglasses undergo certification and testing in accordance with applicable international eyewear standards. Within our goggle range, the Velocity 6.5, 5.5 and 4.5 goggles are certified to EN1938 and are impact-tested on the lenses according to MIL-DTL-43511D. The Velocity 6.5 SNX, 5.5 SNX and 4.5 SNX goggles are certified to EN13178 and are also impact-tested to MIL-DTL-43511D. Our MTB 5.0, 4.0 and 4.0 X-Flow goggles are tested to EN1938 and undergo MIL-DTL-43511D lens impact testing. The Vizion 3.5, 2.5 and 2.5s goggles are certified to EN1938, while our MTB 2.0 goggles are tested to EN1938. Within our sunglass range, the SpeedViz Pro and SpeedViz Lite models are tested to EN ISO 12312, ANSI Z87.1 and AS/NZS 1067.1. Our RideViz Pro, RideViz Lite, RideViz Pro S, RideViz Lite S, TheViz Andes, TheViz Sierra, TheViz Pyrenees and MadViz One sunglasses are tested to EN ISO 12312, ANSI Z80.3 and AS/NZS 1067.1.
Our products are predominantly manufactured in China in accordance with our manufacturing specifications, pursuant to outsourced manufacturing arrangements with third-party manufacturers located there, based on agreed terms. We continue to build manufacturing capacity outside China, namely, in Thailand, Cambodia, and Bangladesh. The Company utilizes outside consultants and its own employees to ensure the quality of its products through regular on-site product inspections. Products sold to our international customers are usually shipped directly from our consolidation warehouse or manufacturers' warehouses to customers or their import agents.
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Leatt earns revenues through the sale of its products through approximately 61 distributors worldwide and 6 e-commerce partners, who in turn sell its products to retailers. Leatt distributors are required to follow certain standard business terms and guidelines for the sale and distribution of Leatt products. Two Eleven and Leatt SA directly distribute Leatt products to dealers and direct to end consumers through digital channels in the United States and South Africa, respectively.
Our Corporate History and Structure
We were incorporated in the State of Nevada on March 11, 2005, under the name Treadzone, Inc. Until March 2006, we were a shell company with little or no operations. Effective as of March 1, 2006, we acquired the exclusive global manufacturing, distribution, sale and use rights to the Leatt-Brace®, pursuant to a license agreement between the Company and Xceed Holdings, a company owned and controlled by the Company's Chairman and founder, Dr. Christopher Leatt. On May 25, 2005, we changed our name to Leatt Corporation in connection with our anticipated acquisition of the Leatt-Brace® rights.
Leatt South Africa
The Company conducts business in South Africa as a foreign registered branch known as 'Leatt Corporation (Incorporated in the State of Nevada)' registered under the laws of South Africa with registration number: 2007/032780/10. Based in Cape Town, South Africa, Leatt SA was formed on November 14, 2007, to conduct the Company's business and operations in South Africa. Our corporate headquarters and our research and development efforts are based at Leatt SA.
Establishment of Two Eleven, Leatt Prop and Leatt USA
On August 17, 2007, the Company established Two Eleven Distribution, a California limited liability company, as its wholly-owned subsidiary. Located in Santa Clarita, California, Two Eleven was formed to serve as the Company's executive offices in the United States, as well as the exclusive distributor of Leatt® products in the United States. On March 8, 2021, the Company's Board of Directors approved the redomicile of Two Eleven Distribution to the State of Nevada, pursuant to a Plan of Conversion, effective upon the filing of Articles of Conversion with the Nevada Secretary of State on April 5, 2021.
Leatt Prop (Proprietary) Limited, a South African company, was established on June 24, 2022, by the Company, as its wholly-owned subsidiary, for the purpose of purchasing immovable property in South Africa. The Company has not moved forward with its original plan to date and Leatt Prop remains dormant.
On June 26, 2010, the Company established Leatt USA, LLC, a Nevada Limited Liability Company, as our wholly-owned subsidiary and for the purpose of holding Two Eleven Distribution, our wholly-owned subsidiary. However, as of the date of this annual report the Company had not moved forward with its original plan and Leatt USA remains dormant.
Settlement Agreement
As consideration for their founding of the Company's operations in South Africa, we agreed to issue 20,000,000 shares of our common stock, and 19,200,000 shares of our preferred stock to Dr. Leatt, 5,000,000 shares of our common stock and 4,800,000 shares of our preferred stock to Jean-Pierre De Villiers, and 50,000 shares of our common stock to Ervian Jarrett. We issued the common stock to Dr. Leatt, Mr. De Villiers and Ms. Jarrett in accordance with the agreement, but we did not issue any preferred shares to Dr. Leatt or Mr. De Villiers. On September 25, 2008, in settlement of our obligation to issue Dr. Leatt and Mr. De Villiers shares of preferred stock, we entered into a Settlement Agreement with them, pursuant to which they agreed to release us from any and all liability arising out of or related to our failure to satisfy our prior obligation to them, and we issued 16,800,000 shares of our common stock and 2,400,000 shares of our Series A Preferred Stock to Dr. Leatt, and 4,200,000 shares of our common stock and 600,000 shares of our Series A Preferred Stock to Mr. De Villiers. The Series A Preferred Stock entitles Dr. Leatt and Mr. De Villiers to one hundred votes for each share of Series A Preferred Stock held (voting with the common stock as a single class). The Series A Preferred Stock converts into common stock, on a one-for-one basis, has a liquidation preference equal to $0.001 par value per share and is redeemable by us at $0.001 par value per share upon the occurrence of specified events, but it is subject to transfer limitations and it does not entitle Dr. Leatt and Mr. De Villiers to dividends. On September 20, 2012, we effected a 1-for-25 reverse stock split which reduces the foregoing issuances on a 1:25 ratio.
Our Corporate Structure
The following chart reflects our organizational structure as of the date of this annual report.
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Our corporate headquarters are located at 12 Kiepersol Drive, Atlas Gardens, Contermanskloof Road, Durbanville, Western Cape, South Africa, 7550. Our telephone number is +(27) 21-557-7257. We maintain a website at www.leatt.com that contains information about our Company, but that information is not incorporated into, or otherwise considered a part of, this annual report.
Our Industry and Market Trends
Off-Road Motorcycle Market
Our products have their roots in the off-road motorcycle market. Our revolutionary neck brace was invented by Dr. Leatt to protect from catastrophic neck injuries after he witnessed the death of a fellow off-road motorcycle rider the weekend after his son's riding debut. As a result, our original products target participants in off-road cycling activities such as BMX racing and downhill racing.
We believe that we have gained our market share largely due to the innovation and quality of our products, the growth of the market, the growth of our product range, our increased marketing efforts, and our steps to secure our international patents and protect our patents from infringement.
Cycling Market
We design and sell neck braces, helmets, protective gear, shoes and clothing for the downhill and a wider cycling market. We entered this market focusing on downhill cycling, which requires a full-face helmet. We have since expanded our protective gear range to address the needs of mountain biking, cross-country biking, gravel biking and a wider cycling audience. The cycling market is now our second largest market.
Adventure Market
We design and sell technical apparel including jackets, pants, boots, and gloves for the off-road adventure segment of the motorcycle market. Our expansion into this market in 2023 was a strategic decision in our drive to reach a wider community of riders globally. Our expanding line of Adventure gear has been well accepted by our distributors and dealers and represents an important growing source of revenue.
Other Recreational Markets
We also design and sell neck braces for use by participants in other recreational sports such as ATV, go-kart, snowmobile users and participants in other sports where a full-face helmet should be worn. As a result, our overall performance in the market is also affected by the performance of these industries, especially in jurisdictions where the use of helmets is compulsory.
Our Products
The Company designs, develops, distributes, and markets protective gear, parts and accessories. The Company currently mainly markets its products under the two main categories addressing the two main markets, namely bicycle and powersports. During 2023, the Company launched a new range of products for the Adventure or ADV market.
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Neck Braces
The Leatt-Brace® is a prophylactic neck bracing system composed of various combinations of carbon fiber, glass fiber, polycarbonate or Glass Filled Nylon, which was designed to help prevent potentially devastating sports injuries to the cervical spine (neck). The first Leatt-Brace® was designed for motorcycle, high speed motor vehicle and ATV use, where there is little means of protecting the neck in the event of an accident, but the Leatt-Brace® has been designed in such a way as to offer neck protection to all who utilize a crash helmet as a form of protection, including soldiers, law enforcement officers and other professionals whose activities could result in cervical spine injury.
The latest range of Neck Braces are designed for both the powersports market and bicycle markets, includes the Neck Brace 6.5 which is a full carbon brace, Neck Brace 5.5, which is fully adjustable, the Neck Brace 5.5 Junior, which is fully adjustable and designed for junior riders, Neck Brace 4.5, is the latest addition to the range and mid-way between the 3.5 and 5.5 in the way of adjustment and pricing, the award-winning Neck Brace 3.5, which is competitively priced, the Neck Brace 3.5 Junior, designed for junior athletes at a very competitive price, and the new 1.5 Mini Neck brace designed for very small riders.
Furthermore, there is a range of SNX models under the powersports category. These neck braces are designed for snowmobile riders, which includes the SNX 5.5 and Neck Brace SNX trophy. These neck braces feature the AFC - Arctic Fusion Compound-designed for extreme temperatures.
The STX neck brace is designed for street commuters and includes the Neck Brace STX Road.
The Fusion is a unique invention that combines neck, chest, back, flank and shoulder protection in one piece of body armor for powersports enthusiasts. This product combines Leatt-Brace® technology together with CE certified back, shoulder and chest impact protection. The Fusion models include the Fusion 3.0, which incorporates hard shell and 3DF AirFit ventilated soft impact foam to protect riders, and the Fusion 2.0 Junior which is designed for junior athletes.
Another product found under the neck brace category is the Neck Brace Kart, specifically designed for go-kart riders. This neck brace features a special Kart angle for improved function and fit. It features bio foam lycra padding and has fully adjustable front and rear tables.
The Company offers various versions, sizes, and colors of these products to appeal to different clients and to address different price points. All these neck braces are CE certified as Personal Protective Equipment 89/686/EEC. To view a detailed listing of these products please see our website; www.leatt.com .
Helmets
In 2015, the Company launched its helmet range and commenced shipment with a limited helmet range. The Company expanded its off-road helmet range in 2016 to include two junior helmets and its award-winning MTB range for downhill and BMX bicycle use. The Company currently sells various models of helmet products which the Company believes redefines head and brain protection with its ground-breaking 360-degree Turbine technology for concussion and brain rotation safety.
The Moto helmet range, designed for off-road motorcycle riders, consists of the award-winning Moto 9.5 Carbon Helmet, a race-ready, premium carbon shell helmet; the Moto 8.5 Helmet with four densities of impact foam, the Moto 7.5 Helmet, a lightweight helmet with a super-ventilated injected polymer compound shell; the Moto 3.5 Helmet, a polymer helmet with 360-degree turbine technology and multi-density impact foam at a competitive price point (with a competitively priced version for young riders, the Moto 3.5 Junior, Helmet); and the latest addition, the Moto 2.5 Helmet, a polymer compound helmet with 360-degree turbine technology at the most competitive price point in the range. All these helmets meet U.S. DOT and ECE 22.06 standards.
The Company launched the ADV helmet range in 2024, designed for adventure riding and featuring the patented 360º Turbine Technology, a revolutionary safety design. The ADV 9.5 Carbon Helmet provides ultimate protection and performance for adventurous riders. It is constructed from a six layer carbon matrix and four densities of impact foam, strategically fixed to maximize protection, reduce shell size and weight. The ADV 8.5 Helmet provides premium protection, it is constructed from a three layer composite matrix which is a lighter and stronger construction than a polymer shell. The ADV 7.5 Helmet provides great protection, it is constructed from an injected polymer compound shell.
The MTB helmet range consists of the premium MTB Gravity 8.0 Helmet, a well-ventilated composite helmet made specifically to suit downhill and BMX riders' requirements which has passed Motorcycle ECE standard and ASTM certified; the MTB Gravity 6.0 Carbon Helmet, a DH certified lightweight M-Forge® carbon shell helmet with a composite chin bar; the Helmet MTB Gravity 5.0, is the first full-face helmet to feature the BOA® FS2 Fit System, delivering a secure 360° wrap with micro-adjustable precision and dual-position cheek pads for a truly personalized fit ;the Helmet MTB Gravity 4.0, a DH certified lightweight polymer shell helmet with maximized ventilation; the Helmet MTB Gravity 2.0, a DH certified ASTM polymer shell helmet with stainless steel mesh vents for added protection against debris; the Helmet MTB Gravity 1.0, a polymer helmet with 360-degree turbine technology at a competitive price point, and its junior version, the Helmet MTB Gravity 1.0 Junior, certified ASTM downhill for use by younger riders.
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The MTB helmet range also has helmets designed for Enduro riders' requirements: the MTB Enduro 4.0 Helmet, which has a DHcertified lightweight polymer shell with a removable chin bar with an easy-fit attachment system. The award-winning MTB 3.0 Enduro Helmet is a lightweight polymer shell with a three-in-one helmet design, with the option of a half-shell face helmet, removable chin bar and optional over-the-ear guards. The MTB 2.0 Enduro Helmet is a lightweight polymer shell with a removable chin bar, and the MTB 2.0 Junior Enduro Helmet is adapted for junior riders which is certified and tested: AS/NZS 2063:2008, EN1078, CPSC 1203.
The Company also has a range of half -shell helmets for MTB riders, which incorporates the 360-degree Turbine technology for concussion and brain rotation safety. The MTB All-Mountain 4.0 Helmet, this helmet is the premium lightweight polymer half shell helmet with in-molded EPS and EPO impact foam for superior energy absorption, the MTB All-Mountain 3.0 Helmet, which is a half shell polymer compound helmet for cyclists, the MTB Trail 3.0 Helmet, is a new lightweight all-purpose MTB helmet with PowerBridge in-molded force absorber is designed for trail riding, cross country training and back country or gravel adventures, the MTB Trail 2.0 Helmet, is a lightweight polymer shell with MaxiFlow impact foam air channels, and the MTB Trail 1.0 Helmet is a competitively priced trail-ready helmet. The MTB Trail 1.0 Universal Fit is engineered to comfortably fit a wide range of head shapes and sizes, with a FidLoc magnetic buckle. The MTB 2.0 All-Mountain Helmet is a lightweight polymer half shell with a sunglasses dock port for easy, secure storage. The MTB 1.0 All-Mountain Helmet, which is the most competitively priced helmet in this range, offers protection around the head and a deeper rear coverage, and the MTB All-Mountain 1.0 Junior Helmet is the lightweight junior helmet at a competitive price, which offers protection around the head and a deeper rear coverage.
The Company has launched a range of endurance helmets designed for endurance cyclists. The helmets incorporate the 360-degree Turbine technology for concussion and brain rotation safety, and the PowerBridge in-molded force absorber, eyewear docking port with anti-slip function. The range includes the MTB 4.0 Endurance Helmet, which is more ventilated than the 3.0 model, and the MTB 3.0 Endurance Helmet is priced more competitively for the everyday rider.
In 2020, the Company introduced the Urban range designed for riding on the busy streets. This range includes: the MTB 2.0 Urban Helmet, a stylish helmet with a fit system for improved individual fitment and stability; and the MTB 2.0 Junior Urban Helmet.
The Company offers various versions, sizes and colors of these products to appeal to different clients in different disciplines and to address different price points. All our helmets have achieved CE certification and other certifications as necessary, depending on market requirements. For the US market our motorcycle helmets comply with the DOT (FMVSS 218) helmet safety standard and our bicycle helmets comply with EN1078, as well as CPSC 1203. Our downhill specific bicycle helmets also comply with ASTM F1952. For our Australian Market our bicycle helmets comply with AS/NZS 2063, for the UK market substantially all of our motorcycle helmets comply with the ACU Gold standard, for the Japanese market our Moto 3.5 helmet complies with the JIS T 8133 standard, and for the Brazilian market our Moto 7.5, Moto 3.5, and Moto 2.5 helmets comply with the NBR 7471 standard. Our Enduro 4.0 helmet and All-Mountain 4.0 helmet have also acquired NTA8776 certification, to meet the new e-bike helmet certification requirements of the Dutch Technical Agreement (NTA) 8776. For the Chinese market the Moto 9.5, Moto 8.5, Moto 7.5, Moto 3.5 and Moto 2.5 have CCC approval. To view a detailed listing of these products please see our website: www.leatt.com.
Body Armor
In 2010, we launched the Leatt body armor range with our introduction of the Leatt Adventure Chest Protector, a hard-shell chest protector. The following year, we introduced junior protectors, body vests and full body protectors. Since then, we have further extended our range to include more body protectors and vests, back protectors, elbow guards, knee guards, impact shorts and cooling vests. These products come in a variety of soft- and hard-shell options for both adult and junior riders. Our expanded body armor product range has also gained us entry into new markets.
In 2014, we expanded into the shoulder and knee-brace markets with the addition of our shoulder brace and C-Frame knee brace to our range of body protection products. In the first quarter of 2015, after our Knee Brace was accepted for registration by both the United States Food and Drug Administration (FDA) and the UK's Medicine and Healthcare Regulatory Products Agency (MHRA), and our Shoulder Brace was accepted by the FDA as a Class 1 Medical Device. FDA and MHRA registration allow us to take these products directly to market as medical devices for patients (not just athletes) recuperating from injuries, surgery, muscle tears or strains, dislocations, breaks or fractures. The Company has expanded its knee brace range to include: the Moto C-Frame Pro Knee Brace Carbon, which is the premium knee protection in the range; the Moto C-Frame Hybrid Knee Brace Carbon, which is slimmer than the Pro Carbon model to fit race pants while retaining the stiff chassis of the mono hinge; the Moto X-Frame Knee Brace Carbon, which is injected carbon cage-type knee protection; the Moto X-Frame Hybrid Knee Brace Carbon, which includes a sleeve with Reaflex impact gel knee cup with hard shell for ultimate knee brace comfort; and the Moto Z-Frame Knee Brace, which is a glass-filled nylon knee protection product at a competitive price point. The Company has expanded the junior knee-brace range to include the Moto Z-Frame Knee Brace Junior and Moto C-Frame Knee Brace Junior, both of which are designed for younger athletes.
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In 2019, we launched our innovative Moto 5.5 FlexLock Boot range, consisting of the Moto 5.5 FlexLock Boot and the Moto 5.5 FlexLock Enduro Boot. These Boots are designed to be an essential part of any rider's motocross riding kit. Our Boots feature the SlideLock system for an outstanding first-class fit, a low-profile toe box for easy gear shifting, and an incredible FlexLock system that is proven to reduce ankle forces by up to 37% and knee forces by up to 35% upon impact, when compared to an industry-leading competitor boot. The Moto 4.5 Boot range, consisting of the Moto 4.5 Boot, the Moto 4.5 Enduro Boot, and the Moto 4.5 HydraDri® Boot, all of which include a SlideLock system, an auto-locking one-way sliding closure for a great seal at the top of boot, an extended foot peg riding zone for arch and on the toes riding style, and a reinforced steel shank. Other additions to the Moto 3.5 Boot range consist of the Moto 3.5 Boot, the Moto 3.5 HydraDri® Boot and the Moto 3.5 Junior Boot, which also features the SlideLock system at a competitive price point. The latest boots to be added to our ADV product line, are the ADV HydraDri® 8.5 Boot, and ADV HydraDri® 7.5 Boot which has been designed for the Adventure market, is waterproof, protective and provides all-day comfort for riders, and the ADV X-Flow 7.5 short, a lightweight boot with quality Nubuck chassis surrounding soft perforated foam, topped with a breathable, durable fabric for an optimal balance of weight, maneuverability, breathability and resistance, even in hot conditions. All our boots are CE tested and certified.
In 2020, we launched our MTB shoes. The MTB shoe range has since expanded to include a wide range of different models that are designed to satisfy any rider's needs, including a variety of clip-on shoes and flat shoes in various colors. The Clip range includes various styles of shoes with the ClipGrip SPD channels. The range also includes new Trail shoes fitted with the BOA® Fit System. Our shoe soles include the RideGripTM PRO Compound for traction and enhanced bike control. The entry-level MTB 1.0 Flat Shoe, MTB Hi Flat Shoe and RideOne 1.0 Shoe can be used as an everyday casual shoe. We also introduced the ProClip range, which includes the ProClip 8.0 Endurance, designed with a Ripstop Polymer Fiber upper reinforced with a TPU overlay and equipped with two insoles for enhanced support. The ProClip 6.0 features the RideGrip™ compound, providing superior traction and durability, while the HydraDri 5.0 ProClip incorporates a HydraDri membrane waterproof bootie construction to keep feet dry in wet conditions. The Company also introduced MTB shoes designed for female and junior riders in various styles and colours.
Our team is committed to consistently expanding, updating and refining these products based on consumer feedback and demand on an annual basis. The Company offers various versions, sizes and colors of these products to appeal to different clients in different disciplines and to address different price points. All our products have achieved CE certification when necessary. To view a detailed listing of these products please see our website: www.leatt.com.
Other Products, Parts and Accessories
Goggles
In 2019, we launched our Leatt Goggle range, developed with WideVision anti-glare, anti-fog technology and bullet-proof tested to military ballistic standards for durability. The goggles also feature a detachable nose piece for multi-purpose use, easy clip-in / clip-out and self-draining frames, and anti-fog lenses that provide the same fit for the entire line-up, ranging from 20-83% Visible Light Transmission (VLT). Currently, our full range of goggles has grown to include over twenty models of goggles with a variety of interchangeable lenses and color options to meet all our riders' requirements, as well, as smaller size.
Leatt Apparel Range
The Leatt Apparel Range is the fastest growing product category in the Leatt range of products. In 2015, we introduced a new product category of gloves to our apparel products and expanded our offering of cooling apparel products. We have since added a variety of apparel products for off-road motorcycle riders and bicycle riders, including our award-winning mono suits, jackets, jerseys, pants, shorts, socks, and gloves. The latest addition to this range is our ADV specific range of pants and jackets for the Adventure market, to suit a variety of climates. All products in this range come in a variety of trendy colors and are designed in line with the latest international fashion trends. We are continuously expanding our range to appeal to a wider range of consumers.
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Casual Clothing and Accessories
We also sell a variety of casual clothing, socks and caps which we have expanded to include sunglasses. We sell accessories that complement our expanding range of products including toolbelt bags, duffel bags, gear bags, helmet bags, backpacks, hats and hydration kits. The products are designed in line with the latest international fashion trends.
MTB Components
In 2025, we launched a range of bicycle components, which includes pedals, stems, handlebars and grips. The pedal range includes pedals made from aluminium and CeraMag®, ceramic-coated magnesium. The handlebars set that combines an ultra-stiff 7050 aluminium bar with vibration-dampening ReaFlex® grips.
Spare Parts
We also provide aftermarket support to users of our protective products primarily for the replacement of worn or damaged parts through our global distribution network. The nature of many of our products is such that certain components collapse and fail in a controlled mode to help prevent further bodily injury. As such, specific parts of a product or the entire product may need to be replaced after a significant impact.
Our team is committed to consistently updating and refining these products based on consumer feedback and demand on an annual basis. To view a detailed listing of these products please see our website: www.leatt.com.
Accolades
The Leatt products have won a series of awards and accolades since 2007, including the following:
• Motocross Action: Leatt-Brace GPX awarded 5/5 Star Product Rating (2007) and Decade's Most Significant Product (awarded by an industry magazine based on comfort, fit and safety)
• ISPO Brandnew Awards: Leatt-Brace DBX awarded Best Protection at Bike Expo (2010) (Bike Expo is an annual gathering of industry participants)
• Motocrossgear.com: Perfect Score to New 2012 Leatt-Brace Chest Protector Adventure Pro (selected by an industry website, based on looks, comfort and safety)
• PPS Moto: This Motocross Product review website awarded the Company the 2014 PPS Moto Protective Gear Company of the Year Award.
• 2015 Vital MX Audience Survey: The Leatt Neck Brace was voted the number one Neck Brace to buy in the Vital MX Audience Survey.
• Decline Magazine: Decline Magazine awarded Leatt Knee Guards a five-star rating based on the product's fit, impact testing, breathability and overall appeal (July 2016).
• Eurobike Award 2017: In 2017, the Leatt DBX 3.5 neck brace won a Eurobike Award. Eurobike is the world's leading trade fair where international bike industry exhibitors present their products and services. The prestigious Eurobike Award honors innovative products and is a highlight of the annual exposition.
• The MTB Lab Best of 2017 Award: In 2017, The MTB Lab, an online publication on mountain bikes and outdoor gear, named the Leatt DBX 3.0 All-Mountain Helmet one of the best products for 2017.
• 2017 Crankjoy Gear of the Year: The Leatt DBX 3.0 helmet was listed by the Editors of Crankjoy, an online publication on mountain bike lifestyle and gear, as among its favorite riding gears for 2017.
• 2020 Gear Of The Year Award: The Moto 9.5 Helmet was named the 2020 Gear of the Year award by German Cross Magazine. The award winner is selected on an annual basis by the Editors of the magazine.
• Mountain Biking UK Magazine: The Airflex Stealth Body Tee was selected as the winner of the "6 of the Best Body Protection" (October 2021).
• Mountainbike Magazine: In 2015, the Leatt F4 Hydration System won the Mountainbike Magazine Design and Innovation Award, as selected from among 100 products by an international jury featuring top athletes, including Enduro World Series Winner, Nico Lau. In 2017, the Leatt DBX 3.0 helmet was one of ten winners in the Editor's Choice Innovations category reserved for innovations that the Editors believe most shaped the mountain bike world during the prior year.
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• Vital MX Audience Survey: The Leatt Neck Brace was voted the number one Neck Brace to buy in the Vital MX Audience Survey for two years running in 2019 and 2020.
• Interbike Innovation Award Winner: The Interbike International Bicycle Exposition is the largest bicycle industry trade event in North America, and its awards are aimed at recognizing excellence and innovation in product, retail, and advocacy. The Leatt DBX 3.5 neck brace was named an Interbike Innovation Award winner in 2017, and the Leatt DBX 4.0 Helmet won the same Innovation Award in 2018.
• Transworld MX: In 2009, the Leatt Brace Adventure was won the Editors' Choice award for 2009 Best New Product of Year, in 2011, the Leatt GPX Pro won the Editors' 2011 Best Product of the Year award, based on comfort and safety, and in 2012, the Leatt Pro Lite chest protector was awarded 2012 "Product of the Year" based on testing and appearance.
• Racer X Readers' Choice Award: The Leatt Brace has been selected as the number one worn Neck Brace by readers of Racer X magazine, for three years running from 2019, 2020, and 2021.
• Powersports Business Nifty 50 Award: The Nifty 50 Award is conferred by the editors of Powersports Business, an industry publication that selects aftermarket products and services that they believe will help boost dealer profitability. To be eligible for an award, products have to be new or substantially improved from previous years and must be ready for delivery in the calendar year of the award. Leatt received the Nifty 50 Award in 2018 for the Leatt GPX 4.5 Helmet and the Leatt GPX 3.5 Neck Brace, in 2021, for the Leatt X-Frame Hybrid Knee Braces, and in 2022 for the Leatt 8.5 Moto Helmet Kit.
• Design & Innovation Award: Leatt is a frequent winner of this award conferred each year by the Design & Innovation jury of bicycle industry experts in recognition of bicycles and bicycle products. The Leatt DBX 5.0 Composite Helmet and the Leatt DBX Enduro Lite WP 2.0 each won a Design and Innovation Award for 2016; the Leatt DBX 2.0 Helmet and the Leatt DBX 3.5 Neck Brace each won a Design and Innovation Award for 2018; the Leatt DBX 4.0 Helmet won a 2019 Design & Innovation Award; the Leatt 4.0 Velocity Goggles won a 2021 Design and Innovation Award; the Mono Suit MTB HydraDri® 5.0 and the Leatt MTB 3.0 Enduro helmet each won a 2023 Design and Innovation Award; and the new Leatt All-Mountain 5.0 Jersey and the Leatt All-Mountain 4.0 Pants each won a 2024 Design and Innovation Award and in 2025, the Leatt Ride Kit MTB 1.0 and the Ceramag AllMTN 8.0 Ti Flat Pedal were awarded with Design & Innovation Awards.
We believe that the premium quality of the Leatt® neck brace has resulted in increased sales since its inception. We have sold in excess of 1,004,000 units of the Leatt® neck brace products worldwide to date.
Manufacturing.
Our products are predominantly manufactured in China by third-party manufacturers in accordance with our manufacturing specifications, pursuant to outsourced manufacturing arrangements based on agreed standard operating terms. We continue to build manufacturing capacity outside of China and currently have manufacturing partners in Thailand, Cambodia, and Bangladesh. We do not currently have any material written agreements with our neck brace third-party manufacturers, but will include any such future material written agreement in our periodic filings. We offer a warranty on our products based on the legal requirements of the specific geographical region where our customers reside. Products purchased through international sales channels are usually shipped directly from our consolidation warehouse or manufacturers' warehouses to customers or their import agents globally.
Upon our determination of order quantities, we issue periodic purchase orders for products to our third-party manufacturers at negotiated prices. A security deposit of between 10 - 30% of the total purchase order value is made with such manufacturers upon receipt of a manufacturer's invoice reflecting confirmation of quantities ordered and the negotiated price for the products. The standard lead time from purchase order date to ship-ready date varies between 90 and 120 days, and our standard supplier shipping terms are FOB (Port).
During production, we measure the manufacturer's quality and on-time performance to determine whether to continue our relationship. We utilize outside consultants and our own employees based in Asia to ensure the quality of our products through regular on-site product inspections. Such quality inspections are conducted in conformance with ISO/IEC 17025 specifications at the manufacturer's premises. Penalties and expedited shipping costs may be levied against a manufacturer if there are excessive delays in shipment to customers or customer rejection is caused by quality issues. The balance of open invoices is paid to the manufacturer based on agreed terms, post successful inspection.
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Raw Materials and Suppliers
Our products are manufactured from generally available engineering materials, such as thermoset carbon fiber, glass fiber reinforced nylon and high impact polycarbonate resin. The cost of materials used in our products varies depending on the technical and safety specifications, as well as the target market and the price of our products. The prices of these raw materials are determined based on prevailing market conditions and supply and demand. Global conditions may impact the supply of these raw materials and adversely affect the supply of our products. We have not experienced any significant interruptions to our production due to a shortage of our raw materials.
Our third-party manufacturers arrange for the purchase of most of the raw materials that are used to manufacture our products and they pay for the cost of such materials. We may occasionally directly source and pay for highly specialized protection materials, for use in the production of our products. These protection materials are generally available. We also occasionally acquire raw materials on behalf of a third-party manufacturer to secure and maintain a specified production capacity. The expenses incurred for such materials for the years ended December 31, 2025, and 2024, were not material, and we do not foresee these amounts being material in the near future.
We have implemented certain protocols to check the quality of incoming raw materials used in the production process, where necessary. Our third-party manufacturers are required to perform prescribed strength testing on critical parts of certain products. In addition, certain materials are tested by our research and development employees at Leatt SA and by independent material laboratories for compliance with manufacturing and material specifications.
Our Customers
Leatt earns revenues through the sale of its products to customers worldwide through a global network of distributors and retailers. Leatt also acts as the original equipment manufacturer for personal protective equipment sold by certain international brands. Leatt sells its products directly to dealers and direct to end consumers through digital channels in South Africa (through Leatt SA), in the USA (through Two Eleven), and through a network of approximately 61 third-party distributors worldwide. Our distributors are required to follow certain standard business terms and guidelines for the sale and distribution of our products. Two Eleven also sells our products directly to consumers through our online store available at www.leatt.com.
Products purchased through international sales are usually shipped directly from our consolidation warehouse or manufacturers' warehouses to customers or their import agents. Revenue and related cost of revenue is recognized at the time of shipment from the manufacturer's port when 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 customer.
We generate revenue both in the United States and abroad. For the years ended December 31, 2025 and 2024, annual revenues associated with international customers were $44,644,239 and $30,410,516 or 72% or 69% of total revenue, respectively.
We have derived a significant portion of our revenue from a limited number of customers, however none of our customers account for more than 10% of our consolidated revenues for the year ended December 31, 2025. For the years ended December 31, 2025 and 2024, our largest customer accounted for approximately 7% and 2% of our annual U.S. revenue, respectively. As of December 31, 2025 and 2024, $146,202 or 2% and $213,391 or 3% of our accounts receivable, was due from this customer.
For both years ended December 31, 2025, and 2024, one customer accounted for approximately 7% and 4% of our annual international revenue, respectively. As of December 31, 2025 and 2024, $239,669 or 3% and $500,548 or 8% of our accounts receivable were due from this international customer.
Advertising and Marketing
Initially we gained market recognition through customer word-of-mouth and then subsequently through third-party articles and reviews of the Leatt-Brace® in motorcycle and racing magazines with unsolicited and unpaid endorsements from current and former celebrity motocross (and other) riders supporting these sports, but we now implement global marketing campaigns that incorporate web and print based advertising, social media engagement, sponsorship of sporting events and athlete sponsorships that are designed to promote the Company's growing product range and consumer brand on a global basis by increasing product and brand visibility.
We believe that, as a result of our marketing efforts, and based on our internal marketing estimates, we have approximately 698 active distributors and dealers who stock Leatt products in the U. S. and approximately 231 active dealers in South Africa. We expect that the number of our distributors and dealers will also grow as the market segments that we sell to, and our product offering grows but we cannot guarantee that this will be the case.
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Our advertising and marketing expenses for the years ended December 31, 2025, and 2024 were $4,563,919 and $4,454,906, respectively, representing approximately 7% and 10% of our revenues, respectively.
Our Growth Strategy
We are committed to growing our business in the coming years. The key elements of our growth strategy are summarized below:
Regional Distribution. Our product range has attracted the interest of global retailers and distributors of protective gear for motor and extreme sports, as well as motorcycle manufacturers and racing teams. The resultant interest and the expected demand for our products prompted us to change our production and distribution strategy in order to cater to this demand. In November 2007, we established Two Eleven, our wholly owned Nevada subsidiary, to manage and control the distribution of our products, particularly in the United States. We distribute products to international consumers through a network of international third-party distributors who are selected by our management team based on their financial status, distribution abilities and creditworthiness, their location in major geographic territories, their marketing and media presence and their portfolio of leading motorcycle brands and accessories as well as their reputation among industry players. We are continuously refining our global multi-channel distribution network by appointing new distributors and dealers with a specific focus on the motorcycle, ADV or bicycle market. We believe that regional distributors will better promote our products in the designated regions and expand our global customer base. In the U.S. we are expanding and upgrading our dealer network and sales management team.
Strategic Alliances. We are actively researching and evaluating strategic alliances that will enable the Company to grow into markets outside of its core markets in an efficient manner. We are also working with our OEM partners to develop more mutually beneficial, sustainable, long-term relationships in line with the Company's goals.
Industry Accreditation and Endorsements. We are pursuing accreditation and endorsements of our products from global motor sports governing and homologation bodies as well as industry organizations. We believe that these accreditations and endorsements will increase sales of our products and solidify our position as a leader in safety products. Should neck protection in two wheeled sports become compulsory we believe that such accreditations and endorsements will additionally increase our sales.
Developing Brand Awareness and Brand Loyalty. We are continuing with our efforts to develop brand loyalty by refining our marketing strategy and by engaging in more targeted communication with current and potential consumers of our products. We are working to build loyalty among more consumers in our core bicycle and moto markets by introducing more price points for our products and addressing more consumer needs in more segments, while remaining true to our mission-pioneering functional safety gear.
Expanding our Portfolio of Products. A cornerstone of Leatt's growth strategy is the introduction of new products that are designed reach a wider rider audience and penetrate new markets. This includes expanding our product range to include innovative protective gear and peripheral products that are well differentiated and align with our core competencies and design principles. Over the last 2 decades we have systematically added worldclass product categories to our range which has made the company a head-to-toe brand for motorcycle, adventure and cycling gear. We continue to develop and refine our product categories.
Our Research and Development Efforts
Our Chairman and Founder, Dr. Christopher Leatt, is our primary research and development consultant and heads the research and development efforts conducted at our research facility, or Leatt Lab, located at our executive headquarters in Cape Town, South Africa. The facility houses a team of biomedical engineers, technicians, designers, and a medical doctor, who ensure products are scientifically conceived, tested and approved. This facility features state of the art testing and prototyping equipment as well as sophisticated simulation modelling and analysis. Leatt also frequently uses the services of outside consultants, academic institutions, and engineering companies, to assist us with our research and development efforts as well as evaluate our methodologies.
We believe that the development of new products and new technology is critical to our success. We are continuously working to improve the quality, efficiency and cost-effectiveness of our existing products. All our helmets have achieved CE certification and other certifications as necessary, depending on market requirements. For the U.S. market our motorcycle helmets comply with the DOT (FMVSS 218) helmet safety standard and our bicycle helmets comply with EN1078, as well as CPSC 1203. Our downhill specific bicycle helmets also comply with ASTM F1952. For the UK market substantially all of our motorcycle helmets comply with the ACU Gold standard, for the Japanese market our Moto 3.5 helmet complies with the JIS T 8133 standard, and for the Brazilian market our Moto 9.5, Moto 7.5, Moto 3.5, and Moto 2.5 helmets comply with the NBR 7471 standard. Our Enduro 4.0 helmet and All-Mountain 4.0 helmet and Gravity 5.0 helmet have also acquired NTA8776 certification, to meet the new e-bike helmet certification requirements of the Dutch Technical Agreement (NTA) 8776. For the Chinese market the Moto 9.5, Moto 8.5, Moto 7.5, Moto 3.5 and Moto 2.5 and ADV 9.5, ADV 8.5 and ADV 7.5 have CCC approval. The Moto 9.5 has been homologated to FRHPhe-02-2023 for us in FIM sanctioned off-road racing events. We are working on testing selected high-end MTB helmets at V-Tech according to their rating system. We are also working on getting some of our high-end MTB helmets tested at V-Tech according to their rating system. In addition to our helmet portfolio, our goggles and sunglasses undergo certification and testing in accordance with applicable international eyewear standards. Within our goggle range, the Velocity 6.5, 5.5 and 4.5 goggles are certified to EN1938 and are impact-tested on the lenses according to MIL-DTL-43511D. The Velocity 6.5 SNX, 5.5 SNX and 4.5 SNX goggles are certified to EN13178 and are also impact-tested to MIL-DTL-43511D. Our MTB 5.0, 4.0 and 4.0 X-Flow goggles are tested to EN1938 and undergo MIL-DTL-43511D lens impact testing. The Vizion 3.5, 2.5 and 2.5s goggles are certified to EN1938, while our MTB 2.0 goggles are tested to EN1938. Within our sunglass range, the SpeedViz Pro and SpeedViz Lite models are tested to EN ISO 12312, ANSI Z87.1 and AS/NZS 1067.1. Our RideViz Pro, RideViz Lite, RideViz Pro S, RideViz Lite S, TheViz Andes, TheViz Sierra, TheViz Pyrenees and MadViz One sunglasses are tested to EN ISO 12312, ANSI Z80.3 and AS/NZS 1067.1. We are continuously working to expand our range of products with further technological innovation, comfort, ergonomics and market appeal. We believe that our scientific and medical approach to product development gives our products a competitive edge.
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Our research and development expenses for the fiscal years ended December 31, 2025, and 2024 amounted to $2,704,071 and $2,523,881, respectively. These expenses included salaries for research and development employees as well as other direct product development and research costs.
Competition
We compete with a small number of dominant competitors in the protective gear and apparel market, some of whom have substantially greater financial and other resources than we currently have. According to the 2023 Racer X Readers' Choice Survey discussed elsewhere herein and available at https://rx.iscdn.net/media-kit/2025/01/361_readers-choice-survey-results-2024.pdf, our major competitors are Alpinestars S.p.A, Fox Head, Inc., Bell Sports, Inc., EVS Sports, and Fox Racing.
Competition is based on quality, price, reputation, industry endorsements and certifications, as well as, on product design, consumer brand recognition, marketing support and distribution strategies. We believe that our products can be distinguished from the products offered by our competitors because our products are innovative, safety tested, versatile, aesthetically appealing, priced competitively and comfortable without compromising quality and performance.
Our Competitive Strengths
We believe that our competitive strengths include the following:
• Intellectual Property. Both our patents and licensed patented technology allows us to provide a product that cannot easily be duplicated by our competitors. We have invested extensive resources to patent our products worldwide and have taken legal action to protect our intellectual property rights from infringement.
• Diverse Multi-Cultural Skilled Management Team. Our management team is knowledgeable and experienced in the personal protective equipment industry, sports medicine, and business development. Our executive corporate management team consists of Mr. Sean Macdonald, Dr. Christopher Leatt, and Mr. Erik Olsson. Mr. Macdonald is our Chief Executive Officer, Chief Financial Officer, President and Director, and is a Chartered Accountant with over 20 years' experience in the financial and operational aspects of running sports orientated growth companies. Dr. Leatt is our Founder, Chairman and Research and Development consultant, who developed the Leatt-Brace® from his study of the benefits and viability of a neck protection system for helmet clad sport and recreational users. Mr. Olsson is our General Manager and Head of International Distribution and has served for over 25 years as a Sales and Product Manager for various companies in the power sports industry.
• Sale and Distribution Channels: Our ability to attract top tier distribution and retail sales channels for the sale of our products is a competitive advantage. These distributors have the financial and distribution resources and relationships to penetrate existing product categories within dealerships and reach a wide geographical dealer network and ultimately consumer base. The Company sells its products to consumers through a global network of approximately 61 global distributors, including the Company's U.S. subsidiary, Two Eleven, and its South African subsidiary, Leatt SA. The Company manages this distribution network through its establishment of standard business terms and guidelines for the sale and distribution of its products to retailers worldwide, and through its direct control of Two Eleven and Leatt SA, the exclusive distributors of Leatt products to retailers in the U.S. and South Africa, respectively. Our research and development and marketing teams also work closely with distributors to educate their sales forces about technical innovations in our products, and to provide support in the marketing and other promotion of our products. We believe that our increase in worldwide sales and our continued expansion into global markets is a testament to the efficiency and effectiveness of our worldwide distribution channels.
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• Outsourced Manufacturing. We outsource our manufacturing to third-party manufacturers in order to produce large volumes of our products. The manufacturing process remains subject to our strict quality control guidelines safeguarded by our employees and the third-party inspectors who we hire as consultants to ensure that these guidelines are being implemented at the production point. While such manufacturing arrangements pose a risk to our ability to safeguard our proprietary technologies and may lead to increased costs, as discussed under the "Risk Factors" heading in this report, we expect that the increase in expected sales volumes will contribute to a lower production cost per unit and that this will translate to better margins for our distributors and retailers.
• Research, Development, Certification and Marketing Capabilities. We have in-house know-how in the areas of product development, testing and accreditation, particularly in the field of personal protective equipment. With the experience and capabilities developed and established in taking our product to market, we believe that we are well positioned to develop, manufacture and market additional products. With our medical and mechanical expertise, demonstrated research and development capabilities, established outsource manufacturing capacity, established brand and our dedicated, loyal and enthusiastic distribution network, we believe that we have the components necessary to bring new successful products to market.
• Industry Accreditation, Testing Standards and Regulations. We are pursuing accreditation and endorsements of our products from global motor sports governing and homologation bodies as well as industry organizations. We have obtained homologations of our products from various global racing authorities where objective standards have been set and we are in discussions with governing racing bodies, such as the FIM, to have the Leatt-Brace® accredited. Should industry accreditation become compulsory, we would be ahead of our competitors in the marketplace.
• Brand Recognition. We believe that public recognition of the Leatt® brand drives the sales of our products, regardless of the action of competitors and competitive products. We expect that the reputation of our brand in the marketplace, particularly our product testing and applicable CE certification, will continue to ensure market acceptance and facilitate market penetration of our new products. In order to bolster and grow the Leatt® brand, stringent quality control and assurance are our highest priority, and our ongoing marketing, advertising and public relations efforts continue to stress the quality, safety and innovation of our products.
Our Intellectual Property
We believe that the continued success of our business is dependent on our intellectual property portfolio consisting of globally registered trademarks, design patents, and utility patents related to the Leatt-Brace. Most of these initial intellectual property rights are held by Xceed Holdings, a corporation controlled by our Chairman, Dr. Christopher Leatt, and the rest of these rights are held by the Company. We license most of our intellectual property from Xceed Holdings, pursuant to a patent and royalty license agreement, or Licensing Agreement, dated March 1, 2006, between the Company and Xceed Holdings. Under the terms of the Licensing Agreement, we are obligated to pay Xceed Holdings 4% of all our revenues billed and received from the Leatt-Brace. In addition, pursuant to a separate license agreement between us and Mr. De Villiers, we are obligated to pay a royalty fee of 1% of all our billed and received sales revenue, in quarterly installments, based on sales of the previous quarter, to a trust that is beneficially owned and controlled by Mr. De Villiers. We also rely on nondisclosure agreements and other methods to protect our intellectual property rights. However, the steps we have taken may be inadequate to prevent the misappropriation of our technology.
Xceed has licensed us thirty-five utility patents registered in various countries for the Neck Brace. Thirty-four expired in 2024, and one will expire in 2026. Furthermore, we hold a license for four design patents, registered in Europe and the U.K, covering various Neck Brace designs, and two European design patents have renewal dates in 2027. We hold one South African patent for a Shoulder Protector, and one South African patent for a Chest Protector, both of which have renewal dates in 2026. We hold patents for our Knee Brace in the U.K. and Germany, with renewal dates in 2026.
We hold patents for Goggles in Germany, the U.K, and U.S.A, the latter of which is renewable in 2027, while the Germany and the U.K patents have renewal dates in 2026. We hold four design patents for Goggles in Europe, with renewal dates in 2027, 2029, and 2030. We hold five design patents for Goggles in the U.S.A, and one design patent for Goggles in the U.K. The U.K design patent has a renewal date in 2030. We hold patents for our Turbine Helmet in Australia, Hong Kong, Germany, and the U.K., all of which have renewal dates in 2026. We hold three patents for our Turbine Helmet in the U.S.A., with renewal dates in 2027, 2028, and 2029, and another Turbine Helmet patent application currently pending in the U.S.A. We hold one U.S.A. design patent for our Visor Screw, which expires in 2031. We hold design patents for our Hydration System in the U.K and U.S.A, the U.S.A patent expires in 2030, and the U.K patent has a renewal date in 2029. We hold one European design patent for our Visor Screw and Hydration System, with a renewal date in 2029. We hold design patents for our STX Neck Brace in Japan, Europe, the U.S.A., and U.K. The European and U.K design patents have renewal dates in 2030, and Japan in 2026. The U.S.A design patent expires in 2026. We hold patents for our Flexlock Boot in the U.S.A., U.K., Germany, Italy, and Thailand, with the U.S.A patent having a renewal date in 2029, and the remaining patents with renewal dates in 2026. We hold one patent for our Velcro Boot in the U.K., with a renewal date in 2027. We hold one patent application for our Velcro Boot in Germany, which is currently pending, with a renewal date in 2027. We hold a U.S.A design patent for a Boot, which expires in 2036. We hold three patents for a Jacket in Germany, the U.K., and U.S.A., with the patents in Germany and the U.K having renewal dates in 2027, and the U.S.A. patent in 2028. We hold patents for our Hoodies with a magnetic fixture in Germany, the U.K., and U.S.A. with the patents in Germany and the U.K having renewal dates in 2026, and the U.S.A. patent in 2030. We hold a design patent for a team sport product in the U.S.A. We filed two Patent Cooperation Treaty (PCT) patent applications for airbag products, both of which are currently pending.
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Patents applicable to specific products extend for varying periods according to the date of patent application filing or patent grant and the legal term of patents in the various countries where patent protection is obtained. The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage, and the availability of legal remedies in the country. Issued patents or patents based on pending patent applications or any future patent applications may not exclude competitors or may not provide a competitive advantage to us. In addition, patents issued or licensed to us may not be held valid if subsequently challenged and others may claim rights in or ownership of such patents. In addition, the validity and breadth of claims in protective gear technology patents involve complex legal and factual questions and, therefore, the extent of their enforceability and protection is highly uncertain.
We have extensive licensed and registered trademarks. Leatt® is trademarked in Argentina, Australia, Canada, Chile, China, the European Union, Indonesia, Japan, Kazakhstan, Malaysia, Mexico, New Zealand, Peru, Philippines, the Russian Federation, Singapore, South Africa, Taiwan, Thailand, U.S.A, Vietnam, and the U.K. in multiple classes depending on the jurisdiction. These multiple trademarks have renewal dates between 2026 and 2035. We also have a Leatt® trademark pending in Macao. Leatt-Brace® has been trademarked in China, the European Union, South Africa, U.K. and the U.S.A. with renewal dates between 2027 and 2034. ALPT® and Alternative Load Path Technology® trademarks are registered in the U.S.A. in class 9, renewable in 2031 and 2030, respectively. Leatt® has also been trademarked in special script in Brazil with renewal dates in 2032. The Leatt Devices and/or Icons have been trademarked in Brazil, China, Colombia, the European Union, South Africa, U.K. and U.S.A., with renewal dates between 2029 and 2035 in multiple classes depending on the jurisdiction. We have the Helmet For Your Neck Device trademarked in the European Union and U.K. with renewal dates in 2027.
We have expanded our trademark portfolio to accommodate our expanding product categories. BraceOn® is registered in class 9 in Australia, the European Union, U.K. and U.S.A. with renewal dates between 2031 and 2033. RIDEVIZ® is registered in class 9 in Australia, China, the European Union, U.K., and U.S.A. with renewal dates between 2030 and 2032. RideGrip® is registered in class 25 in China, the European Union, and U.K., and U.S.A. with renewal dates between 2030 and 2032. FirstTurn® is registered in class 9 in China, the European Union, U.K., and U.S.A. with renewal dates between 2030 and 2032. CeraMag® is registered in class 12 in the European Union, U.K., U.S.A and Taiwan with renewal dates between 2031 and 2036. HydraDri® is registered in classes 25 and 28 in the European Union, U.S.A. and U.K. with renewal dates between 2031 and 2033. We have Three L Device® trademarked in the European Union, U.K. and U.S.A. with renewal dates between 2027 and 2034. We have a Leatt FlexMesh® trademark in the European Union in class 28 with a renewal date in 2034, and we have FlexMesh® trademarked in the U.S.A. in class 28 with a renewal date in 2035. We have ReaFlex® trademarked in the European Union in class 28, with a renewal date in 2035.
Gritt by Leatt® is registered in classes 3 and 4 in Australia and the European Union, with renewal dates in 2035. We have pending registrations for Gritt by LeattTM in the same classes in Brazil, China, the Russian Federation, South Africa, U.K, and U.S.A.
SuperTack® is registered in class 25 in the European Union, with a renewal date in 2035, and has a pending registration in the U.S.A. We have pending registrations for Leatt DrakenTM in classes 12 and 18 in the European Union and U.S.A. We also have pending registrations for ActiveHoldTM in class 18 in the European Union and the U.S.A.
We have SlidelockTM trademark pending in the U.S.A. in class 25. We have Thermaflow™ and HeatGrip™ trademarks pending in the U.S.A., both in class 25.
From time to time, we have had to enforce our intellectual property rights through litigation, and we may be required to do so in the future. Reverse engineering, unauthorized copying or other misappropriation of our technologies could enable third parties to benefit from our technologies without paying us. We cannot assure you that our competitors have not developed or will not develop similar products, will not duplicate our products, or will not design around any patents issued to or licensed by us. We believe that a loss of these rights would harm or cause a material disruption to our business and our corporate strategy is to aggressively take legal action against any violators of our intellectual property rights, regardless of where they may be.
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Our Employees
As of December 31, 2025, we employed 88 full-time employees and 47 independent contractors. The following table sets forth the number of our full-time employees and contractors by function as of December 31, 2025.
| Employee & Contractor Function | Number |
| Executive | 3 |
| Internet & Technology | 2 |
| Marketing | 25 |
| Finance | 6 |
| Operations and Distribution/Logistics | 26 |
| Research and Development/Leatt Lab | 25 |
| Legal & Compliance | 4 |
| Sales & Customer Services | 41 |
| Support Staff | 3 |
| Total | 135 |
We employ 4 full-time employees who are dedicated exclusively to research, development, and testing. We also utilize consultants, academic institutions and engineering companies as independent contractors or consultants, from time to time, to assist us with our research and development efforts where specific and specialized knowledge is needed.
Our Company employs the majority of its employees at its offices in Durbanville, South Africa and in Reno, Nevada. We are required to pay UIF, or unemployment insurance, for each of our South African employees. We are also required to withhold income taxes for our South African and U.S. based employees. We generally provide health care benefits and other standard benefits to our employees. Effective January 1, 2019, we implemented a 401k plan for the benefit of all our U.S. based employees and effective June 1, 2019, we implemented a provident fund for the benefit of all our permanent S.A. based employees.
We value retaining employees long term and developing our human capital, which is evident in the length of tenure of many of our most senior personnel. We are continually evaluating our staffing requirements, working conditions, employee benefit programs and compensation packages that include medium- and long-term incentives through equity compensation plans to retain staff long term. We have established and continue to enhance and refine a comprehensive set of practices for recruiting, managing, and optimizing the global human resources of our organization. In many cases, we utilize objective benchmarking and other tools in our efforts. We aim to instill a passion to protect riders around the world with exceptional products in our workforce which provides purpose.
We believe that we maintain a professional and productive working relationship with our employees, and we have not experienced any significant labor disputes or any difficulty in recruiting staff for our operations.
Regulations
The 2012 JOBS Act
We qualify as an "emerging growth company," as defined in Title I of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company is defined as an issuer, including a foreign private issuer, with less than $1 billion of total annual gross revenues during the most recently completed fiscal year. The SEC has interpreted "total annual gross revenues" to mean total revenues as presented on the income statement presentation under U.S. GAAP, which for the Company was $61.91 million for the fiscal year ended December 31, 2025. We will retain our status as an emerging growth company until the earlier of: (1) the fifth anniversary of the date we first sell securities pursuant to an IPO registration statement; (2) the last day of the fiscal year in which we first exceed $1 billion in annual gross revenues; (3) the time we become a large accelerated filer (an SEC registered company with a public float of at least $700 million); or (4) the date on which we have issued, within the previous three years, $1 billion of nonconvertible debt, whether issued in a registered or unregistered offering and whether or not it is still outstanding at the determination date.
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The JOBS Act provides scaled disclosure provisions for us, including, among other things: (a) permitting us to include only two years of audited financial statements in a registration statement filed under the Securities Act of 1933 for an IPO of common equity securities; (b) allowing us to comply with the smaller reporting company version of Item 402 of Regulation S-K (Executive Compensation); and (c) removing the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting in accordance with Section 404(b) of the Sarbanes-Oxley Act of 2002. The JOBS Act also exempts us from the following additional compensation-related disclosure provisions that were imposed on U.S. public companies pursuant to the Dodd-Frank Act: the advisory "say-on-pay" vote on executive compensation required under Section 14A(a) of the Exchange Act; the Section 14A(b) requirements relating to shareholder advisory votes on golden parachute compensation; the Section 14(i) requirements for disclosure relating to the relationship between executive compensation and financial performance of the issuer; and the requirement of Dodd-Frank Act Section 953(b)(1), which will require disclosure as to the relationship between CEO and median employee pay.
Under Section 102(b)(1) of the JOBS Act, "emerging growth companies" can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. However, we have irrevocably elected not to avail ourselves of this extended transition period for compliance with new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not "emerging growth companies."
European Union Directives
Our products are compliant with all applicable harmonized European Union Regulations. Leatt Personal Protective Equipment products are EU Type Certified showing compliance with European Union Personal Protective Equipment Regulation (EU) 2016/425 and/or the Medical Device Regulation (EU) 2017/745 for hybrid PPE/Medical products. The harmonized PPE Regulation (EU) 2016/425 lays down essential health and safety requirements (EHSRs) and leaves it to standards, primarily European harmonized standards, to give technical expression of the relevant requirements contained in the Regulation. For Leatt this includes the Company's Leatt-Brace® and body protection products.
It means that as a minimum these products must comply with: the basic Health and Safety requirements of the PPE regulation; certain chemical innocuousness tests prescribed in EN ISO 13688:2013 "Protective clothing - General Requirements"; and the requirements relating to usage, care, cleaning, sizing and other information to be supplied with the product. Accordingly, all Leatt-Braces®, MTB Helmets, chest protectors, body protectors, knee braces, limb protectors, boots, goggles, gloves with knuckle protection, on-road jacket and pants, as well as rally jacket and pants are CE certified. Only our peripheral products such as certain jackets, clothing, and caps are not covered.
In addition to the minimum requirements some products require compliance with the European Standards, or EN (European Norm), specific to certain categories of PPE in order to achieve certification. An EN is a standard that has been adopted by one of the three recognized European Standardization Organizations (ESOs): CEN, CENELEC or ETSI. It is produced by all interested parties (including manufacturers, users, consumers and regulators of a particular material, product, process or service) through a transparent, open and consensus-based process. In the Company's case these are the applicable EN standards: EN 14021 Stone Shields; EN 1621-1 Limb Protectors; EN 1621-2 Back Protectors; EN1621-3 Chest Protectors; EN 21420:2020 Protective Gloves; EN 13594:2015 Protective gloves for motorcycle riders; EN1078:1997 Helmets for pedal cyclists and for users of skateboards and roller skates; EN 13634: 2017 Protective footwear for motorcycle riders; EN1938:2010 Personal eye protection - Goggles for motorcycle and moped users; EN 13595-3:2020 - "Protective garments for motorcycle riders - Parts 3: Class AA Garments"; EN 13595-4:2020 - "Protective garments for motorcycle riders - Parts 3: Class A Garments". ISO 12312-1:2022 - "Eye and face protection - Sunglasses and related eyewear". These standards are more performance related and, among other things, measure the performance of PPE at various intensity levels and under different environmental conditions. They also prescribe product labelling, tests for user comfort and ease of use. Where no specific standards exist in the EU, such as with the neck brace, wrist brace or specialized protective equipment for juniors, the Notifying Body will be responsible for interpreting the requirements based on the intended use and environment, develop appropriated testing protocols and perform the technical evaluation necessary for certification.
The PPE Regulation (EU) 2016/425 is total harmonization and a "New Approach" legislation aligned to the "New Legislative Framework". It lays down essential health and safety requirements (EHSRs) and leaves it to standards, primarily European harmonized standards, to give technical expression of the relevant requirements contained in the Regulation.
FDA and MHRA Registration
In the first quarter of 2015, our Knee Brace was accepted for registration by both the FDA and the MHRA, and our Shoulder Brace was accepted by the FDA, as Class 1 Medical Devices. FDA and MHRA registration allow us to take these products directly to market as medical devices for patients (not just athletes) recuperating from injuries, surgery, muscle tears or strains, dislocations, breaks or fractures. The Company's FDA registration included the contract manufacturer of the braces, a Good Manufacturing Practices (GMP) vendor. For the registration period, which currently expires on December 31, 2026, we will be required to maintain logs of complaints or problems, and to provide appropriate labelling for medical uses. We have renewed our registration until December 31, 2026. The MHRA registration of the knee brace is open-ended, subject to the Company's continued monitoring of product performance in the marketplace and delivery of prompt responses to the MHRA as necessary.
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Other Accreditation
We have also obtained certifications for our helmets depending on the market, all Leatt products are compliant with applicable European Union directives, or CE certified, where appropriate. Depending on the market, we have other certifications outside of CE. For the US market, our motorcycle helmets comply with the DOT (FMVSS 218) helmet safety standard, and our bicycle helmets comply with EN1078, as well as CPSC 1203. Our downhill-specific bicycle helmets also comply with ASTM F1952. For our Australian Market, our bicycle helmet complies with AS/NZS 2063, for the UK market substantially all of our motorcycle helmets comply with ACU Gold, and for the Japanese market, our Moto 3.5 helmet complies with JIS T 8133. For the Brazilian market, our Moto 9.5, Moto 7.5, Moto 3.5, and Moto 2.5 helmets comply with NBR 7471. The Moto 9.5, Moto 8.5, Moto 7.5, Moto 3.5, Moto 2.5, and ADV 9.5, ADV 8.5, and ADV 7.5 have CCC approval in China. Our Enduro 4.0 helmet, All-Mountain 4.0 helmet, and Gravity 5.0 helmet have acquired NTA8776 certification, which is a new e-bike helmet certification that confirms that a helmet complies with the requirements in the Dutch Technical Agreement (NTA) 8776. The Moto 9.5 has been homologated to FRHPhe-02-2023 for us in FIM-sanctioned off-road racing events.
We also voluntarily submitted our Moto GPX neck brace to be tested by the in-house engineers of BMW Motorrad (Germany) and reviewed by KTM (Austria). We believe that such testing, while not mandatory, provides validation for our product's performance.
Environmental Matters
Our products are primarily designed for outdoor use and unseasonable weather or physical changes associated with climate change could lead to increased expenses and a reduction in our sales revenue. Unseasonable weather and prolonged, extreme temperatures, such as hurricanes, winter storms, earthquakes, floods, heatwaves, and other natural disasters may affect consumer participation in outdoor sporting activities and adversely impact their demand for our products. In addition, severe weather could disrupt the operation of our facilities and cause service outages, production delays and property damage that require us to incur additional expenses. Such weather conditions may also affect our ability to deliver our products to our customers or may require them to close certain stores temporarily, thereby reducing sales. As a result, unseasonable weather in any of our markets could negatively impact our net revenues.
Legal and regulatory developments related to climate change or other initiatives could also potentially increase costs and affect our ability to deliver our products. We have begun to utilize eco-friendly and sustainably sourced materials for the packaging of our products and have recently introduced a new range of MTB products made from biodegradable, plastic-free materials that maintain their high-performance edge and durability. We are continually considering and implementing steps to sustainably reduce the Company's carbon footprint and we are currently evaluating various environmental certification bodies with the intent of certifying our efforts to reduce our impact on the environment over the last few years. There were no material capital expenditures for environmental matters in the year ended December 31, 2025.
ITEM 1A. RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section entitled "Special Note Regarding Forward-Looking Statements" above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.
RISKS RELATED TO OUR BUSINESS
Our business and financial performance may be adversely affected if our information technology systems fail to perform adequately or if they are the subject of a security breach or cyberattack.
We are a multinational company and rely on a variety of information technology systems in the ordinary course of business to manage business data, communications, supply chain, order entry and fulfilment, customer support, billing and payments. Our system and processes are potentially vulnerable to cybersecurity incidents, such as terrorist or hacker attacks, the introduction of malicious computer viruses, ransomware, falsification of banking and other information, insider risk, or other security breaches, including individual or advanced persistent cyber-attacks on our information technology infrastructure and attempts by others to gain access to our proprietary or sensitive information regarding our employees, suppliers and customers.
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If there is a cybersecurity incident, we may suffer interruptions to our business and service, loss of assets or data, or reduced functionality, which could materially adversely affect our financial condition, business and results of operations. Many of our systems are not redundant, and our disaster recovery planning is not sufficient for every eventuality a cybersecurity incident could cause. Security breaches of our systems which allow inappropriate access to or inadvertent transfer of information and misappropriation or unauthorized disclosure of confidential information belonging to us or to our employees, customers, or suppliers could have an adverse impact on our results of operation. If a customer, supplier or employee alleges that a cyberattack caused or contributed to a loss or compromise of critical information, we could face significant harm to our reputation and financial condition. Any remedial costs or other liabilities related to information security system failures and cybersecurity incidents may not be fully insured or indemnified by other means.
While we attempt to mitigate cybersecurity risks by employing a number of proactive measures, including, technical security controls, enhanced data protection, advanced intrusion detection, targeted threat protection, maintenance of backup, protective systems and disaster recovery procedures, our systems remain potentially vulnerable to cybersecurity threats, any of which could have a material adverse effect on our business. We believe our mitigation measures reduce, but cannot eliminate, the risk of a cybersecurity incident. Despite any precautions we may take, a cybersecurity incident could harm our reputation and financial condition and cause us to incur legal liability and increased costs to respond to such events. Our cyber liability insurance may not be sufficient to compensate us for losses that may result from interruptions in our services or asset or data loss as a result of cybersecurity incidents.
Global political and economic turmoil could negatively affect our domestic and international sales, results of operations, and financial condition.
Prolonged global political and economic turmoil, especially in the U.S., the Middle-East, South America and Europe, could have a negative impact on our ability to conduct business outside the U.S. and on our financial condition. Any intensified or widened conflict in Iran and the surrounding region could lead to volatility in energy prices and adversely impact the cost of raw materials and shipping worldwide. Our exposure to such risks may further increase if any of these economic conditions impact levels of consumer spending.
We sell our products through a global network of distributors and dealers who may have difficulty clearing elevated stock, previously stockpiled in response to industry wide supply chain challenges, which in turn could slow new orders and affect our financial performance. If our customers were to experience slow growth or recession, we could see a drop-in demand for our products, difficulty in obtaining materials and supplies, difficulty in collecting accounts receivables, an increase in accounts receivable write-offs, and greater foreign exchange rate volatility affecting our profitability and cash flow. Customers may also purchase lower-cost products made by competitors and not resume purchasing our products even after economic conditions improve. While we employ comprehensive controls regarding global cash management to guard against cash or investment loss and to ensure our ability to fund our operations and commitments, a material disruption to the counterparties with whom we transact business could expose us to financial loss.
For the years ended December 31, 2025 and 2024, annual revenues from sales to international customers were $44,644,239 and $30,410,516, or 72% and 69% of our total revenue, respectively. While we do not expect to see any significant material adverse impact on our distribution channels (discussed elsewhere in this report), if demand for our products fluctuates as a result of these economic conditions or otherwise, our revenue and gross margin could be harmed.
Our international operations expose us to foreign exchange risk and currency fluctuations affect our operating profits.
We are exposed to foreign exchange risk as our revenues and consolidated results of operations may be affected by fluctuations in foreign currency as we translate these currencies into U.S. dollars when we consolidate our financial results. Operating outside of the United States further exposes us to foreign exchange risk, which we monitor. We are most sensitive to changes in the exchange rates of the South African Rand (or ZAR), the Renminbi, the Euro and the U.S. dollar. Because of our primary operations in South Africa, a portion of our consolidated revenues are denominated in ZAR, certain of our assets are denominated in ZAR, and our research and marketing operations in South Africa utilize South African labor sources, so we have more ZAR expenses than we do sales in South Africa. A decrease in the value of the U.S. dollar in relation to the ZAR could increase our cost of doing business in South Africa. Alternatively, if the ZAR depreciates against the U.S. dollar, the value of our ZAR revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. In China we have more Renminbi expenses than we do sales, because we manufacture our products in China that we sell globally. A decrease in the value of the U.S. dollar in relation to the Renminbi could increase our cost of purchasing products in China. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.
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In Europe we have significantly more sales than we do expenses. Since 72% of our sales is derived outside the U.S. where the U.S. dollar is not the primary currency, significant fluctuations in exchange rates, such as the strengthening of the dollar versus our customers' local currency can adversely affect our ability to remain competitive in those areas.
We engage in international manufacturing and sales, which exposes us to trade restrictions and disruptions that could harm our business and competitive position.
We derive 72% of our revenues from international sales and we develop and primarily manufacture our products outside of the U.S. As a result, we are subject to risks associated with shipping products across borders, including shipping delays, customs duties, export quotas and other trade restrictions that could have a significant impact on our revenue and profitability.
If we cannot deliver our products on a competitive and timely basis, our relationships with international customers will be damaged and our financial condition could also be harmed. The future imposition of, or significant increases in, the level of tariffs, custom duties, export quotas and other barriers and restrictions by the U.S. on China or other countries could disrupt our supply chain, increase the cost of our raw materials and therefore our pricing, and impose the burdens of compliance with foreign trade laws, any of which could potentially affect our bottom line and sales. While we are in continuous discussions with our manufacturers to ensure there are contingencies in place, we cannot assure you that we will not be adversely affected by changes in the trade laws of foreign jurisdictions where we sell and seek to sell our products.
In order to grow at the pace expected by management, we may require additional capital to support our long-term growth strategies. If we are unable to obtain additional capital in future years, we may be unable to proceed with our plans and we may be forced to curtail our operations.
Although our cash, cash equivalents and restricted cash at December 31, 2025 were $13.23 million, and we currently meet our working capital requirements with cash flow provided by our operating activities, we expect to continue doing so for the foreseeable future. Since November 2018, the Company has maintained a revolving line of credit agreement with a bank under which it now has access to a line of credit facility of $1,500,000 which remains available in full for advances through March 1, 2026. However, in the future we may require additional working capital to support our long-term growth strategies, including identifying suitable targets for horizontal or vertical mergers or acquisitions, so as to enhance the overall productivity and benefit from economies of scale. If the uncertainty arising out of domestic and global economic conditions and the ongoing tightening of domestic credit markets persist, we may not be able to generate adequate cash flows or obtain adequate levels of additional financing, whether through equity financing, debt financing or other sources. Even if we are able to get additional financing, it might not be on terms that are favorable to the Company. Furthermore, additional financings could result in significant dilution to our earnings per share or the issuance of securities with rights superior to our current outstanding securities, including registration rights. If we are unable to raise additional financing, we may be unable to implement our long-term growth strategies, develop or enhance our products and services, take advantage of future opportunities or respond to competitive pressures on a timely basis, if at all. In addition, a lack of additional financing could force us to substantially curtail operations.
A substantial amount of our sales revenue is derived from sales to a limited number of customers, and our business will suffer if sales to these customers decline.
We have derived a significant portion of our revenue from a limited number of customers, however none of our customers account for more than 10% of our consolidated revenues. For the years ended December 31, 2025 and 2024, our largest customer accounted for approximately 7% and 2% of our annual U.S. revenue, respectively. As of December 31, 2025 and 2024, $146,202, or 2% and $213,391 or 3% of our accounts receivable, was due from this customer. For both the years ended December 31, 2025 and 2024, our international revenue derived outside of the U.S. was earned from one customer that accounted for approximately 7% and 4% of our annual international revenue. As of December 31, 2025 and 2024, $239,669 or 3% and $500,548 or 8% of our accounts receivable, respectively, was due from this international customer. We do not have long term contractual arrangements with most of these wholesale customers. The loss of one or more of these customers could damage our business, financial condition and results of operations.
Significant fluctuations in fuel prices could have an adverse impact on our business and operations.
A significant portion of our revenue is derived from international sales and so significant fluctuations in fuel prices could adversely affect our business and operations. While fluctuations in fuel prices could lead to higher commuter costs which may encourage the increased use of motorcycles and bicycles as alternative modes of transportation and lead to an increase in the market for our protection products, significant fluctuations in world fuel prices could significantly increase the price of shipping or transporting our products which we may not be able to pass on to our customers.
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Expansion of our business may put added pressure on our management, financial resources and operational infrastructure impeding our ability to meet any increased demand for our products and possibly hurting our operating results.
Our business plan is to significantly grow our operations to meet anticipated growth in demand for existing products, and by the introduction of new product offerings. Growth in our business may place a significant strain on our personnel, management, financial systems and other resources. We may be unable to successfully and rapidly expand sales to potential customers in response to potentially increasing demand or control costs associated with our growth. To accommodate any such growth and compete effectively, we may need to obtain additional funding to improve information systems, procedures and controls and expand, train, motivate and manage our employees, and such funding may not be available in sufficient quantities, if at all. If we are not able to manage these activities and implement these strategies successfully to expand to meet any increased demand, our operating results could suffer.
We rely on patent and trade secret laws that are complex and difficult to enforce and we may not be able to prevent others from unauthorized use of our intellectual property. If we are not able to adequately secure and protect our patent, trademark and other proprietary rights our business may be materially affected.
The continued success of our business is dependent on our intellectual property portfolio consisting of globally registered trademarks, design patents and utility patents related to the Leatt-Brace®. We also rely on nondisclosure agreements and other methods to protect our intellectual property rights. However, the steps we have taken may be inadequate to prevent the misappropriation of our technology. In addition, the validity and breadth of claims in protective gear technology patents involve complex legal and factual questions and, therefore, the extent of their enforceability and protection is highly uncertain. Issued patents or patents based on pending patent applications or any future patent applications may not exclude competitors or may not provide a competitive advantage to us. In addition, patents issued or licensed to us may not be held valid if subsequently challenged and others may claim rights in or ownership of such patents. Reverse engineering, unauthorized copying or other misappropriation of our technologies could enable third parties to benefit from our technologies without paying us. We cannot assure you that our competitors have not developed or will not develop similar products, will not duplicate our products, or will not design around any patents issued to or licensed by us. We believe that a loss of these rights would harm or cause a material disruption to our business and, our corporate strategy is to aggressively take legal action against any violators of our intellectual property rights, regardless of where they may be.
We depend on key personnel, and turnover of key employees and senior management could harm our business.
Our future business and results of operations depend in significant part upon the continued contributions of our key technical and senior management personnel, including specifically, Dr. Christopher Leatt, our Chairman and Research and Development Consultant and the licensor of some of our intellectual property, Sean Macdonald, our Chief Executive Officer and President, and Erik Olsson (collectively, "Key Personnel"). Our future also depends in significant part upon our ability to attract and retain additional qualified management, technical, marketing and sales and support personnel for our operations. To address this risk, we have taken out key man insurance on our Key Personnel. However, if we lose any of our Key Personnel, if any of them fails to perform in their current position, or if we are unable to attract and retain skilled personnel as needed to support business operations from time to time, our business could suffer. In addition, significant turnover of Key Personnel in our senior management could significantly deplete our institutional knowledge held by them. We depend on the skills and abilities of these Key Personnel in managing the development, manufacturing, technical, marketing and sales aspects of our business, any part of which could be harmed by further turnover.
We face an inherent business risk of exposure to product liability claims that could have a material adverse effect on our operating results.
Because of the nature of our products, we face an inherent business risk of exposure to product liability claims arising from the claimed failure of our products to prevent the types of personal injury or death against which they are designed to protect. Plaintiffs may also advance other legal theories supporting claims that our products or actions resulted in harm to them. We maintain product liability insurance policies with a self-insured retention to attempt to manage this risk worldwide. But although we maintain product liability insurance coverage, there can be no absolute assurance that our coverage limits will be sufficient to cover any successful product liability claims made against us now or in the future. Furthermore, our insurance coverage does not include damages which may be assessed against us for willful and/or intentional injury, or for exemplary or punitive damages. Any claim or aggregation of claims substantially in excess of our insurance coverage, or any substantial claim not covered by insurance, could have a material adverse effect on our financial condition and results of operations. These claims also have a negative impact on the renewal our product liability insurance policy and the premiums.
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We may not be able to adequately finance the significant costs associated with the development of new protective equipment products.
The products in the protective equipment market can change dramatically with new technological advancements. We are currently conducting research and development on new products, which requires a substantial outlay of capital. To remain competitive, we must continue to incur significant costs in product development, equipment, facilities and invest in research and development of new products. These costs may increase, resulting in greater fixed costs and operating expenses. In addition to research and development costs, we could be required to expend substantial funds for and commit significant resources to the following: additional engineering and other technical personnel; advanced design, production and test equipment; manufacturing services that meet changing customer needs; technological changes in manufacturing processes; working capital and manufacturing capacity. Our future operating results will depend, to a significant extent, on our ability to continue to provide new and competitive products that compare favorably based on cost and performance with the design and manufacturing capabilities of competitive third-party technologies. We will need to sufficiently increase our net sales to offset these increased costs, the failure of which would negatively affect our operating results.
We may be exposed to potential risks relating to our internal controls over financial reporting and our ability to have those controls attested to by our independent auditors.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company's internal controls over financial reporting in their annual reports, including Form 10-K. Under current law, we became subject to the requirements of SOX 404 beginning with our annual report for the fiscal year ended December 31, 2012 and since becoming a U.S. public company, we have evaluated our internal control systems in order to allow our management to meet these requirements, including for this annual report for the fiscal year ended December 31, 2025. We can provide no assurance that we will comply with all of the requirements imposed thereby in the coming years. In the event that we ever identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements.
We are an "emerging growth company," and have availed ourselves of scaled public company reporting requirements and requirements for stockholder approval and advice applicable to emerging growth companies, which could make our common stock less attractive to investors.
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including not being required to comply with the independent auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions and requirements of stockholder advisory votes and approvals until we are no longer an emerging growth company.
We could be an "emerging growth company" for up to five years after the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act, which we expect will be pursuant to a Registration Statement on Form S-8 or on Form S-1. However, if certain events occur prior to the end of such five-year period, including if we become a "large accelerated filer," our annual gross revenues exceed $1 billion or we issue more than $1 billion of non-convertible debt in any three-year period, we would cease to be an "emerging growth company" prior to the end of such five-year period. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choice we make to reduce future disclosure, there may be a less active trading market for our common stock and our stock price may be more volatile.
Unseasonable weather may disrupt our operations and may reduce consumer demand for our products.
Our products are primarily designed for outdoor use and unseasonable weather could lead to increased expenses and a reduction in our sales revenue. Unseasonable weather and prolonged, extreme temperatures, such as hurricanes, winter storms, earthquakes, floods, heat waves, and other natural disasters may affect consumer participation in outdoor sporting activities and adversely impact their demand for our products. In addition, severe weather could disrupt operation of our facilities and cause service outages, production delays and property damage that require us to incur additional expenses. Such weather conditions may also affect our ability to deliver our products to our customers or may require them to close certain stores temporarily, thereby reducing sales. As a result, unseasonable weather in any of our markets could negatively impact our net revenues.
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Natural or man-made catastrophic events may disrupt our business and negatively impact our results of operation.
We are exposed to natural or man-made catastrophic events that may disrupt our business and may reduce consumer demand for our products. A disruption or failure of our systems or operations in the event of a natural disaster, health pandemic, such as the outbreak and global spread of COVID-19 or the coronavirus, or a man-made catastrophic event could cause delays in completing sales, continuing production, or performing other critical functions of our business, particularly if a catastrophic event occurred at our primary manufacturing locations or our distributor locations worldwide. Any of these events could severely affect our ability to conduct normal business operations and, as a result, our operating results could be adversely affected. There may also be secondary impacts that are unforeseeable, such as impacts on our consumers and on consumer purchasing behavior, which could cause delays in new orders, delays in completing sales or even order cancellations.
Due to strong consumer demand for outdoor product categories, we did not see any significant material negative impact of the COVID-19 pandemic on the Company's results of operations for the year ended December 31, 2025. We remain cautiously optimistic that ongoing efforts to increase the availability and use of COVID-19 vaccines and other precautions worldwide will neutralize any future impact of the virus and its mutations throughout Europe and the U.S. (our largest markets). The continued mutation and spread of deadly viruses, economic headwinds caused by global quarantines, or the occurrence of any other catastrophic events, could have a negative impact on our sales revenue for the coming periods and beyond.
RISKS RELATED TO OUR INDUSTRY
We may not be able to maintain or improve our competitive position because of strong competition in the personal protective equipment industry, and we expect this competition to continue to intensify.
We face competition from other global manufacturers and distributors who provide personal protective equipment to users of motorcycles, ATVs, snowmobiles, motor racing cars and other helmeted sports. Some of our international competitors are larger than we and possess greater name recognition, assets, personnel, sales and financial resources. These entities may be able to respond more quickly to changing market conditions by developing new products and services that meet customer requirements or are otherwise superior to our products and services and may be able to market their products more effectively than we can because they have significantly greater financial, technical and marketing resources than we do. They may also be able to devote greater resources than we can to the development, promotion and sale of their products. Increased competition could require us to reduce our prices, result in our receiving fewer customer orders, and result in our loss of market share. We cannot assure you that we will be able to distinguish ourselves in a competitive market. To the extent that we are unable to successfully compete against existing and future competitors, our business, operating results, and financial condition would be materially adversely affected.
If we are unable to develop competitive new products our future results of operations could be adversely affected.
Our future revenue stream depends to a large degree on our ability to utilize our technology in a way that will allow us to offer new types of safety products to a broader client base. We will be required to make investments in research and development to continue to develop new products, enhance our products and achieve market acceptance. We may incur problems in the future in innovating and introducing new and innovative products or, if developed, such products may not achieve significant customer acceptance. If we are unable to successfully define, develop and introduce competitive new products or improve on existing ones, our future results of operations would be adversely affected.
The value of our brand and sales of our products could be diminished if we, the individuals who use our products or the sport and activity categories in which our products are used, are associated with negative publicity.
Our success depends on the value of our brand. Our brand could be adversely affected if our public image or reputation were to be tarnished by negative publicity. Many athletes and other public individuals use our products and actions taken by such persons that harm the reputations of activities they participate in could also harm our brand image and result in a material decrease in our revenues and net income, which could have a negative effect on our financial condition and liquidity. In addition, negative publicity resulting from severe injuries or death occurring in the sports or activities in which our products are used and negatively impacts the popularity of such sport or activity, could have a subsequent negative effect on our net sales of products used in that sport or activity.
We may not be able to receive certain industry certifications and accreditation for our products.
We have obtained certification and approvals for certain of our products, including approval of our new knee brace as a Class 1 medical device by both the U.S. FDA and the U.K.'s Medicine and Healthcare Regulatory Products Agency (MHRA), and approval of our shoulder brace as a Class 1 medical device by the U.S. FDA. All our products are compliant with applicable European Union directives, or CE certified, where appropriate. All Leatt Personal Protective Equipment (PPE) products are CE Certified showing compliance with European Economic Community (EEC) directive 89/686/EEC that imposes mandatory accreditation of all Personal Protective Equipment products offered for sale in the EEC. This includes the Company's Leatt-Brace® and body protection products. We have also obtained certifications for our helmets depending on the market, for the U.S. market our motorcycle helmets comply with the DOT (FMVSS 218) helmet safety standard and our bicycle helmets comply with EN1078, as well as CPSC 1203. Our downhill specific bicycle helmets also comply with ASTM F1952. For our Australian Market our bicycle helmet complies with AS/NZS 2063. For the U.K. market substantially all of our motorcycle helmets comply with ACU Gold and our Moto 3.5 helmets comply with JIS T 8133 for the Japanese Market. For the Brazilian market our Moto 7.5, Moto 3.5, and Moto 2.5 helmets complies with NBR 7471. For the Chinese market the Moto 9.5, Moto 8.5, Moto 7.5, Moto 3.5 and Moto 2.5 have CCC approval. Both our Enduro 4.0 helmet and All-Mountain 4.0 helmet have acquired NTA8776 certification, which is new e-bike helmet certification. We also voluntarily submitted our GPX neck brace to be tested by the in-house engineers of BMW Motorrad (Germany) and to be reviewed by KTM (Austria).
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We believe that such testing, while not mandatory, will provide validation for our product's performance, however, there is no guarantee that our products will receive DOT, EN1078, CCC, CPSC 1203, ASTM F1952, AS/NZS 2063, NTA8776, ECE 22.06, ACU Gold, CE Certification or meet BMW testing standards. Our failure to meet testing standards could cause reputational harm and have a negative effect on net sales of products.
RISKS RELATED TO DOING BUSINESS IN NON-US JURISDICTIONS
We face risks associated with doing business in non-US jurisdictions.
We have affiliates, and our products are manufactured in and distributed from facilities, located in foreign countries, including countries in Asia and South Africa. International operations are subject to certain risks inherent in doing business abroad, including: exposure to political, social and economic instability; expropriation and nationalization; withholding and other taxes on remittances and other payments by subsidiaries; difficulties in enforcement of contract and intellectual property rights; exposure to foreign current exchange rates, interests rates and inflation; investment restrictions or requirements; and export and import restrictions.
We are monitoring the outbreak of war in Iran and the potential for a prolonged, intensified, or widened conflict in the surrounding region, including volatility in energy prices. We also continue to monitor any adverse impact that the outbreak of war in Ukraine and the subsequent institution of sanctions against Russia by the U.S. and several European leaders may have on the global economy in general and on our business operations and that of our suppliers and customers, in particular. For example, prolonged conflicts may have unintended consequences such as increased inflation, fuel and transportation costs and an increase in bad debt expense from doubtful accounts receivable balances owed by affected customers. We will continue to monitor these fluid situations and develop contingencies as necessary to address any disruptions to our business operations as they develop.
We are highly dependent on our foreign affiliates for their production capabilities and increasing our foreign operations and business relationships are important elements of our strategy. As a result, our exposure to the risks described above may be greater in the future. The likelihood of such occurrences and their potential impact on us varies from country to country and are unpredictable.
Our operations and assets in China are subject to significant political and economic uncertainties.
Changes in PRC laws and regulations, or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business, results of operations and financial condition. Under its current leadership, the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.
We may have limited legal recourse under PRC law if disputes arise under our outsourcing manufacturing arrangements with third parties.
The Chinese government has enacted some laws and regulations dealing with matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. However, their experience in implementing, interpreting and enforcing these laws and regulations is limited, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. If our outsourcing manufacturing arrangements are unsuccessful or other adverse circumstances arise from these arrangements, we face the risk that our third-party manufacturers may dishonor our purchase orders or unwritten arrangements. The resolution of these matters may be subject to the exercise of considerable discretion by agencies of the Chinese government and forces unrelated to the legal merits of a particular matter or dispute may influence their determination. Any rights we may have to specific performance, or to seek an injunction under PRC law, in either of these cases, are severely limited, and without a means of recourse by virtue of the Chinese legal system, we may be unable to prevent these situations from occurring. The occurrence of any such events could have a material adverse effect on our business, financial condition, and results of operations.
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Our potential inability to adequately protect our intellectual property during the outsource manufacturing of our products in China could negatively impact our performance.
Our products are manufactured predominantly in China through third-party outsource manufacturing arrangements. We rely on our third-party manufacturers to implement customary manufacturer safeguards onsite, such as the use of confidentiality agreements with employees, to protect our proprietary information and technologies during the manufacturing process, however, these safeguards may not effectively prevent unauthorized use of such information and technical knowhow or prevent such manufacturers from retaining them. The legal regime governing intellectual property rights in China is relatively weak and it is often difficult to create and enforce intellectual property rights or protect trade secrets there. We face risks that our proprietary information may not be afforded the same protection in China as it is in countries with well-developed intellectual property laws, and local laws may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights in China, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.
We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated these laws could have a material adverse effect on our business.
We are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business. We have operations and agreements with third parties worldwide and such activities create the risk of unauthorized payments or offers of payments by the employees, consultants, sales agents, or distributors of our Company, even though they may not always be subject to our control. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents, or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results, and financial condition. In addition, the U.S. government may seek to hold our Company liable for successor liability in connection with FCPA violations committed by companies in which we invest or that we acquire.
Your ability to bring an action against us, and those of our officers and directors who are based in South Africa, or to enforce a judgment against us or recover assets in our possession may be difficult since any such action or recovery of assets would be an international matter, involving South African laws and geographic and temporal disparities.
We conduct substantial operations in South Africa through our foreign registered branch and a substantial portion of our assets are located outside of the United States. In addition, all but two of our management personnel reside in South Africa. As a result, it may be difficult or impossible for you to bring an action against us or these individuals in the United States in the event that you believe that your rights have been violated under applicable law or otherwise. Even if an action of this type is successfully brought, the laws of the United States and of South Africa may render a judgment unenforceable.
RISKS RELATING TO OUR COMMON STOCK
We cannot assure you that our common stock will be listed on a national securities exchange.
Our common stock is quoted on the QB tier of the over-the-counter electronic bulletin board maintained by the OTC Markets Group Inc. (OTC), which is not a national securities exchange. We plan to list our common stock on a national exchange as soon as practicable, however, we cannot assure you that we will be able to meet the initial listing standards of any national exchange, or that we will be able to maintain any such listing. Until our common stock is listed on a national exchange, we expect that it would be eligible to continue being quoted in the OTC, where trading of our common stock may be sporadic and a more active market for our common stock may not develop.
Our holding company structure may limit the payment of dividends.
We have no direct business operations, other than our ownership of our subsidiaries. Should we decide to pay dividends in the future, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries and other holdings and investments. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions as discussed below. If we determine that we will pay dividends to the holders of our common stock, we cannot assure that such dividends will be paid on a timely basis. As a result, you will not receive any return on your investment prior to selling your shares in our company and, for the other reasons discussed in this "Risk Factors" section, you may not receive any return on your investment even when you sell your shares in our company and your shares may become worthless. If future dividends are paid in ZAR, fluctuations in the exchange rate for the conversion of ZAR into U.S. dollars may reduce the amount received by U.S. stockholders upon conversion of the dividend payment into U.S. dollars.
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The Company's officers, directors and affiliates collectively have the power to make all major decisions regarding the Company without the need to get consent from any stockholder or other person. This discretion could lead to decisions that are not necessarily in the best interests of minority shareholders.
Our Company's officers, directors and affiliates collectively own 48.4% of our common stock (including our preferred stock which converts on a one-for-one basis to common stock but vote on a one-for-one hundred basis to common stock). Our officers and directors, therefore, has the power to make all major decisions regarding our affairs, including decisions regarding whether or not to issue stock and for what consideration, whether or not to sell all or substantially all of our assets and for what consideration and whether or not to authorize more stock for issuance or otherwise amend our charter or bylaws. Our officers and directors are in a position to elect all of our directors and to dictate all of our policies.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy.
We rely on information technology and data to operate our business and develop, market, and deliver our products to our customers. We have
The Company's general risk management program is designed to manage identified material risks, which would include material cybersecurity risks. We engage in processes designed to identify such threats by, among other things, monitoring the threat environment using manual and automated tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and actors, conducting scans of the threat environment, evaluating our and our industry's risk profile, evaluating threats reported to us, coordinating with law enforcement concerning threats, conducting threat assessments for internal and external threats, and conducting vulnerability assessments to identify vulnerabilities. We rely on a multidisciplinary team (including from our information security function, management, and
Depending on the environment, we implement and maintain various technical, physical and organizational measures designed to manage and mitigate material risks from cybersecurity threats to our Information Assets. The cybersecurity risk management and mitigation measures we implement for certain of our Information Assets include: policies and procedures designed to address cybersecurity threats, including an incident response plan, vulnerability management policy, and disaster recovery/business continuity plans; incident detection and response tools; internal and/or external audits to assess our exposure to cybersecurity threats, environment, compliance with risk mitigation procedures, and effectiveness of relevant controls; documented risk assessments; implementation of security standards/certifications; encryption of data; network security controls; threat modeling; data segregation; physical and electronic access controls; physical security; asset management, tracking and disposal; systems monitoring; vendor risk management program; employee security training; penetration testing; cyber insurance.
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We work with third parties from time to time to identify, assess, and manage cybersecurity risks, including professional services firms, threat intelligence service providers, cybersecurity consultants, cybersecurity software providers, managed cybersecurity service providers, and penetration testing. To operate our business, we utilize certain third-party service providers to perform a variety of functions, such as outsourced business critical functions, clinical research, professional services, SaaS platforms, managed services, IT asset management, cloud-based infrastructure, data center facilities, content delivery, encryption and authentication technology, corporate productivity services, and other functions.
We have certain vendor management processes designed to help to manage cybersecurity risks associated with our use of certain of these providers. Depending on the nature of the services provided, the sensitivity and quantity of information processed, and the identity of the service provider, our vendor management process may include reviewing the cybersecurity practices of such provider, contractually imposing obligations on the provider related to the services they provide and/or the information they process, conducting security assessments, conducting on-site inspections, requiring their completion of written questionnaires regarding their services and data handling practices, and conducting annual re-assessments during their engagement.
Governance.
Our cybersecurity incident response and vulnerability management processes are designed to escalate certain cybersecurity incidents and vulnerabilities to members of management depending on the circumstances, including work with the company's incident response team to help the company mitigate and remediate cybersecurity incidents of which they are notified. In addition, the company's incident response processes include reporting to the
Management is involved with the Company's efforts to prevent, detect, and mitigate cybersecurity incidents by overseeing preparation of cybersecurity policies and procedures, testing of incident response plans, engagement of vendors to conduct penetration tests. Management participates in cybersecurity incident response efforts by being a member of the incident response team and helping direct the company's response to cybersecurity incidents.
ITEM 2. PROPERTIES.
Our corporate headquarters are located in a 948 square meter space located at 12 Kiepersol Drive, Atlas Gardens, Contermanskloof Road, Durbanville, Western Cape, South Africa, 7550. Approximately 20% of the space is used by our finance, legal and operations teams, 45% is used by marketing and the remaining 35% is used by Leatt Lab and our research and development team. We purchased this property during 2023.
We entered into a lease agreement for office space and warehouse space to store inventory located at Unit 9, 36 Sycamore Crescent, Atlas Gardens, Durbanville, Western Cape, South Africa, 7550. We occupy these premises pursuant to a lease agreement, dated February 24, 2022, between Leatt SA and Montprop Beleggings (Pty) Ltd, which as amended, is scheduled to expire on February 28, 2027. The renewed lease agreement requires us to pay a monthly rent of ZAR 34,478 or $1,840 for the twelve months, and ZAR 36,892 or $1,969 for the following twelve months. The rent payable excludes VAT, water, electricity, and other associated costs.
We entered into a lease agreement on February 20, 2025, to lease office and warehouse space at Unit 8, Sycamore Park, 36 Sycamore Crescent, Atlas Gardens, Durbanville, Western Cape, South Africa, 7550 for 20 months from July 1, 2025, to February 28, 2027. The first eight months the Company shall pay ZAR 33,260 or $1,775, and then ZAR 35,588 or $1,899, per month for the remainder of the lease term. The rent payable excludes VAT, water, electricity, and other associated costs.
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Our newly redomiciled Nevada subsidiary, Two Eleven, entered into a Lease Agreement, dated December 14, 2020, with CP Logistics NVCC IV, LLC, to lease warehouse and office space comprising approximately 43,056 square foot in Reno, Nevada. The lease commenced upon the date of substantial completion of the landlord's work, as defined in the Lease Agreement, August 2, 2021, and the term will continue for a period of sixty-six (66) months from such commencement date, subject to renewal, at Two Eleven's option, for an additional five (5) year term. The rent payable from the 3rd month following the commencement date through to the 14th month will be $21,959 and thereafter the rent payable will escalate in subsequent months in accordance with the terms of the Lease Agreement, up to a monthly payment of $25,455 in the 63rd through 66th month. The rent payable will exclude other associated costs, such as real estate taxes, association dues, insurance, and other fees.
We also lease extra warehouse space from time to time to store inventory. These agreements are on a month-to-month basis and vary during the year.
We believe that all premises used by the Company and its subsidiaries are in good condition, and that the property located there are adequately insured.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, we may become involved in various lawsuits and legal proceedings in the ordinary course of our business. We are currently not aware of any legal proceedings the ultimate outcome of which, in our judgment based on information currently available, would have a material adverse effect on our business, financial condition or operating results.
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On February 26, 2025, a lawsuit was filed against the Company and other defendant in the Supreme Court of the State of New York, County of Queens, for alleged violation of the American Disabilities Act of 1990, in connection with the accessibility of the Company's website to visually impaired and/or legally blind individuals who may wish to purchase products thereon. This matter has been settled.
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On July 31, 2025, a lawsuit was filed against the Company with the Court of the Commissioner of Patents in South Africa, for alleged patent infringement. The litigation is in the initial stage, and no hearing date has yet been set. The Company believes that the lawsuit is without merit and intends to defend itself.
ITEM 4. MINING SAFETY DISCLOSURES.
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock is quoted on the QB tier of the over-the-counter electronic bulletin board maintained by the OTC Markets Group Inc. under the symbol LEAT. The CUSIP number for our common stock is 522132 10 9.
The following table sets forth, for the periods indicated, the high and low closing prices of our common stock as reported by Yahoo Finance at https://finance.yahoo.com for the periods indicated. These prices reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
| Closing Prices | ||
| High | Low | |
| Year Ended December 31, 2026 | ||
| 1st Quarter (January 1, 2026 to March 10, 2026) | $9.81 | $8.69 |
| Year Ended December 31, 2025 | ||
| 1st Quarter | $7.60 | $6.70 |
| 2nd Quarter | $9.00 | $5.50 |
| 3rd Quarter | $13.50 | $8.80 |
| 4th Quarter | $12.50 | $9.30 |
| Year ended December 31, 2024 | ||
| 1st Quarter | $9.90 | $7.60 |
| 2nd Quarter | $9.15 | $5.75 |
| 3rd Quarter | $9.49 | $6.12 |
| 4th Quarter | $8.89 | $6.92 |
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Holders
As of March 10, 2026, there were approximately 155 stockholders of record of our common stock. The number of record holders does not include persons who held our common stock in nominee or "street name" accounts through brokers.
Dividend Policy
We have never declared dividends or paid cash dividends. Our board of directors will make any future decisions regarding dividends. We currently intend to retain a significant majority of current and future earnings for the development and expansion of our business.
Our board of directors has complete discretion on whether to pay dividends, subject to the approval of our shareholders. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.
Securities Authorized for Issuance under Equity Compensation Plans
Our officers and directors are eligible for equity awards in the form of stock options and restricted stock under the Leatt Corporation Amended and Restated 2011 Equity Incentive Plan (the "2011 Plan"), pursuant to which the Company is authorized to issue and sell up to 1,520,000 shares of common stock of the Company, par value $0.001 per share. Equity awards under the 2011 Plan are granted at the discretion of the Board. The size of an award to any individual, including named executive officers, depends in part on individual performance, company performance, and any other indicators of the impact that such employee's productivity may have on stockholder value over time. Other factors include salary level and competitive data. In addition, in determining the awards granted to each named executive officer, or other individual, the Board considers the future benefits potentially available to the named executive officers or individuals from existing awards. We have no program, plan or practice of granting equity awards that coincide with the release by the Company of material non-public information.
The following table includes the information as of December 31, 2025, for each category of our equity compensation plan.
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |
Weighted-average exercise price of outstanding options, warrants and rights (b) |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
| Equity compensation plans approved by security holders | 52,000 | $1.60 | 173,599 |
| 87,000 | $2.30 | ||
| Equity compensation plans not approved by security holders | -- | -- | 0 |
| Total | 139,000 | -- | 173,599 |
Recent Sales of Unregistered Securities
We have not sold any equity securities during 2025 that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the period.
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Purchases of Equity Securities
On August 12, 2025, the Company announced that the Company's board of directors formally ratified and approved a share purchase plan. The board of directors also directed management to
| Issuer Purchases of Equity Securities | ||||
| Period | (a) Total number of shares (or units) purchased |
(b) Average price paid per share (or unit) |
(c) Total number of shares (or units) purchased as part of publicly announced plans or programs |
(d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs |
| August 19, 2025, to August 28, 2025. | 4,724 | $12.91 | 4,724 | $ 689,000.58 |
| September 1, 2025, to September 30, 2025. | 5,934 | $12.75 | 5,934 | $ 613,313.01 |
| October 1, 2025, to October 31, 2025 | 7,728 | $11.56 | 7,728 | $ 523,948.01 |
| November 1, 2025, to November 30, 2025 | 2,378 | $10.06 | 2,378 | $ 500,036.51 |
| December 1, 2025, to December 31, 2025 | 536 | $9.50 | 536 | $ 494,942.18 |
| Total | 21,300 | -- | 21,300 | |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
ITEM 5. OTHER INFORMATION.
We have no information to disclose that was required to be in a report on Form 8-K during the period covered by this report, but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.
ITEM 6. SELECTED FINANCIAL DATA.
Not Applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following management's discussion and analysis should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report. In addition to historical information, the following discussion contains certain forward-looking information. See "Special Note Regarding Forward Looking Statements" above Part I, for certain information concerning those forward-looking statements. Our financial statements are prepared in U.S. dollars and in accordance with U.S. GAAP.
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Overview of our Business
We were incorporated in the State of Nevada on March 11, 2005, under the name Treadzone, Inc. We were a shell company with little or no operations until March 1, 2006, when we acquired the exclusive global manufacturing, distribution, sale and use rights to the Leatt-Brace®, pursuant to a license agreement between the Company and Xceed Holdings, a company controlled by the Company's Chairman and founder, Dr. Christopher Leatt. On May 25, 2005, we changed our name to Leatt Corporation in connection with our anticipated acquisition of the Leatt-Brace® rights. Leatt designs, develops, markets and distributes personal protective equipment for participants in all forms of motor sports and leisure activities, including riders of motorcycles, bicycles, snowmobiles and ATVs. The Company sells its products to customers worldwide through a global network of distributors and retailers. Leatt also acts as the original equipment manufacturer for personal protective equipment sold by other international brands.
The Company's flagship products are based on the Leatt-Brace® system, a patented injection molded neck protection system owned by Xceed Holdings, designed to prevent potentially devastating injuries to the cervical spine and neck. The Company has the exclusive global manufacturing, distribution, sale and use rights to the Leatt-Brace®, pursuant to a license agreement between the Company and Xceed Holdings, a company owned and controlled by the Company's Chairman and founder, Dr. Christopher Leatt. The Company also has the right to use apparatus embodying, employing and containing the Leatt-Brace® technology and has designed, developed, marketed and distributed other personal protective equipment using this technology, as well as its own developed technology, including the Company's body protection products, and helmets which it markets under the Leatt® brand.
The Company's research and development efforts are conducted at its research facilities, located at its executive headquarters in Cape Town, South Africa. The Company employs 4 full-time employees who are dedicated exclusively to research, development, and testing. The Company also utilizes consultants, academic institutions and engineering companies as independent contractors or consultants, from time to time, to assist it with its research and development efforts. Leatt products have been tested and reviewed internally and by external bodies. All Leatt products are compliant with applicable European Union directives, or CE certified, where appropriate. Depending on the market we have other certifications outside of CE. Specifically, all our motorcycle helmets comply with Economic Commission for Europe (ECE) UN Regulation No. 22 r06, and our bicycle helmet complies with the European Committee for Standardization (CEN) EN-1078 standard. For the US market, our motorcycle helmets comply with the US Department of Transportation (DOT) FMVSS 218 helmet safety standard and our bicycle helmet complies with the US Consumer Product Safety Commission (CPSC) 1203 standard for helmet safety. Our downhill specific bicycle helmets also comply with the American Society for Testing and Materials (ASTM) F1952 standard for downhill racing safety. For the Australian market, our bicycle helmet complies with Australian/New Zealand Standard (AS/NZS) 2063, for the UK market, substantially all of our motorcycle helmets comply with the Auto Cycle Union (ACU) gold standard, for the Japanese market, our Moto 3.5 helmet with the Japanese Standard Association (JSA) JIS T 8133 standard for protective helmets, and for the Brazilian market our Moto 7.5, Moto 3.5, and Moto 2.5 helmets comply with The Brazilian Association of Technical Standards (ABNT) NBR 7471 safety standard. Moto 9.5, Moto 8.5, Moto 7.5, Moto 3.5 and Moto 2.5 and ADV 9.5, ADV 8.5 and ADV 7.5 have CCC approval for the market in China. Our Enduro 4.0 helmet, All-Mountain 4.0 helmet and Gravity 5.0 helmet have acquired NTA8776 certification, a new e-bike helmet certification required in the Dutch Technical Agreement (NTA) 8776. The Moto 9.5 have been homologated to FRHPhe-02-2023 for us in FIM sanctioned off-road racing events.
Our products are predominately manufactured in China in accordance with our manufacturing specifications, pursuant to outsourced manufacturing arrangements with third-party manufacturers located there, based on agreed terms. We continue to build manufacturing capacity outside China, namely, in Thailand, Cambodia, and Bangladesh. The Company utilizes outside consultants and its own employees to ensure the quality of its products through regular on-site product inspections. Products sold to our international customers are usually shipped directly from our consolidation warehouse or manufacturers' warehouses to customers or their import agents.
Leatt earns revenues through the sale of its products through approximately 61 distributors worldwide and 6 e-commerce partners, who in turn sell its products to retailers. Leatt distributors are required to follow certain standard business terms and guidelines for the sale and distribution of Leatt products. Two Eleven and Leatt SA directly distribute Leatt products to dealers and direct to end consumers through digital channels in the United States and South Africa, respectively.
Principal Factors Affecting Our Financial Performance
We believe that the following factors will continue to affect our financial performance:
• Global Economic Fragility - The ongoing turmoil in the global economy, especially in the U.S., Asia and Europe, may have an impact on our business and our financial condition if economic conditions do not improve. We sell our products through a global network of distributors and dealers who may have difficulty clearing elevated multi-brand stock, previously ordered in response to industry wide supply chain challenges, which in turn could slow new orders and affect our financial performance. If our customers were to experience prolonged slow growth or recession as a result of these conditions or otherwise, we could see a drop-in demand for our products and potentially difficulty in collecting accounts receivables.
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• Trade Restrictions - We engage in international manufacturing and sales which exposes us to trade restrictions and disruptions that could harm our business and competitive position. Most of our products are manufactured in China, and the U.S. administration has announced tariffs on certain products imported into the United States with China as the country of origin. While these tariffs have not had a significant impact on the shipment of our products to international markets as at December 31, 2025, we believe that the future imposition of, or significant increases in, the level of tariffs, custom duties, export quotas and other barriers and restrictions by the U.S. on China or other countries could disrupt our supply chain, increase the cost of our raw materials and therefore our pricing, and impose the burdens of compliance with foreign trade laws, any of which could potentially affect our bottom line and sales. While we are in continuous discussions with our manufacturers to ensure there are contingencies in place, we cannot assure you that we will not be adversely affected by changes in the trade laws of foreign jurisdictions where we sell and seek to sell our products.
• Fuel Prices - Significant fluctuations in fuel prices could have both a positive and negative effect on our business and operations. A significant portion of our revenue is derived from international sales and significant fluctuations in world fuel prices could significantly increase the price of shipping or transporting our products which we may not be able to pass on to our customers. On the other hand, fluctuations in fuel prices lead to higher commuter costs which may encourage the increased use of motorcycles and bicycles as alternative modes of transportation and lead to an increase in the market for our protection products.
• Product Liability Litigation - We face an inherent business risk of exposure to product liability claims arising from the claimed failure of our products to help prevent the types of personal injury or death against which they are designed to help protect. Therefore, we have acquired very costly product liability insurance worldwide. We have not experienced any material uninsured losses due to product liability claims, but it is possible that we could experience material losses in the future. After a two-week trial in the United States District Court for the Northern District of Ohio (Eastern) ending on April 17, 2014, a federal jury returned a defense verdict for the Company in the first Leatt-Brace® product liability lawsuit to be tried in the United States. The plaintiffs in that case had alleged that defective product design and failure to warn had caused a motocross rider to suffer multiple mid-thoracic spine fractures, causing immediate and permanent paraplegia, when he crashed at a relatively low speed on February 13, 2011. When the accident occurred, he was wearing a helmet and other safety gear from several different companies, including the Company's acclaimed Leatt-Brace®. The Company produced evidence at trial showing that his thoracic paraplegia was an unavoidable consequence of his fall, not the result of wearing a Leatt-Brace®, and that the neck brace likely saved his life (or saved him from quadriplegia) by preventing cervical spine injury. The Company had maintained from the onset that this and a small handful of other lawsuits are without merit and that it would vigorously defend itself in each case. In this case, the plaintiffs subsequently appealed the court's decision, and the parties reached an amicable settlement. Although we carry product liability insurance, a successful claim brought against us could significantly harm our business and financial condition and have an adverse impact on our ability to renew our product liability insurance or secure new coverage.
• Protection of Intellectual Property - We believe that the continued success of our business is dependent on our intellectual property portfolio consisting of globally registered trademarks, design patents and utility patents related to the Leatt-Brace®. We believe that a loss of these rights would harm or cause a material disruption to our business and, our corporate strategy is to aggressively take legal action against any violators of our intellectual property rights, regardless of where they may be. From time to time, we have had to enforce our intellectual property rights through litigation, and we may be required to do so in the future. Such litigation may result in substantial costs and could divert resources and management attention from the operations of our business.
• Fluctuations in Foreign Currencies - We are exposed to foreign exchange risk as our revenues and consolidated results of operations may be affected by fluctuations in foreign currency as we translate these currencies into U.S. dollars when we consolidate our financial results. While our reporting currency is the U.S. Dollar, a portion of our consolidated revenues are denominated in South African Rand, or ZAR, certain of our assets are denominated in ZAR, and our research and marketing operations in South Africa utilize South African labor sources. A decrease in the value of the U.S. dollar in relation to the ZAR could increase our cost of doing business in South Africa. If the ZAR depreciates against the U.S. Dollar, the value of our ZAR revenues, earnings and assets as expressed in our U.S. Dollar financial statements will decline. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk. Furthermore, since 77% of our sales are derived outside the U.S., where the U.S. dollar is not the primary currency, significant fluctuations in exchange rates such as the strengthening of the dollar versus our customers' local currency can adversely affect our ability to remain competitive in those areas.
• Natural or Man-made Catastrophic Events - We are exposed to natural or man-made catastrophic events that may disrupt our business and may reduce consumer demand for our products. A disruption or failure of our systems or operations in the event of a natural disaster, health pandemic, such as the outbreak and global spread of COVID-19 or the coronavirus, or a man-made catastrophic event could cause delays in completing sales, continuing production, or performing other critical functions of our business, particularly if a catastrophic event occurred at our primary manufacturing locations or our distributor locations worldwide. Any of these events could severely affect our ability to conduct normal business operations and, as a result, our operating results could be adversely affected. There may also be secondary impacts that are unforeseeable, such as impacts on our consumers and on consumer purchasing behavior, which could cause delays in new orders, delays in completing sales or even order cancellations. The continued mutation and spread of deadly viruses, economic headwinds caused by global quarantines, or the occurrence of any other catastrophic events, could have a negative impact on our sales revenue for the coming periods and beyond.
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• Impact of Global Conflict - We are exposed to global conflict, such as the ones in Ukraine and the Middle East, that may disrupt our business and reduce consumer demand for our products. A disruption of global shipping routes, the imposition of government sanctions, or other activities resulting from such conflicts could directly affect consumer demand for our products, cause delays in completing sales, shipping of our products, continuing production or performing other critical functions of our business, particularly if a conflict occurs at our primary manufacturing locations or our distributor locations worldwide. Furthermore, prolonged conflict may have unintended global consequences such as increased inflation and volatility in fuel and transportation costs. While we have conducted due diligence on our customers in Russia to ensure that they do not fall into any sanctioned categories, we have seen a delay in the receipt of receivables in our bank account from the distributors of our products in Russia caused by enhanced screening of Russian funds in compliance with global sanctions against Russia for the war in Ukraine. The prolonging, intensification or expansion of these conflicts into surrounding regions could have an adverse impact on our consumers and on consumer purchasing behavior, and result in delays of new orders and completing sales, order cancellations, or payment and shipping delays. We will continue to monitor these fluid situations and any adverse impact that they may have on the global economy in general and on our business operations and especially that of our customers, and we will develop contingencies as necessary to address any disruptions to our business operations as they arise.
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Results of Operations
Year ended December 31, 2025, compared to the year ended December 31, 2024
The following table summarizes the results of our operations during the years ended December 31, 2025 and 2024 and provides information regarding the dollar and percentage of year-over-year increase or (decrease):
| Fiscal Year Ended December 31, | Percentage | ||||||||||||
| 2025 | 2024 | Increase | Increase | ||||||||||
| Item | (Decrease) | (Decrease) | |||||||||||
| REVENUES | $ | 61,907,914 | $ | 44,027,942 | $ | 17,879,972 | 41% | ||||||
| COST OF REVENUES | 34,685,970 | 26,314,945 | $ | 8,371,025 | 32% | ||||||||
| GROSS PROFIT | 27,221,944 | 17,712,997 | $ | 9,508,947 | 54% | ||||||||
| PRODUCT ROYALTY INCOME | 381,757 | 326,614 | $ | 55,143 | 17% | ||||||||
| OPERATING EXPENSES | |||||||||||||
| Salaries and Wages | 7,917,387 | 7,140,550 | $ | 776,837 | 11% | ||||||||
| Commissions and Consulting | 764,602 | 535,584 | $ | 229,018 | 43% | ||||||||
| Professional Fees | 853,065 | 627,659 | $ | 225,406 | 36% | ||||||||
| Advertising and Marketing | 4,563,919 | 4,454,906 | $ | 109,013 | 2% | ||||||||
| Office Lease and Expenses | 923,839 | 702,785 | $ | 221,054 | 31% | ||||||||
| Research and Development Costs | 2,704,071 | 2,523,881 | $ | 180,190 | 7% | ||||||||
| Bad Debt Recovery | (65,923 | ) | (76,278 | ) | $ | 10,355 | 14% | ||||||
| General and Administrative | 4,372,333 | 3,879,553 | $ | 492,780 | 13% | ||||||||
| Depreciation | 1,327,190 | 1,229,847 | $ | 97,343 | 8% | ||||||||
| Impairment | 234,224 | - | $ | 234,224 | 100% | ||||||||
| Total Operating Expenses | 23,594,707 | 21,018,487 | $ | 2,576,220 | 12% | ||||||||
| INCOME (LOSS) FROM OPERATIONS | 4,008,994 | (2,978,876 | ) | $ | 6,987,870 | 235% | |||||||
| Other Income | 397,000 | 275,413 | $ | 121,587 | 44% | ||||||||
| INCOME (LOSS) BEOFRE INCOME TAXES | 4,405,994 | (2,703,463 | ) | $ | 7,109,457 | 263% | |||||||
| Provision for (benefit from) Income taxes | 1,142,072 | (498,799 | ) | $ | 1,640,871 | 329% | |||||||
| NET INCOME (LOSS) | $ | 3,263,922 | $ | (2,204,664 | ) | $ | 5,468,586 | 248% | |||||
Revenues - We earn revenues from the sale of our protective gear comprising of neck braces, body armor, helmets and other products, parts and accessories both in the United States and abroad. Revenues for the year ended December 31, 2025 were $61.91 million, a 41% increase, compared to revenues of $44.03 million, for the year ended December 31, 2024. This increase in worldwide revenues is attributable to a $6.52 million increase in body armor sales, a $4.92 million increase in helmet sales, a $5.99 million increase in other products, parts and accessories sales and a $0.45 million increase in neck brace sales. Revenues associated with international customers for the years ended December 31, 2025 and 2024, respectively, were $44.64 million and $30.41 million, or 72% and 69% of global revenues. Consumer direct sales increased by 44% and dealer direct sales increased by 22% for the year ended December 31, 2025, with sales to our global distributors increasing by 48%, when compared to the prior year period, as consumer demand for our products continued to build and sales momentum at the dealer level domestically improved.
The following table sets forth our revenues by product line for the years ended December 31, 2025 and 2024:
| Year Ended December 31, | |||||||||||||
| 2025 | % of Revenues | 2024 | % of Revenues | ||||||||||
| Neck braces | $ | 2,888,172 | 5% | $ | 2,440,697 | 6% | |||||||
| Body armor | 28,980,708 | 47% | 22,456,134 | 51% | |||||||||
| Helmets | 13,305,892 | 21% | 8,389,186 | 19% | |||||||||
| Other products, parts and accessories | 16,733,142 | 27% | 10,741,925 | 24% | |||||||||
| $ | 61,907,914 | 100% | $ | 44,027,942 | 100% | ||||||||
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Sales of our flagship neck brace accounted for $2.89 million and $2.44 million, or 5% and 6% of our revenues for the years ended December 31, 2025 and 2024, respectively. The 18% increase in neck brace revenues is primarily attributable to a 35% increase in the volume of neck braces sold during the 2025 period.
Our body armor products are comprised of chest protectors, full upper body protectors, upper body protection vests, back protectors, knee braces, knee and elbow guards, off-road motorcycle boots and mountain biking shoes. Body armor revenues accounted for $28.98 million and $22.46 million, or 47% and 51% of our revenues for the years ended December 31, 2025 and 2024, respectively. The 29% increase in body armor revenues was primarily the result of a 22% increase in revenue generated from the sale of upper body and limb protection and a 40% increase in the volume of footwear, comprising of motorcycle boots and mountain biking shoes, sold during the 2025 period.
Our helmets accounted for $13.31 million and $8.39 million, or 21% and 19% of our revenues for the years ended December 31, 2025 and 2024, respectively. The 59% increase in helmet revenues is primarily due to a 33% increase in the volume of MOTO, MTB, and ADV helmets sold to our global customers during the 2025 period.
Our other products, parts and accessories are comprised of goggles, hydrations bags and apparel items including jerseys, pants, shorts and jackets, sunglasses, bicycle components and aftermarket product support items. Other products, parts and accessories sales accounted for $16.73 million and $10.74 million, or 27% and 24% of our revenues for the years ended December 31, 2025 and 2024, respectively. The 56% increase in revenues of other products, parts and accessories is primarily due to a 54% increase in the sales volume of our MOTO, MTB and ADV technical apparel lines, designed for offroad motorcycle, mountain biking and adventure motorcycle riding, respectively during the 2025 period.
Costs of Revenues and Gross Profit - Cost of revenues for the years ended December 31, 2025 and 2024 were $34.69 million and $26.31 million, respectively. Gross Profit for the years ended December 31, 2025 and 2024 were $27.22 million or 44% of revenues, and $17.71 million or 40% of revenues, respectively. Our neck brace products continue to generate a higher gross margin than our other product categories. Although neck brace revenues accounted for 5% and 6% of our revenues for the year ended December 31, 2025 and 2024, respectively, the 4% increase in gross profit as a percentage of revenues, was primarily due to dealer direct promotional selling activity during the year ended December 31, 2024, designed to turn slower moving inventory. As industry-wide inventory dynamics continue to improve and our dealer direct sales momentum continues, margins earned on dealer direct sales continued to improve. Additionally, shipping costs as a percentage of domestic and international distributor revenues improved as shipping and logistics efficiencies continue to improve.
Product Royalty Income - Product royalty income is earned on sales to distributors that have royalty agreements in place, as well as sales of licensed products by third parties that have licensing agreements in place. Product royalty income for the years ended December 31, 2025 and 2024 were $381,757 and $326,614, respectively. The 17% increase in product royalty income is primarily due to an increase in the sale of licensed products to licensees during the 2025 period.
Salaries and Wages - Salaries and wages for the years ended December 31, 2025 and 2024 were $7.92 million and $7.14 million, respectively. This 11% increase in salaries and wages during the 2025 period was primarily due to the employment of sales, marketing and brand management professionals globally as the Company continues to build a diversified multi-channel selling organization and global consumer facing brand. Additionally, share compensation costs relating to the recognition of share grants that were issued during the fourth quarter of 2023 were recognized on a straight-line basis for the year ended December 31, 2025.
Commissions and Consulting Expense - Commissions and consulting expense for the years ended December 31, 2025 and 2024 were $764,602 and $535,584, respectively. This 43% increase in commissions and consulting expenses during the 2025 period is primarily the result of an increase in commissions paid to sales representatives and management in the United States in line with the increase in domestic sales when compared to the 2024 period.
Professional Fees - Professional fees consist of costs incurred for audit, tax, regulatory filings and quarterly reporting requirements, as well as patent maintenance, protection and litigation expenses incurred as the Company continues to expand its portfolio of exceptional protective gear. Professional fees for the years ended December 31, 2025 and 2024 were $853,065 and $627,659, respectively. The 36% increase in professional fees is primarily due to an increase in expenditures on corporate legal, listing and audit fees incurred during the 2025 period.
Advertising and Marketing - The Company primarily places paid advertising on various motorsport and bicycle online platforms and sponsors a number of events, teams and individuals to increase brand and product visibility globally. Advertising and marketing expenses for the years ended December 31, 2025 and 2024 were $4.56 million and $4.45 million, respectively. The 2% increase in advertising and marketing costs during the 2025 period is primarily due to increased trade show, athlete sponsorship and international sales conference expenditures, that were partially offset by a decrease in point of sale merchandising costs.
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Office Lease and Expenses - Office lease and expenses for the years ended December 31, 2025 and 2024 were $923,839 and $702,785, respectively. Although lease expenses relating to our offices and warehouse in the United States decreased when compared to the 2024 period, the 31%, increase in office lease and expenses is primarily due to the inclusion of consolidation warehousing costs incurred during the 2025 period in order to facilitate consolidated global shipping.
Research and Development Costs - These costs include the salaries of staff members that are directly involved in the research and development of protective gear, as well as the direct costs associated with developing these products. Research and development costs for the year ended December 31, 2025, increased to $2,704,071, from $2,523,881, during the same 2024 period. The 7% increase in research and development costs during the 2025 period is primarily as a result of an increase in expenditure on product certification and research costs, as the Company continues to develop a pipeline on cutting edge products and refine its product categories.
Bad Debt Recovery - Bad debt recovery for the years ended December 31, 2025 and 2024 were $65,923 and $76,278, respectively. This 14% decrease in bad debt recovery is primarily the result of a decrease in bad debts that were recovered during the 2025 period, when compared to the prior year comparative period.
General and Administrative Expenses - General and administrative costs consist of insurance, travel, merchant fees, communication costs, office and computer equipment with insurance and travel comprising a substantial part of these expenses. General and administrative expenses for the years ended December 31, 2025 and 2024, were $4.37 million and $3.88 million, respectively. The 13% increase in general and administrative expenses is primarily due to an increase in fees paid to enhance the Company's global e-commerce selling capabilities, that were partially offset by a decrease in merchant fees paid when compared to the comparative 2024 period.
Depreciation Expense - Depreciation expense for the years ended December 31, 2025 and 2024 was $1.33 million and $1.23 million, respectively. The 8% increase in depreciation expense is primarily due to software enhancements that were implemented to improve customer and consumer buying activity across the Company's digital and web-based selling platforms.
Impairment Expense - Impairment expense for the years ended December 31, 2025 and 2024 was $234,224 and $0, respectively. The 100% increase in impairment expense is primarily due to the impairment of long-lived intangible web assets as a result of web platform enhancements designed to increase development, engagement and ultimately e-commerce selling abilities.
Total Operating Expenses - Total operating expenses increased by $2.58 million to $23.59 million for the year ended December 31, 2025, when compared to $21.02 million in the 2024 period. This increase in total operating expenses during the 2025 period is primarily due to increases in salaries and wages, commission and consulting and general administrative expenditures discussed above.
Other Income - Other income for the years ended December 31, 2025 and 2024 was $397,000 and $275,413, respectively. The 44% increase in other income is primarily due to an increase in interest received during the 2025 period.
Provision for (benefit from) Income taxes - Provision for (benefit from) Income taxes for the years ended December 31, 2025 and 2024 was $1.14 million and $(498,799), respectively. The 329% increase in income taxes is primarily due to an increase in net income before taxation as a result of the increase in revenues and margins discussed above.
Net Income (Loss) - The net income after income taxes for the year ended December 31, 2025 was $3.26 million, an increase of $5.47 million when compared to a net loss after income taxes of ($2.20) million. This 248% increase in net income is primarily due to the increase in revenues and margins that were partially offset by the increase in total operating expenses discussed above.
Liquidity and Capital Resources
At December 31, 2025, we had cash, cash equivalents and restricted cash of $13.23 million, as compared to cash and cash equivalents of $12.37 million at December 31, 2024. The following table sets forth a summary of our cash flows for the periods indicated:
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| December 31, | |||||||
| 2025 | 2024 | ||||||
| Net cash provided by operating activities | $ | 1,807,829 | $ | 2,793,192 | |||
| Net cash used in investing activities | $ | (1,053,043 | ) | $ | (1,228,935 | ) | |
| Net cash used in financing activities | $ | (217,574 | ) | $ | (514,951 | ) | |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | $ | 327,735 | $ | (28,626 | ) | ||
| Net increase in cash, cash equivalents and restricted cash | $ | 864,947 | $ | 1,020,680 | |||
| Cash, cash equivalents and restricted cash at the beginning of period | $ | 12,368,100 | $ | 11,347,420 | |||
| Cash, cash equivalents and restricted cash at the end of period | $ | 13,233,047 | $ | 12,368,100 | |||
Cash increased by $864,947 or 7%, for the year ended December 31, 2025. The primary sources of cash during 2025 were net income of $3,263,922 and an increase in accounts payable and accrued expenses amounting to $1,654,576. The primary uses of cash for the 2025 period were an increase in inventory of $2,869,908, increased accounts receivable of $1,197,572 an increase in prepaid expenses and other current assets amounting to $631,082 and capital expenditures of $1,081,946.
The Company is currently meeting its working capital needs through cash on hand, a revolving line of credit with a bank as well, as internally generated cash from operations. Management believes that its current cash and cash equivalent balances, along with the net cash generated by operations are sufficient to meet its anticipated operating cash requirements for at least the next twelve months. There are currently no plans for any major capital expenditures in the next twelve months. Our long-term financing requirements depend on our growth strategy, which relates primarily to our desire to increase revenue both domestically, as well as internationally.
Obligations under Material Contracts
Pursuant to our Licensing Agreement with Xceed Holdings, a company controlled by Dr. Christopher Leatt, our founder, chairman and head of research and development, we pay Xceed Holdings 4% of all neck brace sales revenue billed and received by the Company on a quarterly basis based on sales of the previous quarter. During the years ended December 31, 2025 and 2024, the Company paid an aggregate of $113,740 and $106,679, in licensing fees to Xceed Holdings. In addition, pursuant to a separate license agreement between the Company and Mr. J. P. De Villiers, our former director, the Company is obligated to pay a royalty fee of 1% of all our billed and received neck brace sales revenue, in quarterly installments, based on sales of the previous quarter, to a trust that is beneficially owned and controlled by Mr. De Villiers. During the years ended December 31, 2025 and 2024, the Company paid an aggregate of $28,435 and $26,670, in licensing fees to Mr. De Villiers.
Dr. Christopher Leatt is compensated in his capacity as our Research and Development consultant, pursuant to our Consulting Agreement, dated November 8, 2021, with Innovation Services Limited, or Innovation, a Jersey limited company in which, Dr. Leatt is an indirect beneficiary. Pursuant to the terms of the agreement, Innovation has agreed to serve as the Company's exclusive research, development and marketing consultant, in exchange for a monthly fee; provided, however, that Dr. Leatt must remain an Innovation director and beneficiary of a majority of its ownership interests during the term of the agreement, and Dr. Leatt must remain the Company's primary point of contact responsible for the oversight, review and delivery of the services to be performed by Innovation under the agreement. During the year ended December 31, 2025, the monthly fee payable by the Company to Innovation was $$48,437. Innovation may increase its monthly fees, on an annual basis on written notice to the Company, by no greater than the lesser of: (a) five percent (5%) of the prior year's annualized fee; or (b) a percentage equal to then-applicable annual percentage increase in the Consumer Price Index (CPI) published by the United States Department of Labor's bureau of labor statistics, plus one-half percent (0.5%). The parties further agreed that all intellectual property generated in connection with the services provided under the consulting agreement will be the sole property of the Company. The term of the Consulting Agreement will continue unless terminated by either party in accordance with its terms. Either party may terminate the Consulting Agreement upon 6 months' prior written notice, except that the Company may immediately terminate it without notice if the services to be performed by Innovation cease to be performed by Dr. Leatt, if beneficial ownership in Innovation by Dr. Leatt and his immediate family members decreases, or for any other material breach of the agreement. The parties have agreed to settle any dispute under the Consulting Agreement by submission to JAMS for final and binding arbitration pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules.
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In addition to the Consulting Agreement, the Company simultaneously entered into a side letter agreement, dated November 8, 2021, with Dr. Leatt, pursuant to which Dr. Leatt agreed, among other things: (1) not to perform services similar to the services provided under the agreement for any current or future, direct or indirect competitor of the Company or any similar company; (2) not to solicit any current or future employees of the Company for employment with Innovation or any other entity with which he may become affiliated, or to contact or solicit any current or future stockholder or investor of the Company in connection with any matter that is not directly related to the ongoing or future business operations of the Company; and (3) that he will apprise the Company of any business opportunity that he becomes aware of that could benefit the Company so that the Company, can in its sole discretion, make a determination regarding whether to pursue such opportunity in the best interest of the Company and its stockholders. Dr. Leatt further agreed to continue dedicating a majority of his time on matters related to performance of his duties as a director of the Company and to the fulfillment of his obligations to the Company's research and development efforts under the consulting agreement, and the Company will have the right to adjust the amount of the fees payable under the consulting agreement to the extent of any substantial diminution in his fulfillment of such duties and obligations. The foregoing agreements replaced prior agreements in force from June 2018 to November 2021, among the Company, Dr. Leatt and Innovate Services Limited, a Seychelles company, beneficially owned by Dr. Leatt, that wound up operations. The foregoing description of the Consulting Agreement and Side Letter Agreement is qualified in its entirety by reference to the Consulting Agreement and the Side Letter Agreement, copies of which are filed as Exhibits 10.1 and 10.2, respectively, hereto and are incorporated by reference in this report. During the years ended December 31, 2025, and 2024, the Company recognized an aggregate of $573,058 and $555,317, respectively, in consulting fees to Innovation.
The Company is the holder of a $1,500,000 revolving line of credit through March 1, 2026, pursuant to a line of credit agreement with a U.S. bank, dated November 19, 2018, as amended. Advances under the line of credit bear interest at the greater of the Secured Overnight Financing Rate Daily Floating rate plus spread adjustment or an Index Floor of 1.25 percentage points, plus 2.5 percentage points. Effective February 12. 2026, the Company signed Amended and Restated Loan Agreement to extend the revolving line of credit to March 1, 2027, the agreement adjusted the interest rate to the greater of the Secured Overnight Financing Rate Daily Floating rate plus spread SOFR adjustment or the index floor, plus 2.7 percentage points. Obligations under the line of credit are secured by the United States accounts receivable, inventory, and equipment and fixtures of the Company and its subsidiary, Two Eleven Distribution, LLC. As of December 31, 2025 and 2024, respectively, there were no advances of the line of credit, leaving $1,500,000 and $1,500,000 available for advances.
Critical Accounting Policies
Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. We have identified the following as the items that require the most significant judgment and often involve complex estimation: revenue recognition, estimating allowances for doubtful accounts receivable, inventory valuation, impairment of long-lived assets, leases and accounting for income taxes.
Revenue and Cost Recognition - The Company recognizes revenue in accordance with ASC 606 "Revenues from Contracts with Customers". 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 products is performed by third party subcontractors that are predominately based 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 a 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 standard distributor payment terms range from pre-payment in full to sixty (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, however, in limited instances, qualified distributors and dealers may be granted extended payment terms during selected order periods. In performing such evaluations, the Company utilizes historical experience, sales performance, and credit risk requirements. Furthermore, products purchased by distributors may not be returned to the Company in the event that any such distributor relationship is terminated.
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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 and upon shipment of products direct to end consumers, which have been sold through digital channels. The Company's standard terms and conditions of sale for non-consumer direct sales do not allow for product returns other than under warranty. Web-based direct sales permit products to be returned or exchanged within 30 days of the purchase date.
International sales (other than in the United States and South Africa) are generally drop-shipped directly from our consolidation warehouse or our third-party manufacturing partner to Company's 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.
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.
Sales commissions are expensed when incurred, which is generally at the time of sale.
Shipping and handling activities associated with outbound freight, after control over a product has transferred to a customer, are accounted for as a fulfilment cost and are included in cost of revenues in the accompanying consolidated statements of operations and comprehensive income (loss). 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.
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.
Allowance for Credit Losses - Accounts receivable consist of amounts due to the Company from normal business activities. Credit is granted to distributors on an unsecured basis based on credit risk analysis procedures. We continuously monitor credit reports, collections, communication and payments from customers and maintain an allowance for credit losses based upon the expected credit losses determined utilizing historical experience and any specific customer collection issues that have been identified. In determining the amount of the allowance, we are required to make certain estimates and assumptions. Accounts receivable balances that are still outstanding after we have used reasonable collection efforts are written off as uncollectible. While such credit losses have historically been minimal, within our expectations and the provisions established, macro-economic conditions and customer financial positions are fluid, and we cannot guarantee that we will continue to experience the same credit loss rates that we have had in the past. A significant change in the liquidity or financial position of any of our significant customers could have a material adverse effect on the collectability of our accounts receivable and our future operating results. The allowance for short-term credit losses at December 31, 2025 and December 31, 2024, was $205,827 and $500,164, respectively. Additionally, an allowance for long-term credit losses will be included for accounts receivables that are anticipated to be collected over a period that is greater than 12 months. The allowance for long-term credit losses at December 31, 2025 and December 31, 2024 was $0 and $3,366, respectively.
Inventory Valuation - 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, we 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, we utilize historical experience as well as current market information. The reserve for obsolescence at December 31, 2025 and December 31, 2024 was $510,576 and $533,953, respectively.
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Impairment of Long-Lived Assets - The Company reviews its intangible and tangible long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the expected future net cash flows to be generated by the assets. Based on these reviews, the Company recognized an impairment charge of $234,224 relating to intangible capitalized website costs and $0 to the carrying value of long-lived assets during the years ended December 31, 2025 and 2024, respectively.
Operating Leases - The Company determines if an arrangement is a lease at contract inception. Operating leases are included in the right-of-use assets ("ROU''), and lease liability obligations are included in the Company's consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset of the lease term and lease liability obligations represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date, based on the present value of lease payments over the lease term. As the Company's leases typically do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives and lease direct costs. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term.
Income Taxes - As part of the process of preparing our consolidated financial statements, we are required to estimate our income tax provision (benefit) in each of the jurisdictions in which we operate. This process involves estimating our current income tax provision (benefit) together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets. We regularly evaluate our ability to recover the reported amount of our deferred income taxes considering several factors, including our estimate of the likelihood of the Company generating sufficient taxable income in future years during the period over which the temporary differences reverse.
Recent Accounting Pronouncements
See Note 2, "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements, including the respective dates of adoption, or expected adoption and effects on our consolidated financial position, results of operations and cash flows.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to its stockholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Some of our operations are carried out in the Republic of South Africa, or RSA, and we are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. Accordingly, our business, financial condition, and results of operations may be influenced by the political, economic and legal environments in the RSA, and by the general state of the RSA economy. Our results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
Foreign Exchange Risk
We are exposed to foreign exchange risk as our revenues and consolidated results of operations may be affected by fluctuations in foreign currency as we translate these currencies into U.S. dollars when we consolidate our financial results. Operating outside of the United States further exposes us to foreign exchange risk, which we monitor. We are most sensitive to changes in the exchange rates of the South African rand, the renminbi, the euro and the U.S. dollar. We have more ZAR expenses than we do sales in South Africa. Furthermore, a portion of our consolidated revenues are denominated in South African Rand, or ZAR, certain of our assets are denominated in ZAR, and our research and marketing operations in South Africa utilize South African labor sources. A decrease in the value of the U.S. dollar in relation to the ZAR could increase our cost of doing business in South Africa. Alternatively, if the ZAR depreciates against the U.S. Dollar, the value of our ZAR revenues, earnings and assets as expressed in our U.S. Dollar financial statements will decline. In China we have more renminbi expenses than we do sales, because we manufacture our products in China that we sell globally. A decrease in the value of the U.S. dollar in relation to the renminbi could increase our cost of purchasing products in China. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk. In Europe we have significantly more sales than we do expenses. Since 69% of our sales is derived outside the U.S. where the U.S. dollar is not the primary currency, significant fluctuations in exchange rates such as the strengthening of the dollar versus our customers' local currency can adversely affect our ability to remain competitive in those areas.
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Inflation
Inflationary factors such as increases in the cost of our sales, salaries, wages and overhead costs may adversely affect our operating results. During the year ended December 31, 2025, the Company experienced inflationary cost increases that had an impact on both cost of sales, gross margins, salaries and selling, general and administrative expenses. A prolonged high rate of inflation in the future may have a significant adverse effect on our ability to maintain current levels of gross margin as a percentage of net sales if the selling prices of our products are not increased due to market dynamics. Additionally, prolonged inflationary pressure on salaries, selling, general and administrative expenses may have an impact on Net Income.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The full text of our audited consolidated financial statements as of December 31, 2025 and 2024 begins on page F-1 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, Mr. Sean Macdonald, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2025. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer determined that, as of December 31, 2025, and as of the date that the evaluation was completed, our disclosure controls and procedures were effective.
Internal Controls over Financial Reporting
Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP, and includes those policies and procedures that:
1. pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and
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3. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the framework set forth in the report entitled Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that our internal control over financial reporting, as of December 31, 2025 was effective.
Because the Company is a smaller reporting company, this annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm.
Changes in Internal Controls over Financial Reporting
There were no changes in its internal controls over financial reporting in 2025 that would materially affect, or are reasonably likely to materially affect our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
We have no information to disclose that was required to be in a report on Form 8-K during the period covered by this report but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Directors, Executive Officers, Promoters and Control Persons
The following sets forth the name and position of each of our current executive officers, directors and significant employees and their ages and titles as of March 10, 2026.
| Name | Age | Title |
| Dr. Christopher James Leatt | 57 | Founder, Chairman and Research & Development Consultant |
| Sean Macdonald | 48 | President, CEO, CFO and Director |
| Jeffrey Joseph Guzy | 74 | Director |
DR. CHRIS LEATT: Dr. Leatt, aged 57, has served as the Company's Chairman since 2005 and as the Company's Research and Development consultant since July 2015. He studied medicine at the University of Cape Town and interned in the United Kingdom. He worked briefly as a General Practitioner and in General Surgery and Orthopaedics before taking up a Registrar's position in Neurosurgery at the Tygerberg Academic Hospital. He resigned from his post in Neurosurgery in order to develop and study the benefits and viability of a neck protection system (the Leatt-Brace®) for helmet clad sport and recreational users in an attempt to reduce devastating neck injuries. Dr. Leatt is a fixed wing PPL pilot, Commercial helicopter pilot and Grade II instructor. He has been an active participant in competitive cross-country motorcycle endurance races, as well as Super Sport and Battle of the Twins (BOTTS) track racing events. He won the Western Province BOTTS championship in 2011. He is an avid MTB rider and completed the ABSA Cape Epic in 2019. He is currently pursuing a PhD in the Department of Neurosurgery at Stellenbosch University, looking at brain injury prevention.
SEAN MACDONALD: Mr. Macdonald, CA (SA), aged 48, has served as the Company's Chief Executive Officer and President since November 2010, as its Chief Financial Officer since August 2009, and as a Director since May 2010. Prior to joining the Company, Mr. Macdonald served from August 2004 to December 2009, as the Chief Financial Officer of Cyclelab, the largest bicycle retailer in South Africa, where he was responsible for operational, financial and strategic leadership of the business including the implementation of a franchise model in order to grow the business. Mr. Macdonald holds a Bachelor of Commerce Degree in Finance and Information Systems from the University of Cape Town, as well as a Post-Graduate Diploma in Accounting, which included 3 years of articles at KPMG Cape Town. Mr. Macdonald is also a South Africa registered Chartered Accountant.
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JEFFREY GUZY: Mr. Guzy, aged 74, has served as a director since April 2007 and serves as a business development consultant and entrepreneur in Arlington, Virginia. Mr. Guzy is currently working as Chairman and CEO of CoJax Oil and Gas Corporation (OTC.CJAX). Prior to that, Mr. Guzy served, from October 2007 to August 2010 as our President. Mr. Guzy has a MBA in Strategic Planning and Management from The Wharton School of the University of Pennsylvania; a M.S. in Systems Engineering from the University of Pennsylvania; a B.S. in Electrical Engineering from Penn State University; and a Certificate in Theology from Georgetown University. Mr. Guzy has served as an executive manager with IBM Corp., Sprint International, Bell Atlantic Video Services, Loral CyberStar and FaciliCom International. Mr. Guzy has also started his own telecommunications company providing Internet services in Western Africa. He continues to work with emerging private companies and middle-market public companies. He serves as an independent director and chairman of the audit committee of public companies, Capstone Industries (OTC.CAPC) and Purebase Corporation (OTC.PUBC), and as an independent director and chairman of the audit committee and the corporate governance committee of Blue Star Foods Corporation (NASDAQ.BSFC) a public company.
There are no agreements or understandings for any of our executive officers, directors or significant employees to resign at the request of another person and no officer or director is acting on behalf of nor will any of them act at the direction of any other person.
Qualifications, Attributes, Skills and Experience Represented on the Board
The Board has identified particular qualifications, attributes, skills and experience that are important to be represented on the board as a whole, in light of our current needs and business priorities. The Board believes that each director is a recognized person of high integrity with a proven record of success in his or her field. Each director demonstrates innovative thinking, familiarity with and respect for corporate governance requirements and practices, an appreciation of multiple cultures and a commitment to the business and operations of the Company. In addition to the foregoing qualifications, the Board has assessed the intangible qualities including the director's ability to ask difficult questions and, simultaneously, to work collegially. The Board also considers diversity of age, cultural background and professional experiences in evaluating candidates for Board membership. Diversity is important because a variety of points of view contribute to a more effective decision-making process.
Set forth below is a tabular disclosure summarizing some of the specific qualifications, attributes, skills and experiences of our directors.
| Name | Title | Qualifications | |
| Dr. Christopher James Leatt | Founder, Chairman and Head of Research & Development | • | Dr. Leatt holds a Bachelor of Medicine and Bachelor of Surgery Degree and is the inventor of the Leatt Brace® and the Founder of the Company. |
| • | He supports the Company's research and development department and has an intimate knowledge of the Company's innovative products. | ||
| • | He contributes invaluable long-term knowledge of the Company's business and operations and extensive experience in the industry. |
||
| Sean Macdonald | CEO, CFO, President and Director | • | Mr. Macdonald is a registered Chartered Accountant and holds a Bachelor of Commerce Degree in Finance and Information Systems and a Post-Graduate Diploma in Accounting. |
| • | His invaluable experience in finance and accounting provides insight for the implementation of effective operational, financial and strategic leadership of the Company. |
||
| Jeffrey Joseph Guzy | Director | • | Through his MBA in Strategic Planning & Management and his knowledge of U.S. capital markets, Mr. Guzy provides invaluable guidance and perspective to the Board. |
| • | He has also served as the Company's President and has invaluable long-term knowledge of the Company's business and operations. | ||
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Family Relationships
There are no family relationships among our directors or officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
• been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
• had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
• been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
• been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
• been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
• been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self- regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Except as set forth in our discussion below in "Certain Relationships and Related Transactions, and Director Independence - Transactions with Related Persons," none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
Significant Employees
| Name | Age | Position |
| Erik Olsson | 58 | International General Manager and Head of International Distribution |
ERIK OLSSON: Mr. Olsson, aged 58, has served as our International General Manager and Head of International Distribution since January 2012. Prior to that, Mr. Olsson served from January 2010 to December 2011, as European General Manager and later as General Manager of Asia, Europe, the Middle-East and the Central Pacific (Oceania). Mr. Olsson has over 20 years' experience as a sales and product manager for various companies in the power sports industry. Prior to joining us he served from January 2003 to December 2009 as Area Manager for Jofrab Ab, a Swedish distributor of motorcycles and recreational vehicles.
Stockholder Communication with the Board of Directors
Stockholders may communicate with the Board by sending a letter to our Board of Directors, c/o Corporate Secretary, 12 Kiepersol Drive, Atlas Gardens, Contermanskloof Road, Durbanville, Western Cape, South Africa, 7550 for submission to the board or committee or to any specific director to whom the correspondence is directed. Stockholders communicating through this means should include with the correspondence evidence, such as documentation from a brokerage firm, that the sender is a current record or beneficial stockholder of the Company. All communications received as set forth above will be opened by the Corporate Secretary or his designee for the sole purpose of determining whether the contents contain a message to one or more of our directors.
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Any contents that are not advertising materials, promotions of a product or service, patently offensive materials or matters deemed, using reasonable judgment, inappropriate for the Board will be forwarded promptly to the chairman of the Board, the appropriate committee or the specific director, as applicable.
Code of Ethics
We have adopted a written code of ethics that applies to all of our officers, directors and employees, including our principal executive officer and principal financial officer, or persons performing similar functions, a copy of which is attached as an exhibit to this report.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table Update
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the following persons for services rendered in all capacities during the indicated periods. No other executive officers received total annual salary and bonus compensation in excess of $100,000.
| Name and Principal Position |
Year | Salary ($) |
Bonus ($) |
Stock Awards ($)(3) |
Option Awards ($)(1) |
Non-Equity Incentive Plan Compensation Earnings ($) |
Non- qualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
| Dr. Christopher James Leatt, Chairman and Head of Research and Development(2) | 2023 | 61,743 | -- | 21,105 | -- | -- | -- | 538,001 | 620,849 |
| 2024 | 65,867 | -- | 46,900 | -- | -- | -- | 555,317 | 668,084 | |
| 2025 | 71,010 | -- | 102,523 | -- | -- | -- | 573,058 | 746,591 | |
| Sean Macdonald, President, CEO, CFO and Director |
2023 | 342,262 | 62,500 | 26,968 | -- | -- | -- | -- | 431,730 |
| 2024 | 367,406 | 50,000 | 70,350 | -- | -- | -- | -- | 487,756 | |
| 2025 | 399,949 | 70,000 | 153,785 | -- | -- | -- | -- | 623,734 |
1. The option awards reflect a 1-for-25 reverse split effected by the Company on September 20, 2012.
2. Also reflects compensation to Dr. Leatt in his capacity as our Research and Development consultant as discussed under the Summary of Employment Agreements heading below. Compensation received by Dr. Leatt in his role as Chairman of the Company's board of directors is separately reflected under the Compensation heading below.
3. The stock awards reflect stock awards from previous issuances that vested during the period as well as stock awards that were issued during the period.
Summary of Employment Agreements
We have entered into an employment agreement, effective as of January 1, 2009, with Sean Macdonald our President, CEO and CFO, pursuant to which, as amended, we were obligated to pay him a base salary of ZAR4,314,392 (approximately $230,267) and $113,660 per annum. Mr. Macdonald further received a travel allowance of R127,789 (approximately, $6,820), medical and life insurance benefits, participation in the Company's new provident fund, the right to participate in the Company's executive wellness program and he is entitled to an annual performance-based bonus at the sole discretion of the Company's Board of Directors. Effective January 1, 2026, this increased to ZAR4,551,684 (approximately, $273,725) per annum and $125,0267 per annum and travel allowance of ZAR134,824 (approximately, $8,108) per annum. Mr. Macdonald may not sell any stock issued to him by the Company without prior written consent of the Board of Directors. Mr. Macdonald is also subject to the customary confidentiality covenants and South African Labor Laws which entitle Mr. Macdonald to one week's severance pay for each year of service to the Company. The agreement may be terminated by either party with six months' written notice; provided that Mr. Macdonald will be obligated to assist in the appointment and orientation of his successor during such six-month period. Mr. Macdonald may also be terminated by the Company with no notice for gross misconduct, incapacity or for breach of the employment agreement.
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Dr. Christopher Leatt is compensated in his capacity as our Research and Development consultant, pursuant to our Consulting Agreement, dated November 8, 2021, with Innovation Services Limited, or Innovation, a Jersey limited company in which, Dr. Leatt is an indirect beneficiary. Pursuant to the terms of the agreement, Innovation has agreed to serve as the Company's exclusive research, development and marketing consultant, in exchange for a monthly fee; provided, however, that Dr. Leatt must remain an Innovation director and beneficiary of a majority of its ownership interests during the term of the agreement, and Dr. Leatt must remain the Company's primary point of contact responsible for the oversight, review and delivery of the services to be performed by Innovation under the agreement. Innovation may increase its monthly fees, on an annual basis on written notice to the Company, by no greater than the lesser of: (a) five percent (5%) of the prior year's annualized fee; or (b) a percentage equal to then-applicable annual percentage increase in the Consumer Price Index (CPI) published by the United States Department of Labor's bureau of labor statistics, plus one-half percent (0.5%). From July 1, 2024 through June 30, 2025, the monthly fee payable by the Company to Innovation was $47,072, and commencing July 1, 2025, this monthly fee increased to $48,437. The parties further agreed that all intellectual property generated in connection with the services provided under the consulting agreement will be the sole property of the Company. The term of the Consulting Agreement will continue unless terminated by either party in accordance with its terms. Either party may terminate the Consulting Agreement upon 6 months' prior written notice, except that the Company may immediately terminate it without notice if the services to be performed by Innovation cease to be performed by Dr. Leatt, if beneficial ownership in Innovation by Dr. Leatt's and his immediate family members decreases, or for any other material breach of the agreement. The parties have agreed to settle any dispute under the Consulting Agreement by submission to JAMS for final and binding arbitration pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules.
The Company also simultaneously entered into a side letter agreement, dated November 8, 2021, with Dr. Leatt, pursuant to which Dr. Leatt agreed, among other things: (1) not to perform services similar to the services provided under the agreement for any current or future, direct or indirect competitor of the Company or any similar company; (2) not to solicit any current or future employees of the Company for employment with Innovation or any other entity with which he may become affiliated, or to contact or solicit any current or future stockholder or investor of the Company in connection with any matter that is not directly related to the ongoing or future business operations of the Company; and (3) that he will apprise the Company of any business opportunity that he becomes aware of that could benefit the Company so that the Company, can in its sole discretion, make a determination regarding whether to pursue such opportunity in the best interest of the Company and its stockholders. Dr. Leatt further agreed to continue dedicating a majority of his time on matters related to performance of his duties as a director of the Company and to the fulfillment of his obligations to the Company's research and development efforts under the consulting agreement, and the Company will have the right to adjust the amount of the fees payable under the consulting agreement to the extent of any substantial diminution in his fulfillment of such duties and obligations. The foregoing agreements replaced prior agreements in force from June 2018 to November 2021, among the Company, Dr. Leatt and Innovate Services Limited, a Seychelles company, beneficially owned by Dr. Leatt, that wound up operations.
Grants of Plan-Based Awards
The following table sets forth information regarding equity grants to named executive officers during the fiscal year ended December 31, 2025, including prior year grants that vested during the period.
Name |
Grant Date |
All other stock awards: Number of shares of stock or units |
All other option awards: Number of securities underlying options |
Exercise or base price of option awards ($/Share) |
Grant date fair value of stock and option awards ($) |
| Dr. Christopher Leatt | 12/22/2023 | 51,000 | $9.38 | $478,380 | |
| Sean Macdonald | 12/22/2023 | 76,000 | $9.38 | $712,880 |
On December 21, 2023, the Board approved the award of 51,000 restricted shares of the Company's common stock to Dr. Leatt, pursuant to a Restricted Stock Award Agreement, under the Company's 2011 Plan. On December 22, 2023, 2,250 shares of Restricted Stock vested, 5,000 vested on December 22, 2024, 8,750 Restricted Stock vested on December 22, 2025, 10,000 Restricted Stock will vest on December 22, 2026, 12,500 Restricted Stock will vest on December 22, 2027, and the remaining 12,500 Restricted Stock will vest on December 22, 2028; provided, however, that one hundred percent (100%) of Grantee's nonvested Restricted Stock will become fully vested upon a Change of Control (as defined in the Agreement).
On December 21, 2023, the Board approved the award of 76,000 restricted shares of the Company's common stock to Mr. Macdonald, pursuant to a Restricted Stock Award Agreement, under the Company's 2011 Plan. On December 22, 2023, 2,875 shares of Restricted Stock vested, 7,500 vested on December 22, 2024, and 13,125 vested on December 22, 2025. Another 15,000 shares of Restricted Stock will vest on December 22, 2026, 18,750 will vest on December 22, 2027, and the remaining 18,750 shares will vest on December 22, 2028; provided, however, that one hundred percent (100%) of Grantee's nonvested Restricted Stock will become fully vested upon a Change of Control (as defined in the Agreement).
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Outstanding Equity Awards at Fiscal Year End
The following table sets forth the equity awards outstanding at December 31, 2025 for each of our named executive officers.
| OPTION AWARDS | |||||
| Name | Number of securities underlying unexercised options exercisable |
Number of securities underlying unexercised options unexercisable |
Equity incentive plan awards; number of securities underlying unexercised unearned options |
Option exercise price ($) |
Option expiration date |
| Dr. Christopher Leatt | 52,000 | -- | -- | $1.60 | August 23, 2027 |
| Dr. Christopher Leatt | 52,000 | -- | -- | $2.30 | February 24, 2029 |
| Jeffrey Guzy | 15,000 | -- | -- | $2.30 | February 24, 2029 |
On August 24, 2017, the Board approved a grant to Dr. Leatt of another 10-year option to purchase 52,000 shares of common stock at an exercise price of $1.60 a share under the 2011 Plan, 20,800 of which vested on December 31, 2017, 15,600 of which vested on December 31, 2018, and the remaining 15,600 of which vested on December 31, 2019. This option will expire on August 23, 2027. On February 25, 2019, the Board approved a grant to Dr. Leatt of another 10-year option to purchase 52,000 shares of common stock at an exercise price of $2.30 a share under the 2011 Plan, 15,600 (30%) of which vested on February 25, 2019, another 10,400 of which vested on February 25, 2020, another 10,400 of which vested on February 25, 2021, and the remaining 15,600 (30%) shares vested on February 25, 2022. This option to purchase 52,000 shares will expire on February 24, 2029.
On February 25, 2019, the Board approved a grant to Mr. Guzy of another 10-year option to purchase 15,000 shares of common stock at an exercise price of $2.30 a share under the 2011 Plan, 30% or 4,500 of which vested February 25, 2019. Options to purchase another 20% or 3,000 shares, vested on February 25, 2020, options to purchase another 20% or 3,000 shares, vested on February 25, 2021 and options to purchase the remaining 30% or 4,500 shares vested February 25, 2022. This option to purchase 15,000 shares will expire on February 24, 2029.
Option Exercises and Stock Vested
Except as set forth below, no named executive officers exercised stock options, stock appreciation rights or similar instruments or had vesting stock during the fiscal year ended December 31, 2025.
On March 29, 2016, the Board of Directors of the Company approved the grant to Dr. Leatt, of a 10-year option under the Company's 2011 Plan, to purchase 52,000 shares of the Company's common stock at an exercise price of $2.60 a share, 15,600 of which immediately vested. The initial option grant to Dr. Leatt had vesting scheduled for the remaining underlying shares on December 31, 2017 (30%), March 29, 2017 (20%) and March 29, 2018 (20%), however on November 22, 2016, the Company's board of directors modified the option award to push out the vesting period in line with the Company's expected 2016 fourth quarter performance. As a result of the modification, the option will now expire on March 28, 2026 and the December 31, 2017 vesting date was eliminated. The option to purchase 15,600 of the shares vested on March 29, 2017, and the remaining options to purchase 20,800 shares vested in two equal portions on March 29, 2018 and 2019, respectively. The foregoing modification did not affect the exercise price as the fair market value of the underlying shares on the initial grant date was the same as the fair market value on the modification date. Dr. Leatt exercised his option to purchase 52,000 shares on December 15, 2025.
On December 21, 2023, the Board approved the award of 51,000 restricted shares of the Company's common stock to Dr. Leatt, pursuant to a Restricted Stock Award Agreement, under the Company's 2011 Plan. On December 22, 2023, 2,250 Restricted Stock vested, 5,000 vested on December 22, 2024, 8,750 Restricted Stock vested on December 22, 2025, 10,000 Restricted Stock shall vest on December 22, 2026, 12,500 Restricted Stock shall vest on December 22, 2027, and lastly 12,500 Restricted Stock shall vest on December 22, 2028, provided, however, that one hundred percent (100%) of Grantee's nonvested Restricted Stock shall become fully vested upon a Change of Control (as defined in the Agreement).
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On December 21, 2023, the Board approved the award of 76,000 restricted shares of the Company's common stock to Mr. Macdonald, pursuant to a Restricted Stock Award Agreement, under the Company's 2011 Plan. On December 22, 2023, 2,875 Restricted Stock vested, 7,500 vested on December 22, 2024, 13,125 Restricted Stock vested on December 22, 2025, 15,000 Restricted Stock shall vest on December 22, 2026, 18,750 Restricted Stock shall vest on December 22, 2027, and lastly 18,750 Restricted Stock shall vest on December 22, 2028, provided, however, that one hundred percent (100%) of Grantee's nonvested Restricted Stock shall become fully vested upon a Change of Control (as defined in the Agreement).
Pension Benefits
The Company and its U.S. employees participate in a defined contribution plan under Section 401(k) of the Internal Revenue Code (IRC). None of the named executive officers received or held benefits under a defined pension benefit plan and the Company did not maintain a defined pension benefit plan during the fiscal year ended December 31, 2025.
Nonqualified Deferred Compensation
No nonqualified deferred compensation was offered or issued to any named executive officer during the fiscal year ended December 31, 2025.
Potential Payments upon Termination or Change in Control
Our named executive officers are not entitled to severance payments or other benefit upon the termination of their employment agreements or following a change in control.
Compensation of Directors
The following table sets forth the total director compensation earned by our directors during our fiscal year ended December 31, 2025:
| Name | Fees earned or paid in cash ($) |
Stock awards ($) |
Option awards ($) |
All other compensation ($) |
Total ($) |
| Dr. Christopher James Leatt | 71,010 | 82,075 | - | - | 153,085 |
| Jeffrey J. Guzy | 25,536 | - | - | - | 25,536 |
| Sean Macdonald | 20,383 | 123,113 | - | - | 143,496 |
Narrative to Director Compensation Table
During the 2025 calendar year, we paid Jeff Guzy and Sean Macdonald $2,128 and $1,683 per month, respectively, for their services as directors. Effective January 1, 2026, Jeff Guzy and Sean Macdonald's compensation increased to $2,185 and $1,776 per month, respectively for their services. In the future, we may adopt a policy of paying independent directors a fee for their attendance at board and committee meetings. We also reimburse our directors for reasonable travel expenses related to their duties as our directors.
On July 8, 2015, the Company entered into a Director Agreement with Board Chairman, Dr. Christopher Leatt, pursuant to which, as amended, in addition to his duties with the Company's Research and Development department, Dr. Leatt agreed to devote as much time as is necessary to perform the duties of a director of the Company, including duties as a member of any committees that he may be appointed to by the Board of Directors, including but not limited to assisting the Company with the development of business and new business strategies relating to the objectives of the Company, participation in the Company's investor relations activities, including road shows and shareholder communication activities, and participation in corporate strategy decisions of the Company. During the 2025 calendar year, we paid Dr. Leatt a base fee of ZAR105,487(approximately, $6,344) per month as compensation for his services, approved expenses for travel, medical and life insurance benefits and participation in the Company's Senior Executive Wellness Program, and the Company has agreed to indemnify him to the full extent allowed by law except where such indemnification is prohibited due to intentional misconduct, fraud or knowing violation of law. Effective January 1, 2026, Dr. Leatt's base fee increased to ZAR 111,289(approximately, $6,693) per month, and remainder of the compensation remained the same. Either party may terminate the Director Agreement at any time upon six months' written notice unless he resigns from his position or is removed by shareholders of the Company prior to such termination.
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On March 29, 2016, the Board of Directors of the Company approved the grant to Dr. Leatt, of a 10-year option under the Company's 2011 Plan, to purchase 52,000 shares of the Company's common stock at an exercise price of $2.60 a share, 15,600 of which immediately vested. The initial option grant to Dr. Leatt had vesting scheduled for the remaining underlying shares on December 31, 2017 (30%), March 29, 2017 (20%) and March 29, 2018 (20%), however on November 22, 2016, the Company's board of directors modified the option award to push out the vesting period in line with the Company's expected 2016 fourth quarter performance. As a result of the modification, the option will now expire on March 28, 2026 and the December 31, 2017 vesting date was eliminated. The option to purchase 15,600 of the shares vested on March 29, 2017, and the remaining options to purchase 20,800 shares vested in two equal portions on March 29, 2018 and 2019, respectively. The foregoing modification did not affect the exercise price as the fair market value of the underlying shares on the initial grant date was the same as the fair market value on the modification date. Dr. Leatt exercised his option to purchase 52,000 shares on December 15, 2025. On August 24, 2017, the Board approved a grant to Dr. Leatt of another 10- year option to purchase 52,000 shares of common stock at an exercise price of $1.60 a share under the 2011 Plan, 20,800 of which vested on December 31, 2017, 15,600 of which vested on December 31, 2018, and the remaining 15,600 of which vested on December 31, 2019. This option to purchase 52,000 shares will expire on August 23, 2027. On February 25, 2019, the Board approved a grant to Dr. Leatt of another 10-year option to purchase 52,000 shares of common stock at an exercise price of $2.30 a share under the 2011 Plan, 15,600 (30%) of which vested on February 25, 2019, another 10,400 of which vested on February 25, 2020, and another 10,400 of which vested on February 25, 2021. The remaining 15,600 (30%) shares vested February 25, 2022. This option to purchase 52,000 shares will expire on February 24, 2029. On December 29, 2020, the Company's Board approved the award of 8,000 restricted shares of the Company's common stock to Dr. Leatt, pursuant to a Restricted Stock Award Agreement, under the Company's 2011 Plan. Sixty percent (4,800 shares) of the restricted stock vested immediately, on the date of the award, twenty percent (1,600 shares) vested on December 29, 2021, and the remaining 20% (1,600 shares) vested on December 29, 2022. On December 22, 2021, the Company's Board approved the award of 8,500 restricted shares of the Company's common stock to Dr. Leatt, pursuant to a Restricted Stock Award Agreement, under the Company's 2011 Plan, sixty percent (5,100 shares) of which vested on December 31, 2021, and the remaining 40% (3,400 shares) of which vested in equal parts on March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022. On December 20, 2022, the Board approved the award of 6,800 restricted shares of the Company's common stock to Dr. Leatt, pursuant to a Restricted Stock Award Agreement, under the Company's 2011 Plan, all of which vested on December 31, 2022. On December 21, 2023, the Board approved the award of 51,000 restricted shares of the Company's common stock to Dr. Leatt, pursuant to a Restricted Stock Award Agreement, under the Company's 2011 Plan. On December 22, 2023, 2,250 Restricted Stock vested, 5,000 vested on December 22, 2024, 8,750 Restricted Stock vested on December 22, 2025, 10,000 Restricted Stock shall vest on December 22, 2026, 12,500 Restricted Stock shall vest on December 22, 2027, and lastly 12,500 Restricted Stock shall vest on December 22, 2028, provided, however, that one hundred percent (100%) of Grantee's nonvested Restricted Stock shall become fully vested upon a Change of Control (as defined in the Agreement).
On February 25, 2019, the Board approved a grant to Mr. Guzy of another 10-year option to purchase 15,000 shares of common stock at an exercise price of $2.30 a share under the 2011 Plan, 30% or 4,500 of which vested February 25, 2019. Options to purchase another 20% or 3,000 shares, vested on February 25, 2020; options to purchase another 20% or 3,000 shares, vested on February 25, 2021, and options to purchase the remaining 30% or 4,500 shares vested on February 25, 2022. This option to purchase 15,000 shares will expire on February 24, 2029. On December 21, 2023, the Board approved the award of 1,000 restricted shares of the Company's common stock to Mr. Guzy, pursuant to a Restricted Stock Award Agreement, under the Company's 2011 Plan, all of which vested on December 22, 2023.
On December 21, 2023, the Board approved the award of 76,000 restricted shares of the Company's common stock to Mr. Macdonald, pursuant to a Restricted Stock Award Agreement, under the Company's 2011 Plan. On December 22, 2023, 2,875 Restricted Stock vested, 7,500 vested on December 22, 2024, 13,125 Restricted Stock vested on December 22, 2025, 15,000 Restricted Stock shall vest on December 22, 2026, 18,750 Restricted Stock shall vest on December 22, 2027, and lastly 18,750 Restricted Stock shall vest on December 22, 2028, provided, however, that one hundred percent (100%) of Grantee's nonvested Restricted Stock shall become fully vested upon a Change of Control (as defined in the Agreement).
Limitation of Liability and Indemnification
Section 78.138 of the NRS provides that a director or officer will not be individually liable unless it is proven that (i) the director's or officer's acts or omissions constituted a breach of his or her fiduciary duties, and (ii) such breach involved intentional misconduct, fraud, or a knowing violation of the law.
Section 78.7502 of NRS permits a company to indemnify its directors and officers against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending or completed action, suit or proceeding if the officer or director (i) is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner the officer or director reasonably believed to be in or not opposed to the best interests of the corporation and, if a criminal action or proceeding, had no reasonable cause to believe the conduct of the officer or director was unlawful.
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Section 78.751 of NRS permits a Nevada company to indemnify its officers and directors against expenses incurred by them in defending a civil or criminal action, suit or proceeding as they are incurred and in advance of final disposition thereof, upon receipt of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that such officer or director is not entitled to be indemnified by the company. Section 78.751 of NRS further permits the company to grant its directors and officers additional rights of indemnification under its articles of incorporation or bylaws or otherwise.
Section 78.752 of NRS provides that a Nevada company may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the company has the authority to indemnify him against such liability and expenses.
Our Articles of Incorporation provide that no director or officer of the Company will be personally liable to the Company or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or (ii) the payment of dividends in violation of Section 78.300 of NRS. In addition, our Bylaws implement the indemnification and insurance provisions permitted by Chapter 78 of the NRS by providing that:
• The Company shall indemnify its directors to the fullest extent permitted by the NRS and may, if and to the extent authorized by the board of directors, so indemnify its officers and any other person whom it has the power to indemnify against liability, reasonable expense, or other matter whatsoever.
• The Company may, at the discretion of the board of directors, purchase and maintain insurance on behalf of any person who holds or who has held any position identified in the paragraph above against any and all liability incurred by such person in any such position or arising out of his status as such.
Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers, or persons controlling the company pursuant to provisions of our articles of incorporation and bylaws, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Other than as disclosed herein, there is no pending litigation or proceeding involving any of our directors or executive officers to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of March 10, 2026, the stock ownership of (i) each of our executive officers and directors, (i) of all our executive officers and directors as a group, and (iii) of each person known by us to be a beneficial owner of 5% or more of our common stock. Except as otherwise noted, each person listed below is the sole beneficial owner of the shares and has sole investment and voting power of such shares. No person listed below has any option, warrant or other right to acquire additional securities of the Company, except as may be otherwise noted. Unless otherwise specified, the address of each of the persons set forth below is in care of Leatt Corporation, 12 Kiepersol Drive, Atlas Gardens, Contermanskloof Road, Durbanville, Western Cape, South Africa, 7550.
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| Title of Class | |||||
| Common Stock, $0.001 par value |
Class A Voting Convertible Preferred Stock, $0.001 par value(1) |
Name & Address of Beneficial Owner |
Office, If Any |
Amount and Nature of Beneficial Ownership (2) |
Percent of Class (3) |
| Officers and Directors | |||||
| X | -- | Dr. Christopher J. Leatt (4) | Founder, Innovation Officer and Chairman | 2,012,853 | 31.72% |
| -- | X | -- | -- | 96,000 | 80.00% |
| X | -- | Jeffrey J. Guzy(5) | Director | 71,717 | 1.15% |
| -- | -- | Sean Macdonald(6) | Chief Executive Officer, President and Director | 312,809 | 5.01% |
|
X |
-- |
All officers and directors as |
--
|
2,397,379 |
37.69% |
|
-- |
X |
-- |
-- |
96,000 |
80.00% |
|
5% Shareholders |
|||||
|
-- |
X |
Jean-Pierre De Villiers |
|
24,000 |
20.00% |
|
X |
|
Astoria Investments Ltd |
|
527,762 |
8.46% |
|
X |
|
Mr. Gelband(7) |
|
316,645 |
5.07% |
| (1) | The Preferred Stock votes with the Common Stock at a vote of 100-for-one, subject to adjustments resulting from any future stock splits. The Preferred Stock has priority over the Common Stock in any liquidation preferences but no dividend rights (except as may be declared by the Board). The Common Stock has dividend rights in respect of any dividend distributions when and if declared and paid by the Company. The Common Stock has a claim to any liquidation distribution, subject to the priority claim of the Preferred Stock. No dividends have been paid to date on any securities. There are no other classes of equity securities authorized and issued. |
| (2) | Beneficial Ownership is determined in accordance with the rules of the U.S. Securities and Exchange Commission or "SEC" and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of our common stock. |
| (3) | As of the date of this report and after giving effect to the Company's 1-for-25 reverse stock split effected on September 20, 2012 (the "Reverse Split"), the Company has 28,000,000 shares of common stock authorized with 6,237,561 shares issued and outstanding, and 1,120,000 shares of Preferred Stock authorized with 120,000 shares issued and outstanding. For each Beneficial Owner above, any options exercisable or restricted shares vesting within 60 days have been included in the denominator. |
| (4) | Represents (a) 1,903,846 shares of common stock directly held by Dr. Leatt and 5,007 shares of common stock held by members of his immediate family, (b) a vested option to purchase 52,000 shares of common stock at $1.60 per share which will expire on August 23, 2027, (c) a vested option to purchase 52,000 shares of common stock at $2.30 per share which will expire on February 24, 2029. |
| (5) | Represents (a) 56,717 shares of common stock directly held by Mr. Guzy, and (b) a vested option to purchase 15,000 shares of common stock at $2.30 per share which will expire on February 24, 2029. |
| (6) | Represents 312,809 shares of common stock directly held by Mr. Macdonald. |
| (7) | Represents 316,645 shares of the Company's common stock, beneficially owned or controlled by Mr. Gelband, 277,643 of which are held by Warren Street Capital Management LP, and the remainder of which are held directly by Mr. Gelband and his spouse and children. |
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Changes in Control
We do not currently have any arrangements which if consummated, may result in a change of control of our Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Transactions with Related Persons
The following includes a summary of transactions since the beginning of the last fiscal year, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds $120,000, and in which any related person had or will have a direct or indirect material interest (other than compensation described under "Executive Compensation"). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm's-length transactions.
On March 1, 2006, the Company entered into a Licensing Agreement with Xceed Holdings (formerly, Leatt Brace Holdings), a South African company that is controlled by Dr. Leatt, the Company's Chairman, and by Mr. De Villiers until his resignation on August 29, 2006. Under the terms of the Licensing Agreement, we are obligated to pay Xceed Holdings 4% of neck brace sales revenue billed and received by us, on a quarterly basis, based on sales of the previous quarter. During the years ended December 31, 2025, and 2024, the Company paid an aggregate of $113,740 and $106,679, in licensing fees to Xceed Holdings. In addition, pursuant to a separate license agreement between Mr. De Villiers and us, the Company is obligated to pay a royalty fee of 1% of all our billed and received neck brace sales revenue, in quarterly installments, based on sales of the previous quarter, to a trust that is beneficially owned and controlled by Mr. De Villiers. Royalties paid to Mr. De Villiers totaled $28,435 and $26,670 for the years ended December 31, 2025, and 2024, respectively.
On November 8, 2021, the Company entered into a consulting agreement with Innovation Services Limited, a Jersey limited company in which, Dr. Christopher Leatt, the Company's founder and chairman, is an indirect beneficiary. Pursuant to the terms of the agreement, Innovation has agreed to serve as the Company's exclusive research, development and marketing consultant, in exchange for a monthly fee; provided, however, that Dr. Leatt must remain an Innovation director and beneficiary of a majority of its ownership interests during the term of the agreement, and Dr. Leatt must remain the Company's primary point of contact responsible for the oversight, review and delivery of the services to be performed by Innovation under the agreement. The monthly fee payable by the Company to Innovation during the year ended December 31, 2025 was $48,437. Innovation may increase its monthly fees, on an annual basis on written notice to the Company, by no greater than the lesser of: (a) five percent (5%) of the prior year's annualized fee; or (b) a percentage equal to then-applicable annual percentage increase in the Consumer Price Index (CPI) published by the United States Department of Labor's bureau of labor statistics, plus one-half percent (0.5%). The parties further agreed that all intellectual property generated in connection with the services provided under the consulting agreement will be the sole property of the Company. The term of the Consulting Agreement will continue unless terminated by either party in accordance with its terms. Either party may terminate the Consulting Agreement upon 6 months' prior written notice, except that the Company may immediately terminate it without notice if the services to be performed by Innovation cease to be performed by Dr. Leatt, if beneficial ownership in Innovation by Dr. Leatt's and his immediate family members decreases, or for any other material breach of the agreement. The parties have agreed to settle any dispute under the Consulting Agreement by submission to JAMS for final and binding arbitration pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules.
In connection with the consulting agreement, the Company simultaneously entered into a side letter agreement, dated November 8, 2021, with Dr. Leatt, pursuant to which Dr. Leatt agreed, among other things: (1) not to perform services similar to the services provided under the agreement for any current or future, direct or indirect competitor of the Company or any similar company; (2) not to solicit any current or future employees of the Company for employment with Innovation or any other entity with which he may become affiliated, or to contact or solicit any current or future stockholder or investor of the Company in connection with any matter that is not directly related to the ongoing or future business operations of the Company; and (3) that he will apprise the Company of any business opportunity that he becomes aware of that could benefit the Company so that the Company, can in its sole discretion, make a determination regarding whether to pursue such opportunity in the best interest of the Company and its stockholders. Dr. Leatt further agreed to continue dedicating a majority of his time on matters related to performance of his duties as a director of the Company and to the fulfillment of his obligations to the Company's research and development efforts under the consulting agreement, and the Company will have the right to adjust the amount of the fees payable under the consulting agreement to the extent of any substantial diminution in his fulfillment of such duties and obligations. The foregoing agreements replaced prior agreements in force from June 2018 to November 2021, among the Company, Dr. Leatt and Innovate Services Limited, a Seychelles company, beneficially owned by Dr. Leatt, that wound up operations. During the years ended December 31, 2025 and 2024, the Company recognized an aggregate of $573,058 and $555,317, respectively, in consulting fees to Innovation.
54
Except as set forth in our discussion above, none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons
As we increase the size of our board of directors to include additional independent directors, we expect to prepare and adopt a written related-person transactions policy that sets forth our policies and procedures regarding the identification, review, consideration and approval or ratification of "related-persons transactions." For purposes of our policy only, a "related-person transaction" will be a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any "related person" are participants involving an amount that exceeds $120,000. Transactions involving compensation for services provided to us as an employee, director, consultant or similar capacity by a related person will not be covered by this policy. A related person will be any executive officer, director or a holder of more than five percent of our common stock, including any of their immediate family members and any entity owned or controlled by such persons.
We anticipate that, where a transaction has been identified as a related-person transaction, the policy will require management to present information regarding the proposed related-person transaction to our audit committee (or, where approval by our audit committee would be inappropriate, to another independent body of our board of directors) for consideration and approval or ratification. Management's presentation will be expected to include a description of, among other things, the material facts, the direct and indirect interests of the related persons, the benefits of the transaction to us and whether any alternative transactions are available.
To identify related-person transactions in advance, we are expected to rely on information supplied by our executive officers, directors and certain significant stockholders. In considering related-person transactions, our board of directors will take into account the relevant available facts and circumstances including, but not limited to:
• the risks, costs and benefits to us;
• the impact on a director's independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;
• the terms of the transaction;
• the availability of other sources for comparable services or products; and
• the terms available to or from, as the case may be, unrelated third parties or to or from our employees generally.
We also expect that the policy will require any interested director to excuse himself from deliberations and approval of the transaction in which the interested director is involved.
Promoters and Certain Control Persons
We did not have any promoters at any time during the past five fiscal years.
Director Independence
Our Board of Directors has determined that our director, Mr. Jeffrey Guzy, is an independent director, as the term "independent" is defined by the rules of the Nasdaq Stock Market.
55
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Independent Auditors' Fees
The following is a summary of the fees billed to the Company for professional services rendered for the fiscal years ended December 31, 2025 and 2024:
| Year Ended December 31, | ||||||
| 2025 | 2024 | |||||
| Audit Fees | $ | 256,000 | $ | 211,000 | ||
| Audit-Related Fees | 30,000 | 27,684 | ||||
| Tax Fees | 22,119 | 20,629 | ||||
| Other fees | - | 1,097 | ||||
| TOTAL | $ | 308,119 | $ | 260,410 | ||
"Audit Fees" consisted of fees billed for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Form 10-K and 10-Qs, or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.
"Audit-Related Fees" consisted of fees billed for assurance and related services by the principal accountant that were reasonably related to the performance of the audit or review of our financial statements and are not reported under the paragraph captioned "Audit Fees" above.
"Tax Fees" consisted of fees billed for professional services rendered by the principal accountant for tax returns preparation.
"All Other Fees" consisted of fees billed for products and services provided by the principal accountant, other than the services reported above under other captions of this Item 14.
Pre-Approval Policies and Procedures
Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our auditors must be approved in advance by our board of directors to ensure that such services do not impair the auditors' independence from us. In accordance with its policies and procedures, our board of directors pre-approved the audit and non-audit services performed by Fitzgerald & Co, CPAs, P.C. for our financial statements as of and for the year ended December 31, 2025.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Financial Statements and Schedules
The financial statements are set forth under Item 8 of this annual report on Form 10-K. Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.
56
Exhibit List
The list of exhibits included in the attached Exhibit Index is hereby incorporated herein by reference.
| Exhibit | Exhibit Title |
| Number | |
| 2.1 | Settlement Agreement, dated as of September 25, 2008, between Leatt Corp., Christopher J. Leatt and J. P. De Villiers |
| 2.2 | Amendment No. 1 to Settlement Agreement, dated February 4, 2010, between Leatt Corp., Christopher J. Leatt and Jean- Pierre De Villiers |
| 3.1 | Amended and Restated Articles of Incorporation, as filed with the Secretary of State of Nevada on October 28, 2008 |
| 3.2 | Amended and Restated Bylaws, adopted on October 28, 2008 |
| 4.1 | Certificate of Designation of Series A Voting Convertible Preferred Stock, as filed with the Secretary of State of Nevada on October 29, 2008 |
| 4.2 | Leatt Corp. Amended and Restated 2011 Equity Incentive Plan as amended |
| 4.7 | Stock Option Agreement, dated February 25, 2019, between Leatt Corp. and Jeffrey Guzy. |
| 4.9 | Stock Option Agreement, dated August 24, 2017, between Leatt Corp. and Dr. Christopher Leatt |
| 4.12 | Stock Option Agreement, dated February 25, 2019, between Leatt Corp. and Dr. Christopher Leatt |
| 4.14 | Stock Option Agreement, dated February 25, 2019, between Leatt Corp. and Todd Repsher |
| 4.30 | Restricted Stock Award Agreement, dated December 22, 2023, between Leatt Corp. and Erik Olsson |
| 4.31 | Restricted Stock Award Agreement, dated December 22, 2023, between Leatt Corp. and Jeffrey Guzy |
| 4.32 | Restricted Stock Award Agreement, dated December 22, 2023, between Leatt Corp. and Sean Macdonald |
| 4.33 | Restricted Stock Award Agreement, dated December 22, 2023, between Leatt Corp. and Dr. Christopher Leatt |
| 4.34* | Restricted Stock Award Agreement, dated February 24, 2026, between Leatt Corp. and Erik Olsson |
| 4.35* | Restricted Stock Award Agreement, dated February 24, 2026, between Leatt Corp. and Sean Macdonald |
| 4.36* | Restricted Stock Award Agreement, dated February 24, 2026, between Leatt Corp. and Dr. Christopher Leatt |
| 10.1 | Consulting Agreement, dated November 8, 2021, between Innovation Services Limited and Leatt Corporation (as amended) |
| 10.2 | Side Letter Agreement, dated November 8, 2021, between Leatt Corporation and Dr. Christopher Leatt |
| 10.3* | 2026-2027 Leatt Corporation General Distributor Terms and Conditions, effective February 15, 2026 |
| 10.4 | Lease Agreement, dated February 24, 2022, between Leatt Corp. and Montprop Beleggings (Pty) Ltd (as amended) |
| 10.5 | Lease Agreement, dated February 20, 2025, between Leatt Corp. and Montprop Beleggings (Pty) Ltd Addendum for Unit 8 |
| 10.6 | Lease Agreement, dated February 20, 2025, between Leatt Corp. and Montprop Beleggings (Pty) Ltd Addendum for Unit 9 |
| 10.8 | Lease Agreement, dated February 18, 2025, between Two Eleven Distribution, LLC, and CP Logistics NVCC IV, LLC. |
| 10.9* | Second Amended and Restated Employment Agreement, effective as of January 1, 2022, between Leatt Corp. and Sean Macdonald (as amended) |
| 10.10* | Director Agreement, dated July 8, 2015, between Leatt Corporation and Dr. Christopher Leatt (as amended) |
| 10.11* | Director Agreement, dated June 29, 2017, between Leatt Corporation and Sean Macdonald (as amended) |
| 10.12* | Director Agreement, dated January 1, 2017, between Leatt Corporation and Jeffrey Guzy (as amended) |
| 14.1 | Code of Ethics |
| 21 | List of Subsidiaries |
| 31.1* | Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
57
| 31.2* | Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1* | Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2* | Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101** | Interactive data files pursuant to Rule 405 of Regulation S-T |
| 101.INS** | Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH** | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL** | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF** | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB** | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE** | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
_______________________
* Filed herewith
** Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company's Annual Report on Form 10-K for the period ended December 31, 2025 is formatted in XBRL interactive data files: (i) Consolidated Balance Sheets at December 31, 2025 and 2024; (ii) Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2025 and 2024; (iii) Consolidated Statements of Changes in Shareholders' Equity as of and for the years ended December 31, 2025 and 2024; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024; and (vi) Notes to Consolidated Financial Statements. Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections.
58
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: March 24, 2026
| LEATT CORPORATION | |
| By: /s/ Sean Macdonald | |
| Sean Macdonald, Chief Executive | |
| Officer and Chief Financial Officer | |
| (Principal Executive Officer and | |
| Principal Financial and Accounting Officer) |
In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date |
| /s/ Sean Macdonald | Chief Executive Officer, Chief | March 24, 2026 |
| Sean Macdonald | Financial Officer and Director | |
| (Principal Executive Officer) | ||
| /s/ Dr. Christopher J. Leatt | Chairman | March 24, 2026 |
| Dr. Christopher J. Leatt | ||
| /s/ Jeffrey J. Guzy | Director | March 24, 2026 |
| Jeffrey J. Guzy |
59
LEATT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
| CONTENTS | PAGE |
| Report of Independent Registered Public Accounting Firm | 2 |
| Consolidated Financial Statements: | |
| Consolidated Balance Sheets | 4 |
| Consolidated Statements of Operations and Comprehensive Income (Loss) | 5 |
| Consolidated Statements of Changes in Stockholders' Equity | 6 |
| Consolidated Statements of Cash Flows | 7 |
| Notes to Consolidated Financial Statements | F-8-F-23 |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Leatt Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Leatt Corporation (the Company) as of December 31, 2025, and the related consolidated statements of operations and comprehensive income (loss), changes in stockholders' equity, and cash flows for the period ended December 31, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. The financial statements of Leatt Corporation, as of December 31, 2024, were audited by other auditors whose report dated March 28, 2025, expressed an unqualified opinion.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue
The Company recognizes revenue upon the transfer of control of promised goods to the customer upon delivery in an amount that reflects the consideration the Company expects to receive in exchange for the products.
Auditing the recognition of revenue involves significant challenge due to the inherent risk of revenue recognition. M&K tested a sample of point-of-sale transactions that involves verifying the recognition of revenue under FOB shipping terms the flow of funds related to their product sales.
To evaluate the appropriateness and accuracy of the assessment by management, we evaluated management's assessment relationship to the relevant agreements and management's disclosure in the financial statements.
/s/
We have served as the Company's auditor since 2025.
March 24, 2026
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Leatt Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of LEATT CORPORATION (the Company) as of December 31, 2024, and the related consolidated statement of operations and comprehensive income (loss), changes in stockholders' equity, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company's auditor since 2008.
Vienna, Virginia
March 28, 2025
| 8150 Leesburg Pike • Suite 500 • Vienna, VA 22182 Phone: 703.847.4600 • Fax: 703.356.4821 • Email: fc@fcocpas.oom • Website: http://www.fcocpas.com Members of: American Institute of Certified Public Accountants PCPS/CAQ • Virginia Society of Certified Public Accountants CPA Associates International, Inc., a consortium of independent CPA firms with members in Principal U.S. and International Cities |
F-3
| LEATT CORPORATION | ||
| CONSOLIDATED BALANCE SHEETS | ||
| As of December 31, 2025 and 2024 |
| ASSETS | ||||||
| December 31, 2025 | December 31, 2024 | |||||
| Current Assets | ||||||
| Cash and cash equivalents | $ | $ | ||||
| Restricted cash | ||||||
| Accounts receivable, net | ||||||
| Inventory, net | ||||||
| Payments in advance | ||||||
| Income tax receivable | ||||||
| Prepaid expenses and other current assets | ||||||
| Total current assets | ||||||
| Property and equipment, net | ||||||
| Operating lease right-of-use assets, net | ||||||
| Accounts receivable, net | ||||||
| Deferred tax asset, net | ||||||
| Other Assets | ||||||
| Deposits | ||||||
| Total Assets | $ | $ | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current Liabilities | ||||||
| Accounts payable and accrued expenses | $ | $ | ||||
| Refund liability | ||||||
| Notes payable, current | ||||||
| Operating lease liabilities, current | ||||||
| Other current liabilities | ||||||
| Short term loan, net of finance charges | ||||||
| Total current liabilities | ||||||
| Notes payable, net of current portion | ||||||
| Operating lease liabilities, net of current portion | ||||||
| Total liabilities | ||||||
| Commitments and contingencies | ||||||
| Preferred stock, $ and December 31, 2024 |
||||||
| Common stock, $ 31, respectively 2025 and as of December 31, 2024, respectively |
||||||
| Accumulated other comprehensive loss | ( |
) | ( |
) | ||
| Retained earnings | ||||||
| Additional paid - in capital | ||||||
| Treasury stock, at cost, as of December 31, 2025 and December 31, 2024, respectively |
( |
) | ||||
| Total stockholders' equity | ||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
| LEATT CORPORATION | ||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||
| FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
| 2025 | 2024 | |||||
| Revenues | $ | $ | ||||
| Cost of Revenues | ||||||
| Gross Profit | ||||||
| Product Royalty Income | ||||||
| Operating Expenses | ||||||
| Salaries and wages | ||||||
| Commissions and consulting expenses | ||||||
| Professional fees | ||||||
| Advertising and marketing | ||||||
| Office lease and expenses | ||||||
| Research and development costs | ||||||
| Bad debt recovery | ( |
) | ( |
) | ||
| General and administrative expenses | ||||||
| Depreciation | ||||||
| Impairment loss | ||||||
| Total operating expenses | ||||||
| Income (Loss) from Operations | ( |
) | ||||
| Other Income | ||||||
| Interest and other income, net | ||||||
| Total other income | ||||||
| Income (Loss) Before Provision for (Benefit from) Income Taxes | ( |
) | ||||
| Provision for (benefit from) Income taxes | ( |
) | ||||
| Net Income (Loss) Available to Common Shareholders | $ | $ | ( |
) | ||
| Net Income (Loss) per Common Share | ||||||
| Basic | $ | $ | ( |
) | ||
| Diluted | $ | $ | ( |
) | ||
| Weighted Average Number of Common Shares Outstanding | ||||||
| Basic | ||||||
| Diluted | ||||||
| Comprehensive Income (Loss) | ||||||
| Net Income (Loss) | $ | $ | ( |
) | ||
| Other comprehensive income (loss), net of $ ($ |
||||||
| Foreign currency translation | ( |
) | ||||
| Total Comprehensive Income (Loss) | $ | $ | ( |
) |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
| LEATT CORPORATION | ||||||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||
| FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
| Accumulated | ||||||||||||||||||||||||||||||
| Preferred Stock A | Common Stock | Additional | Treasury Stock | Other | ||||||||||||||||||||||||||
| Number of | Number of | Paid - In | Number of | Comprehensive | Retained | Total | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Shares | Amount | Loss | Earnings | Equity | |||||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||||||||
| Restricted stock awards | - | - | - | - | - | - | ||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||
| Balance, January 1, 2025 | ( |
) | ||||||||||||||||||||||||||||
| Restricted stock awards | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
| Options exercised on a cashless basis | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
| Purchase of treasury stock under share repurchase plan | - | - | ( |
) | ( |
) | ( |
) | - | - | ( |
) | ||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
| LEATT CORPORATION | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
| 2025 | 2024 | |||||
| Cash flows from operating activities | ||||||
| Net income (loss) | $ | $ | ( |
) | ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
| Depreciation | ||||||
| Deferred income taxes | ( |
) | ||||
| Stock-based compensation | ||||||
| Increase in accrued compensation liability | ||||||
| Bad debts recovery | ( |
) | ( |
) | ||
| Inventory reserve | ( |
) | ||||
| Deferred asset allowance | ( |
) | ||||
| (Gain) loss on sale of property and equipment | ( |
) | ||||
| Increase in refund liability | ||||||
| Recognition of right ot recover asset | ( |
) | ||||
| Impairment loss | ||||||
| (Increase) decrease in: | ||||||
| Accounts receivable | ( |
) | ||||
| Deferred asset | ||||||
| Inventory | ( |
) | ||||
| Payments in advance | ( |
) | ( |
) | ||
| Prepaid expenses and other current assets | ( |
) | ( |
) | ||
| Income tax receivable | ( |
) | ||||
| Long-term accounts receivable | ||||||
| Deposits | ( |
) | ( |
) | ||
| Increase (decrease) in: | ||||||
| Accounts payable and accrued expenses | ||||||
| Other current liabilities | ||||||
| Net cash provided by operating activities | ||||||
| Cash flows from investing activities | ||||||
| Capital expenditures | ( |
) | ( |
) | ||
| Proceeds from sale of property and equipment | ||||||
| Net cash used in investing activities | ( |
) | ( |
) | ||
| Cash flows from financing activities | ||||||
| Repayment of notes payable to bank | ( |
) | ( |
) | ||
| Proceeds from (repayments of) short-term loan, net | ( |
) | ||||
| Purchase of treasury stock under share repurchase plan | ( |
) | ||||
| Net cash used in financing activities | ( |
) | ( |
) | ||
| Effect of exchange rates on cash, cash equivalents and restricted cash | ( |
) | ||||
| Net increase in cash, cash equivalents and restricted cash | ||||||
| Cash, cash equivalents and restricted cash - beginning of period | ||||||
| Cash, cash equivalents and restricted cash - end of period | $ | $ | ||||
| Reconciliation of cash, cash equivalents and restricted cash | ||||||
| Cash and cash equivalents | ||||||
| Restricted cash | ||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||
| Cash paid for interest | $ | $ | ||||
|
Cash paid for income taxes |
$ | $ | ||||
|
Other noncash investing and financing activities |
||||||
|
Common stock issued for services |
$ |
$ |
The accompanying notes are an integral part of these consolidated financial statements.
F-7
| LEATT CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2025 AND 2024 |
NOTE 1 - DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS
Leatt Corporation (the "Company") designs, develops, markets and distributes personal protective equipment for participants in all forms of motor sports and leisure activities, including riders of motorcycles, bicycles, snowmobiles and ATVs. The Company's flagship products are based on the Leatt-Brace® system, a patented injection molded neck protection system owned by Xceed Holdings CC ("Holdings"), designed to prevent potentially devastating injuries to the cervical spine and neck. The Company has the exclusive global manufacturing, distribution, sale and use rights to the Leatt-Brace®, pursuant to a license agreement between the Company and Holdings, a South African incorporated company owned and controlled by the Company's Chairman and founder, Dr. Christopher Leatt. The Company also has the right to use apparatus embodying, employing and containing the Leatt-Brace® technology and has designed, developed, marketed and distributed other personal protective equipment.
The Company's products are predominantly manufactured in China and sold to customers worldwide through a global network of distributors, dealers, and direct to end consumers through digital channels. The Company continues building manufacturing capacity outside of China, namely, in Taiwan, Vietnam, Cambodia, Thailand and Bangladesh. Leatt also acts as the original equipment manufacturer for personal protective equipment sold by other international brands.
The Company was incorporated in the State of Nevada on March 11, 2005, under the name Treadzone, Inc. On June 17, 2005, the Company changed its name to Leatt Corporation in connection with the Company's acquisition of rights to use the Leatt neck brace patents and trademarks. The Company conducts business in South Africa as a foreign registered branch, and in the United States through the Company's wholly-owned subsidiary, Two Eleven Distribution, LLC ("Two Eleven") a Nevada limited liability company. Research and development efforts, global sales and global operations are managed out of the Company's foreign registered branch located in Cape Town, South Africa. Two Eleven acts as a distributor of Leatt products in the United States. United States sales and marketing are managed by Two Eleven located in Reno, Nevada. The Company also has a wholly-owned subsidiary, Leatt Prop (Pty) Ltd ("Leatt Prop") a dormant, South African company, established on June 24, 2022, for the purpose of purchasing immovable property in South Africa.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") in compliance with the Accounting Standards Codification ("ASC") of the Financial Accounting Standards Board ("FASB").
Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue and Cost Recognition - The Company's products are sold worldwide to a global network of distributors and dealers, and directly to customers 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, consumer direct returns, marketing incentives and allowances in the event of product defect where no exchange of product is possible.
Revenues are recognized when performance obligations are satisfied as evidenced by transfer of control of promised goods to our customers, in an amount that reflects the consideration the Company expects 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 sale occurs, in accordance with the related licensing arrangements.
The Company's standard distributor payment terms range from pre-payment in full to 60 days after shipment and subsequent sales of product by distributors have no effect on the amount and timing of payments due to the Company, however, in limited instances qualified distributors and dealers may be granted extended payment terms during selected order periods. In performing such evaluations, the Company utilizes historical experience, sales performance, and credit risk assessments. Furthermore, products purchased by distributors may not be returned to the Company 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
F-8
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue and Cost Recognition (continued) - or to the consumer where 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 and upon shipment of products direct to end consumers which has been sold through digital channels. 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 or exchange arrangements.
International sales (other than in the United States and South Africa) are generally drop-shipped directly from the Company's consolidation warehouse or the third-party manufacturer to the Company's international distributors. Revenue and related cost of revenue are 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 for exchange. 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:
| Year Ended December 31, | |||||||||||||
| 2025 | % of Revenues |
2024 | % of Revenues |
||||||||||
| Consumer and athlete direct revenues | $ | $ | |||||||||||
| Dealer direct revenues | |||||||||||||
| International distributor revenues | |||||||||||||
| $ | $ | ||||||||||||
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. Refund liabilities are presented within Other current liabilities in the consolidated balance sheet.
Sales commissions are expensed when incurred, which is generally at the time of sale.
Shipping and handling activities associated with outbound freight, after control over a product has transferred to a customer, are accounted for as a fulfilment cost and are included in revenues and cost of revenues in the accompanying consolidated statements of operations and comprehensive income (loss). 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.
Operating leases - The Company determines if an arrangement is a lease at contract inception. Operating leases are included in the right-of-use assets ("ROU"), and lease liability obligations are included in the Company's consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liability obligations represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company's leases typically do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The ROU assets also include lease payments made to be made and excludes lease incentives and lease direct costs. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Please refer to Note 5 for additional information.
F-9
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounts Receivable and Allowance for expected Credit Losses - Accounts receivable consist of amounts due to the Company from normal business activities. Credit is granted to distributors on an unsecured basis based on credit risk analysis assessments and procedures. The Company continuously monitors both credit reports and collections, communication and payments from customers and maintains an allowance for credit losses based upon the expected credit losses determined utilizing historical experience, the aging of funds outstanding and any specific customer collection issues that have been identified. In determining the amount of the allowance, the Company is required to make certain estimates and assumptions.
Accounts receivable balances that are still outstanding after the Company has used reasonable collection efforts are written off as uncollectible. While such credit losses have historically been minimal, within the Company's expectations and the provisions established, macro-economic conditions and customer financial positions are fluid, and the Company cannot guarantee that the Company will continue to experience the same credit loss rates that it has in the past. A significant change in the liquidity or financial position of any of the Company's significant customers could have a material adverse effect on the collectability of the Company's accounts receivable and the future operating results. The allowance for short-term credit losses at December 31, 2025 was $
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 value of inventory, 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 for the years ended December 31, 2025 and 2024 was $
Property and Equipment - Property and equipment are recorded at cost. Depreciation is provided using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes over the estimated useful lives of the respective assets. The estimated useful lives of assets for financial reporting purposes are as follows: moulds and tools,
The cost of improvements that extend the lives of an asset are capitalized. Repairs and maintenance are expensed as incurred. When items of property and equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in income.
Impairment of Long-Lived Assets - The Company reviews its intangible and tangible long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the expected future net cash flows to be generated by the assets. Based on these reviews, the Company recognized an impairment charge of $
Advertising - Costs of advertising and marketing are expensed as incurred.
Patent-related Costs - In connection with the Company's license agreement with Holdings, and its company owned patents, the Company incurs legal costs associated with approved patents and patent applications in various jurisdictions which are expensed as incurred and classified as professional fees in the consolidated statements of operations. Patent-related costs totaled $
Research and Development - Research and development costs are expensed as incurred and include the salaries of those individuals directly involved in research and development activities.
Foreign Currency Translation and Foreign Currency Transactions - The U.S. dollar is the Company's reporting currency. Assets and liabilities of the Company's foreign operation, consisting of its South African Branch, denominated in the local currency, SA RAND,
F-10
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign Currency Translation and Foreign Currency Transactions (continued) - are translated at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the rate of exchange at the date of the transaction in the applicable period. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are included in the foreign currency translation adjustment, a component of accumulated other comprehensive income (loss) in stockholders' equity. Net unrealized gains (losses) on foreign currency translation adjustments totaled $
Stock-Based Compensation - The Company accounts for stock-based compensation in accordance with the fair-value-base method set forth in FASB ASC Topic 718-10, Stock-Based Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors, including employee stock options, based on the estimated fair values on the date of grant or the fair value of the services performed. The Company recognizes these compensation costs, net of an estimated forfeiture rate, on a pro rata basis over the requisite service period of each vesting tranche of each award. The Company considers voluntary termination behaviour as well as trends of actual option forfeitures when estimating the forfeiture rate.
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 includes taxes currently payable, if any, plus the net change during the year 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 December 31, 2025, and 2024, the Company has no unrecognized tax benefits.
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 year ended December 31, 2025, the Company had
Comprehensive Income (Loss) - Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including foreign currency translation adjustment. Accumulated comprehensive income (loss) at December 31, 2025 and 2024, represents cumulative translation adjustments related to the Company's foreign registered branch office and subsidiaries. The Company presents comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss).
Fair Value of Financial Instruments - The Company records certain financial assets and liabilities at fair value. To determine fair value, the Company uses a three -level hierarchy:
- Level 1 - based on quoted prices in active markets for identical items.
- Level 2 - based on other observable inputs, such as market data for similar items or interest rates.
- Level 3 - based on unobservable inputs, such as the Company's own assumptions when market data is not available.
The carrying amount reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, inventory, payments in advance, accounts payable and accrued expenses, short-term loan and note payable, approximate fair value because of the immediate or short-term maturity of these financial instruments.
F-11
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentration of Credit Risk - The Company maintains cash and cash equivalent balances at several financial institutions that are insured by the Federal Deposit Insurance Corporation (FDIC) up to $
Cash, Cash Equivalents and Restricted cash - Cash includes currency on hand, checking accounts, and savings accounts maintained with financial institutions. Restricted cash represents amounts that are not available for general use due to contractual or regulatory restrictions. These balances are excluded from cash and cash equivalents and are presented separately on the balance sheet. The Company reconciles cash, cash equivalents, and restricted cash in the statement of cash flows in accordance with ASC 230.
Recent Accounting Pronouncements - In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard is intended to provide greater transparency in various income tax components that affect the tax rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. This accounting standard update is effective for annual reporting periods beginning after December 15, 2024. The Company adopted the accounting standard prospectively during 2025.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses. This standard does not change the expense captions presented on the face of the income statement. Instead, it requires the disaggregation of certain expense captions into specified categories within the footnotes to the consolidated financial statements. This accounting standard update is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The standard provides an optional practical expedient for estimating future credit losses based on current conditions as of the balance sheet date and assuming those conditions do not change over the remaining life of the accounts receivable. This accounting standard update is effective for interim and annual reporting periods beginning after December 15, 2025. The Company does not expect this accounting standard update to have a material impact on its consolidated financial statements and related disclosures.
The Company evaluated all ASU's issued by the FASB for consideration of their applicability. ASU's not included in the Company's disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on the Company's consolidated financial statements.
NOTE 3 - INVENTORY
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 Company's products are manufactured by third parties in Asia, predominantly in China and shipped to either a warehouse in Nevada, the corporate and sales offices in South Africa or to distributors throughout South America, Africa, The Middle East, United Kingdom, Europe, Asia, Australia and New Zealand. The reserve for obsolescence for the years ended December 31, 2025 and 2024 was $
F-12
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 2025, and 2024 consisted of the following:
| 2025 | 2024 | |||||
| Land | $ | $ | ||||
| Building | ||||||
| Moulds and tools | ||||||
| Computer equipment and software | ||||||
| Office and other equipment | ||||||
| Vehicles | ||||||
| Leasehold improvements | ||||||
| $ | $ | |||||
| Accumulated depreciation | ( |
) | ( |
) | ||
| Property and equipment, net | $ | $ |
NOTE 5 - LEASES
On December 14, 2020, Two Eleven entered into a lease agreement to lease warehouse and office space comprising approximately
On May 25, 2023, the Company entered into a non-cancellable operating lease for warehousing space in South Africa. The lease commenced on July 1, 2023 and expired in February 2025. The lease agreement requires the Company to pay a monthly rent of $
On May 23, 2023, the Company signed a renewal of the non-cancellable operating lease agreement for warehousing space in South Africa. The renewed lease commenced on September 1, 2023, and expired in February 2025. The lease agreement required the Company to pay a monthly rent of $
As of December 31, 2025, the Company has three non-cancellable operating leases, for office and warehousing space, that expires in January 2027 and February 2027. Rent expense for these operating leases is recognized over the term of the lease on a straight-line basis.
F-13
NOTE 5 - LEASES (continued)
Below is a summary of the Company's Operating Right-of-Use Assets and Operating Lease liabilities as of December 31, 2025 and 2024:
| 2025 | 2024 | |||||
| Assets | ||||||
| Operating lease ROU assets | $ | $ | ||||
| Liabilities | ||||||
| Operating lease liabilities, current | $ | $ | ||||
| Operating lease liabilities, net of current portion | ||||||
| Total operating lease liabilities | $ | $ |
For the years ended December 31, 2025, and December 31, 2024, the Company recognized $
As of December 31, 2025, and 2024, the following disclosures for remaining lease term and incremental borrowing rates were applicable:
|
Supplemental disclosure |
December 31, 2025 |
December 31, 2024 |
|
Weighted average remaining lease term |
|
|
|
Weighted average discount rate |
Maturities of lease liabilities as of December 31, 2025 where as follows:
| Year ending December 31, | Amounts under Operating Leases | ||
| 2026 | $ | ||
| 2027 | |||
| Total minimum lease payments | $ | ||
| Less: amount representing interest | $ | ( |
) |
| Total operating lease liabilities | $ |
Supplemental cash flow information for the years ended December 31, 2025 and 2024 are as follows:
| Year ended December 31, 2025 |
Year ended December 31, 2024 |
|||||
| Cash paid for operating leases | $ | $ | ||||
| Right-of-use assets obtained in exchange for lease obligations | $ | $ |
NOTE 6 - PAYMENTS IN ADVANCE
Payments in advance consists of upfront deposit payments made to suppliers for the purchase of assets including moulds, tooling and raw materials to be capitalized and used in the production of income in the future. Payments in advance of $
F-14
NOTE 7 - PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist primarily of upfront deposit payments made to contract manufacturers for the manufacturing of the Company's products. Prepaid expenses and other current assets of $
NOTE 8 - REVOLVING LINE OF CREDIT FACILITY
The Company has a $
NOTE 9 - 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 requires a down payment of $
The South African short-term loan was payable in monthly instalments of $
NOTE 10 - NOTES PAYABLE
Two Eleven entered into a Note Payable with a bank effective December 17, 2021 in the principal amount of $
Two Eleven entered into a Note Payable with a bank effective December 1, 2022 in the principal amount of $
| December 31, 2025 | December 31, 2024 | |||||
| Liabilities | ||||||
| Note payable, current | $ | $ | ||||
| Note payable, net of current portion | ||||||
| $ | $ |
Principal Maturities of notes payable as of December 31, 2025 are as follows:
| Years ending December 31, | Amounts under Notes Payable | ||
| 2026 | |||
| $ |
NOTE 11 - REFUND LIABILITY
The Company records a refund liability for expected customer returns and other refund obligations in accordance with ASC 606, Revenue from Contracts with Customers. Refund liabilities represent amounts the Company anticipates refunding to customers, including rights of return and other contractual refund provisions. At each reporting date, the Company estimates the refund liability based on historical
F-15
NOTE 11 - REFUND LIABILITY (continued)
experience, current trends, and other relevant factors. The refund liability is presented separately from contract liabilities and is included within current liabilities in the consolidated balance sheet.
The activity in the refund liability for the year ended December 31, 2025 is as follows:
| December 31, 2025 | December 31, 2024 | |||||
| Balance at beginning of year | $ | $ | ||||
| Additions related to current period | ||||||
| Reductions for actual refunds/returns | ||||||
| Adjustments for changes in estimates | ||||||
| Balance at end of year | $ | $ |
NOTE 12 - STOCKHOLDERS' EQUITY
On December 6, 2011, the Board of Directors adopted, and the shareholders subsequently approved, the 2011 Equity Incentive Plan (the "Plan") which provides for, among other incentives, the granting to employees, directors and consultants incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares as the Plan Administrator may determine. The maximum number of shares of common stock which may be issued under the Plan is
A summary of information related to stock option activity during the years ended December 31, 2025 and 2024 is as follows:
| Weighted Average | ||||||||||||
| Options | Exercise Price | Remaining Contractual Term (Yrs) |
Intrinsic Value | |||||||||
| Options outstanding at January 1, 2024 | $ |
|
$ | |||||||||
| Stock options cancelled | ( |
) | $ | |||||||||
| Options outstanding at December 31, 2024 | $ |
|
$ | |||||||||
| Stock options exercised | ( |
) | $ | |||||||||
| Options outstanding at December 31, 2025 | $ |
|
$ | |||||||||
| Options vested and exercisable at December 31, 2025 | $ |
|
$ | |||||||||
The intrinsic value is the difference between the current fair value of the stock and the exercise price of the stock option. The weighted-average remaining contractual life of options outstanding, vested and exercisable as of December 31, 2025 is one to ten years.
On December 21, 2023, the Company's board of directors approved the award of
In December 2024,
F-16
NOTE 12 - STOCKHOLDERS' EQUITY (continued)
On December 22, 2024, the Company's Board approved the award of
In December 2025, the Company issued
On December 22, 2025, the Company's board of directors approved the award of
On December 22, 2025, the Company's board of directors approved the award of
On February 24, 2026, the Company's board of directors approved the award of
Stock-based compensation expense related to vested restricted stock awards during the years ended, December 31, 2025 and 2024 was $
Preferred Stock
The Company's preferred stock, when issued, is convertible to common stock at or above the then current market price of the Company's common stock and therefore, contains no beneficial conversion feature.
Share Purchase Plan
On August 12, 2025, the Company announced that the Company's board of directors formally ratified and approved a share purchase plan (the "Plan"). The board of directors has authorized the repurchase of the Company's common stock with a par value of $
Share repurchases may be made from time to time through open market purchases, privately negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time.
Payment for shares repurchased under the share purchase plan are funded using the Company's cash on hand and cash flow from operations. As of the effective date, the Company deposited $
As of December 31, 2025,
F-17
NOTE 13 - INCOME TAXES
The Company's income (loss) before income taxes for the years ended December 31, 2025 and 2024 are:
| 2025 | 2024 | |||||
| United states | $ | $ | ( |
) | ||
| Foreign | ( |
) | ( |
) | ||
| Income before income taxes | $ | $ | ( |
) |
The Company's income tax expense (benefit) for the years ended December 31, 2025 and 2024 consists of the following components:
| 2025 | 2024 | |||||
| Current tax expense (benefit): | ||||||
| United States | ||||||
| Federal | $ | $ | ||||
| State & Local | ||||||
| Foreign | ||||||
| Total | ||||||
| Deferred tax expense (benefit): | ||||||
| United States | ||||||
| Federal | ( |
) | ||||
| State & Local | ( |
) | ( |
) | ||
| Foreign | ||||||
| Total | ( |
) | ||||
| Total | $ | $ | ( |
) |
The Company's effective income tax expense differs from the federal statutory amount because of the effect of the following items:
| 2025 | |||||
| Rate | Amount | ||||
| Pretax Income - Total | $ | ||||
| State and Local Income Taxes, Net of Federal Income Tax Effect (1) | |||||
| Foreign Tax Effects | |||||
| Changes in Valuation Allowances | |||||
| Nontaxable or Nondeductible Items | |||||
| Stock Compensation - Foreign | |||||
| Other | |||||
| Changes in Unrecognized Tax Benefits | |||||
| Other | |||||
| Return to Provision True Ups | |||||
| Effective Income Tax Rate | $ | ||||
(1) State Taxes in California contributed to the majority (greater than 50%) of the tax effect in this category.
F-18
NOTE 13 - INCOME TAXES (continued)
| 2024 | |
| Federal tax statutory rate | |
| State tax statutory rate | - |
| Effect of prior year (over) under provision | - |
| Timing and permanent differences | - |
| Valuation Allowance | |
Deferred income taxes (benefit) reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and the tax effects of net operating losses that are available to offset future taxable income.
Significant components of the Company's deferred tax assets (liabilities) at December 31, 2025 and 2024 consist of the following:
| 2025 | 2024 | |||||
| Deferred tax assets: | ||||||
| Inventory reserve | $ | $ | ||||
| Accrued expenses | ||||||
| Allowance for bad debts | ||||||
| Capitalized research & development expenses | ||||||
| Lease liability | ||||||
| Impairment | ||||||
| Federal net operating loss carryforwards | ||||||
| State net operating loss carryforwards | ||||||
| Deferred tax assets, gross: | ||||||
| Valuation allowance | ( |
) | ( |
) | ||
| Deferred tax assets, net: | ||||||
| Deferred tax liabilities: | ||||||
| Fixed asset depreciation | ( |
) | ( |
) | ||
| ROU Asset | ( |
) | ||||
| Change in accounting method | ( |
) | ||||
| Deferred tax assets (liabilities), net: | $ | $ |
In assessing the ultimate realization of deferred tax assets and liabilities, management considers whether it is more likely than not that some or all of them will not be realized. The Company established a valuation allowance for the use of its state tax net operating loss carry forwards due to uncertain state tax profitability in the jurisdictions within which the losses were incurred.
Changes in the California tax system has prevented the Company from utilizing any portion of its California tax net operating loss carry forwards in tax year 2025. While the future level of profitability is uncertain, due in part to the uncertain economic climate and its impact on our future levels of profitability, the change in the location of the USA warehouse in 2022 will impact the utilization of the state tax net operating loss carry forwards. The Company has approximately $
F-19
NOTE 13 - INCOME TAXES (continued)
The cash paid/(refunded) for income taxes for the years ended December 31, 2025 and 2024 was as follows:
| 2025 | 2024 | |||||
| U.S. Federal | $ | $ | ||||
| U.S. State and Local | ||||||
| Total | $ | $ |
The Company files a consolidated federal and separate company state income tax returns in the United States. As of December 31, 2025, the tax years that remain subject to examination are 2022 to 2025 for federal and state tax purposes.
The Company has reviewed its open tax positions and determined that no uncertain tax positions exist as of December 31, 2025 or 2024. While the Company believes that it has performed adequate procedures to identify all reasonably identifiable exposures, it is possible that exposures exist and that these exposures will need to be assessed and may potentially have a material impact on the Company's consolidated financial statements.
NOTE 14 - SEGMENT INFORMATION
The Company manages its operations as a single operating segment for the purpose of assessing performance and making operating decisions, resulting in a single reportable segment. The Company has determined that its Chief Operating Decision Maker ("CODM") is its Chief Executive Officer. The Company's CODM reviews the Company's financial information on a consolidated basis for the purpose of making key operating decisions, allocating resources and assessing financial performance.
The key measure of segment profit or loss that the CODM uses to allocate resources and assess performance is the Company's consolidated net income (loss), as reported on the consolidated statements of operations and comprehensive income (loss). In addition, the CODM is regularly provided the significant segment expense categories included in the table below, which are reviewed against budgeted expectations to assist in resource allocation decision-making. The CODM does not review assets in evaluating operating performance, and therefore, such information is not presented.
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NOTE 14 - SEGMENT INFORMATION (continued)
The following table presents selected financial information with respect to the Company's single operating segment for the year ended December 31, 2025 and 2024:
| 2025 | 2024 | |||||
| Revenues | $ | $ | ||||
| Cost of Revenues | ||||||
| Gross Profit | ||||||
| Product Royalty Income | ||||||
| Operating Expenses | ||||||
| Salaries and wages | ||||||
| Professional fees | ||||||
| Advertising and marketing | ||||||
| Research and development | ||||||
| General and administrative | ||||||
| Other operating expenses | ||||||
| Operating Expenses | ||||||
| Income (Loss) from Operations | ( |
) | ||||
| Other Income (Expense) | ||||||
| Provision for (benefit from) Income taxes | ( |
) | ||||
| Net Income (Loss) | $ | $ | ( |
) |
NOTE 15 - RELATED PARTY TRANSACTIONS
Royalty fees associated with sales of Leatt-Brace® products are paid to Holdings, a company owned by a chairman and founder, and a related individual who is a shareholder. Royalties are based on
On November 8, 2021, the Company entered into a consulting agreement with Innovation Services Limited, or ("Innovation"), a Jersey limited company in which the Company's founder and chairman is an indirect beneficiary, pursuant to which Innovation served as the Company's exclusive research, development and marketing consultant. Monthly consulting fees amounting to $
NOTE 16 - RETIREMENT PLANS
Effective January 1, 2019, the Company implemented a retirement plan under the provisions of Section 401(k) of the Internal Revenue Code for the benefit of the Company's U.S. based employees. The Company makes a matching contribution equal to 100% of the first
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NOTE 16 - RETIREMENT PLANS (continued)
Effective June 1, 2019, the Company implemented a provident fund for the benefit of the Company's permanent South African based employees. The Company contributes a minimum of
NOTE 17 - COMMITMENTS AND CONTINGENCIES
Litigation/Potential 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 a liability has been incurred and the amount of the loss is reasonably estimable. 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 flow of the Company.
NOTE 18 - RISKS AND UNCERTAINTIES
The COVID-19 pandemic had an adverse impact on global shipping and supply chains which caused a disruption in our customers' ordering patterns and ultimately inflated certain industry wide stock levels. Although global shipping and supply chain conditions have improved, elevated industry inventory levels in certain markets and product categories may continue to impact levels of dealer and distributor ordering to some extent and ultimately consumer spending in the foreseeable future, which may affect the Company's profitability, and could have a negative impact on the Company's results of operations for the coming periods and beyond.
Changes in U.S. and international trade policies, including the imposition of tariffs and retaliatory measures, have created significant uncertainty in global markets. Our business is exposed to risks associated with these evolving policies, which may materially affect our operations, supply chain, and financial performance. Our products are manufactured in Asia which may be subject to increased tariffs. These tariffs may raise our costs and reduce profit margins if we are unable to pass them on to customers. Tariff changes may lead to delays, shortages, or the need to identify alternative suppliers, which could impact production timelines and product availability. Foreign governments may impose retaliatory tariffs or restrictions, further complicating our international operations and market access. The duration and scope of current and future tariffs remain unpredictable. Legal challenges, Congressional action, or executive orders may alter the landscape abruptly. Uncertainty surrounding trade policy may also delay capital investments, hinder long-term planning, and affect our ability to enter new markets or expand existing ones. If these risks materialize, they could adversely affect our financial condition, results of operations, and stock price.
NOTE 19 - SUBSEQUENT EVENTS
The Company entered into a restated and amended loan agreement effective February 12, 2026, for the revolving line of credit, the restated loan agreement extended the facility with the bank to March 1, 2027, and adjusted the interest rate to
On December 22, 2025, the Company's board of directors approved the award of
On December 22, 2025, the Company's board of directors approved the award of
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NOTE 19 - SUBSEQUENT EVENTS (continued)
On February 11, 2026, the Company cancelled
On February 24, 2026, the Company's board of directors approved the award of
On February 24, 2026, the Company's board of directors approved the award of
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Exhibit List
The list of exhibits included in the attached Exhibit Index is hereby incorporated herein by reference.
| Exhibit | Exhibit Title |
| Number | |
| 2.1 | Settlement Agreement, dated as of September 25, 2008, between Leatt Corp., Christopher J. Leatt and J. P. De Villiers |
| 2.2 | Amendment No. 1 to Settlement Agreement, dated February 4, 2010, between Leatt Corp., Christopher J. Leatt and Jean- Pierre De Villiers |
| 3.1 | Amended and Restated Articles of Incorporation, as filed with the Secretary of State of Nevada on October 28, 2008 |
| 3.2 | Amended and Restated Bylaws, adopted on October 28, 2008 |
| 4.1 | Certificate of Designation of Series A Voting Convertible Preferred Stock, as filed with the Secretary of State of Nevada on October 29, 2008 |
| 4.2 | Leatt Corp. Amended and Restated 2011 Equity Incentive Plan as amended |
| 4.7 | Stock Option Agreement, dated February 25, 2019, between Leatt Corp. and Jeffrey Guzy. |
| 4.9 | Stock Option Agreement, dated August 24, 2017, between Leatt Corp. and Dr. Christopher Leatt |
| 4.12 | Stock Option Agreement, dated February 25, 2019, between Leatt Corp. and Dr. Christopher Leatt |
| 4.14 | Stock Option Agreement, dated February 25, 2019, between Leatt Corp. and Todd Repsher |
| 4.30 | Restricted Stock Award Agreement, dated December 22, 2023, between Leatt Corp. and Erik Olsson |
| 4.31 | Restricted Stock Award Agreement, dated December 22, 2023, between Leatt Corp. and Jeffrey Guzy |
| 4.32 | Restricted Stock Award Agreement, dated December 22, 2023, between Leatt Corp. and Sean Macdonald |
| 4.33 | Restricted Stock Award Agreement, dated December 22, 2023, between Leatt Corp. and Dr. Christopher Leatt |
| 4.34* | Restricted Stock Award Agreement, dated February 24, 2026, between Leatt Corp. and Erik Olsson |
| 4.35* | Restricted Stock Award Agreement, dated February 24, 2026, between Leatt Corp. and Sean Macdonald |
| 4.36* | Restricted Stock Award Agreement, dated February 24, 2026, between Leatt Corp. and Dr. Christopher Leatt |
| 10.1 | Consulting Agreement, dated November 8, 2021, between Innovation Services Limited and Leatt Corporation (as amended) |
| 10.2 | Side Letter Agreement, dated November 8, 2021, between Leatt Corporation and Dr. Christopher Leatt |
| 10.3* | 2026-2027 Leatt Corporation General Distributor Terms and Conditions, effective February 15, 2026 |
| 10.4 | Lease Agreement, dated February 24, 2022, between Leatt Corp. and Montprop Beleggings (Pty) Ltd (as amended) |
| 10.5 | Lease Agreement, dated February 20, 2025, between Leatt Corp. and Montprop Beleggings (Pty) Ltd Addendum for Unit 8 |
| 10.6 | Lease Agreement, dated February 20, 2025, between Leatt Corp. and Montprop Beleggings (Pty) Ltd Addendum for Unit 9 |
| 10.8 | Lease Agreement, dated February 18, 2025, between Two Eleven Distribution, LLC, and CP Logistics NVCC IV, LLC. |
| 10.9* | Second Amended and Restated Employment Agreement, effective as of January 1, 2022, between Leatt Corp. and Sean Macdonald (as amended) |
| 10.10* | Director Agreement, dated July 8, 2015, between Leatt Corporation and Dr. Christopher Leatt (as amended) |
| 10.11* | Director Agreement, dated June 29, 2017, between Leatt Corporation and Sean Macdonald (as amended) |
| 10.12* | Director Agreement, dated January 1, 2017, between Leatt Corporation and Jeffrey Guzy (as amended) |
| 14.1 | Code of Ethics |
| 21 | List of Subsidiaries |
| 31.1* | Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 31.2* | Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1* | Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2* | Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101** | Interactive data files pursuant to Rule 405 of Regulation S-T |
| 101.INS** | Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH** | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL** | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF** | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB** | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE** | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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