UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~March 31,~~September 30, 2022

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________to _____________

Commission File No. 000-54693

LEATT CORPORATION
(Exact name of registrant as specified in its charter)

Nevada	20-2819367
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

12 Kiepersol Drive, Atlas Gardens, Contermanskloof Road,
Durbanville, Western Cape, South Africa, 7441
(Address of principal executive offices)

+(27) 21-557-7257
(Registrant's telephone number, including area code)

__________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

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. Yes [X] No [_]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). Yes [X] No [_]

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.

Large accelerated filer [_]Accelerated filer [_]Non-accelerated filer [_]Smaller reporting company [X]Emerging growth company [X]

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. [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]

The number of shares outstanding of each of the issuer's classes of common stock, as of ~~May 6,~~November 4, 2022 is as follows:

Class of Securities	Shares Outstanding
Common Stock, $0.001 par value	~~5,791,683~~ 5,826,892

PART I

~~LEATT CORPORATION~~FINANCIAL INFORMATION

LEATT CORPORATION

CONSOLIDATED BALANCE SHEETS

ASSETS
March 31, 2022 December 31, 2021
Unaudited Audited
Current Assets
Cash and cash equivalents $ 4,245,676 $ 5,022,436
Short-term investments 58,263 58,262
Accounts receivable, net 17,743,659 12,660,936
Inventory, net 19,916,817 21,081,481
Payments in advance 1,541,775 1,610,640
Prepaid expenses and other current assets 3,900,500 4,178,427
Total current assets 47,406,690 44,612,182

Property and equipment, net 3,147,973 3,128,086
Operating lease right-of-use assets, net 1,287,949 1,393,213
Other Assets
Deposits 49,750 33,339

Total Assets $ 51,892,362 $ 49,166,820

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued expenses $ 11,410,067 $ 14,617,671
Note payable, current 88,168 83,270
Operating lease liabilities, current 279,148 318,621
Income taxes payable 4,146,521 2,738,818
Short term loan, net of finance charges 661,067 975,025
Total current liabilities 16,584,971 18,733,405

Deferred compensation 340,000 320,000
Note payable, net of current portion 169,957 189,249
Operating lease liabilities, net of current portion 1,008,801 1,074,592
Deferred tax liability, net 228,600 228,600
Commitments and contingencies - -
Stockholders' Equity
Preferred stock, $.001 par value, 1,120,000 shares authorized, 120,000 shares issued and outstanding 3,000 3,000
Common stock, $.001 par value, 28,000,000 shares authorized, 5,791,683 and 5,673,683 shares issued and outstanding 130,280 130,162
Additional paid - in capital 9,689,299 9,230,847
Accumulated other comprehensive loss (521,534 ) (779,268 )
Retained earnings 24,258,988 20,036,233
Total stockholders' equity 33,560,033 28,620,974

Total Liabilities and Stockholders' Equity $ 51,892,362 $ 49,166,820

ASSETS

		September 30, 2022			December 31, 2021
		Unaudited			Audited
Current Assets
Cash and cash equivalents	$	4,835,268		$	5,022,436
Short-term investments		58,267			58,262
Accounts receivable, net		22,504,973			12,660,936
Inventory, net		25,021,494			21,081,481
Payments in advance		1,201,454			1,610,640
Prepaid expenses and other current assets		1,332,503			4,178,427
Total current assets		54,953,959			44,612,182

Property and equipment, net		3,066,304			3,128,086
Operating lease right-of-use assets, net		1,163,782			1,393,213

Other Assets
Deposits		40,141			33,339

Total Assets	$	59,224,186		$	49,166,820

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued expenses	$	12,481,062		$	14,617,671
Note payable, current		89,739			83,270
Operating lease liabilities, current		286,564			318,621
Income taxes payable		4,812,039			2,738,818
Short term loan, net of finance charges		142,936			975,025
Total current liabilities		17,812,340			18,733,405

Deferred compensation		380,000			320,000
Note payable, net of current portion		124,690			189,249
Operating lease liabilities, net of current portion		877,218			1,074,592
Deferred tax liability, net		228,600			228,600

Commitments and contingencies

Stockholders' Equity
Preferred stock, $.001 par value, 1,120,000 shares
authorized, 120,000 shares issued and outstanding		3,000			3,000
Common stock, $.001 par value, 28,000,000 shares
authorized, 5,826,892 and 5,673,683 shares issued
and outstanding		130,280			130,162
Additional paid - in capital		9,929,779			9,230,847
Accumulated other comprehensive loss		(1,335,752	)		(779,268	)
Retained earnings		31,074,031			20,036,233
Total stockholders' equity		39,801,338			28,620,974

Total Liabilities and Stockholders' Equity	$	59,224,186		$	49,166,820

The accompanying notes are an integral part of these consolidated financial statements.

LEATT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		Three Months Ended					Three Months Ended						Nine Months Ended
		March 31					September 30						September 30
		2022		2021			2022			2021			2022			2021
		Unaudited		Unaudited			Unaudited			Unaudited			Unaudited			Unaudited

Revenues	$	24,228,108	$	12,896,475		$	23,258,752		$	22,100,827		$	65,425,170		$	49,297,861

Cost of Revenues		14,601,018		6,844,521			13,122,213			12,571,692			38,017,469			27,523,233

Gross Profit		9,627,090		6,051,954			10,136,539			9,529,135			27,407,701			21,774,628

Product Royalty Income		78,839		24,810			74,411			58,246			200,221			141,535

Operating Expenses
Salaries and wages		1,297,962		924,537			1,274,554			975,676			3,897,693			2,813,024
Commissions and consulting expenses		162,586		220,662			143,691			144,837			456,911			581,485
Professional fees		259,115		337,755			166,537			510,713			505,305			971,969
Advertising and marketing		613,890		517,580			1,166,804			633,915			2,526,808			1,669,648
Office lease and expenses		207,021		87,373			145,499			99,314			546,398			273,887
Research and development costs		533,700		405,105			501,604			468,922			1,516,147			1,319,183
Bad debt expense		18,324		65,825			97,325			42,197			101,680			56,290
General and administrative expenses		711,752		528,599			977,796			691,696			2,399,899			1,830,055
Depreciation		276,924		236,535			264,923			265,777			829,790			744,713
Total operating expenses		4,081,274		3,323,971			4,738,733			3,833,047			12,780,631			10,260,254

Income from Operations		5,624,655		2,752,793			5,472,217			5,754,334			14,827,291			11,655,909
Other Income (Expenses)

Other Income
Interest and other expenses, net		6,157		(4,007	)		7,784			1,413			5,592			1,354
Total other income (expenses)		6,157		(4,007	)
Total other income							7,784			1,413			5,592			1,354

Income Before Income Taxes		5,630,812		2,748,786			5,480,001			5,755,747			14,832,883			11,657,263

Income Taxes		1,408,057		687,948			1,391,878			1,467,936			3,795,085			2,899,966

Net Income Available to Common Shareholders	$	4,222,755	$	2,060,838		$	4,088,123		$	4,287,811		$	11,037,798		$	8,757,297

Net Income per Common Share
Basic	$	0.73	$	0.38		$	0.70		$	0.79		$	1.90		$	1.61
Diluted	$	0.68	$	0.34		$	0.65		$	0.69		$	1.77		$	1.42

Weighted Average Number of Common Shares Outstanding
Basic		5,765,461		5,430,374			5,826,892			5,461,933			5,802,771			5,443,780
Diluted		6,246,325		6,118,129			6,261,160			6,190,748			6,237,039			6,172,596

Comprehensive Income
Net Income	$	4,222,755	$	2,060,838		$	4,088,123		$	4,287,811		$	11,037,798		$	8,757,297
Other comprehensive income, net of $0 and ($1,000) deferred income taxes in 2022 and 2021
Other comprehensive income, net of $0 deferred income
taxes in 2022 and 2021
Foreign currency translation		257,734		(28,352	)		(431,436	)		(146,285	)		(556,484	)		(113,744	)

Total Comprehensive Income	$	4,480,489	$	2,032,486		$	3,656,687		$	4,141,526		$	10,481,314		$	8,643,553

The accompanying notes are an integral part of these consolidated financial statements.

LEATT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

AS OF AND FOR THE ~~THREE~~NINE MONTHS ENDED ~~MARCH 31,~~SEPTEMBER 30, 2022

										Accumulated															Accumulated
										Other															Other
	Preferred Stock A			Common Stock				Additional		Comprehensive			Retained			Preferred Stock A			Common Stock				Additional		Comprehensive			Retained
	Shares		Amount	Shares		Amount		Paid - In Capital		Loss			Earnings		Total	Shares		Amount	Shares		Amount		Paid - In Capital		Loss			Earnings		Total

Balance, January 1, 2022	120,000	$	3,000	5,673,683	$	130,162	$	9,230,847	$	(779,268	)	$	20,036,233	$	28,620,974	120,000	$	3,000	5,673,683	$	130,162	$	9,230,847	$	(779,268	)	$	20,036,233	$	28,620,974

Compensation cost recognized in connection with stock options	-		-	-		-		82,530		-			-		82,530
Compensation cost recognized in connection
with stock options																-		-	-		-		82,530		-			-		82,530

Exercise of stock options	-		-	118,000		118		255,682		-			-		255,800	-		-	118,000		118		255,682		-			-		255,800

Options exercised on a cashless basis																-		-	35,209		-		-		-			-		-

Restricted stock awards	-		-	-		-		120,240		-			-		120,240	-		-	-		-		360,720		-			-		360,720

Net income	-		-	-		-		-		-			4,222,755		4,222,755	-		-	-		-		-		-			11,037,798		11,037,798

Foreign currency translation adjustment	-		-	-		-		-		257,734			-		257,734	-		-	-		-		-		(556,484	)		-		(556,484	)

Balance, March 31, 2022	120,000	$	3,000	5,791,683	$	130,280	$	9,689,299	$	(521,534	)	$	24,258,988	$	33,560,033
Balance, September 30, 2022																120,000	$	3,000	5,826,892	$	130,280	$	9,929,779	$	(1,335,752	)	$	31,074,031	$	39,801,338

The accompanying notes are an integral part of these consolidated financial statements.

LEATT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~THREE~~NINE MONTHS ENDED ~~MARCH 31,~~SEPTEMBER 30, 2022 AND 2021

		2022			2021				2022			2021

Cash flows from operating activities
Net income	$	4,222,755		$	2,060,838			$	11,037,798		$	8,757,297
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation		276,924			236,535				829,790			744,713
Stock-based compensation		202,770			55,020				443,250			55,020
Bad debts reserve		14,526			63,111				81,305			32,423
Inventory reserve		13,656			(23,044	)			148,901			51,840
(Gain) loss on sale of property and equipment		(21,590	)		457				(23,047	)		5,767
(Increase) decrease in:
Accounts receivable		(5,097,249	)		2,950,042				(9,925,342	)		(10,023,484	)
Inventory		1,151,008			(236,474	)			(4,088,914	)		(5,060,128	)
Payments in advance		68,865			82,168				409,186			(952,067	)
Prepaid expenses and other current assets		277,927			(1,938,074	)			2,845,924			(2,212,611	)
Income tax refunds receivable		0			2,964				-			2,964
Deposits		(16,411	)		125				(6,802	)		146
Increase (decrease) in:
Accounts payable and accrued expenses		(3,207,604	)		(2,301,718	)			(2,136,609	)		8,412,521
Income taxes payable		1,407,703			137,197				2,073,221			1,271,016
Deferred compensation		20,000			20,000				60,000			60,000
Net cash provided by (used in) operating activities		(686,720	)		1,109,147
Net cash provided by operating activities									1,748,661			1,145,417

Cash flows from investing activities
Capital expenditures		(260,912	)		(34,272	)			(865,204	)		(892,658	)
Proceeds from sale of property and equipment		35,848			0				43,469			-
Increase in short-term investments, net		(1	)		(1	)			(5	)		(4	)
Net cash used in investing activities		(225,065	)		(34,273	)			(821,740	)		(892,662	)

Cash flows from financing activities
Issuance of common stock		255,800			0				255,800			-
Repayment of note payable to bank		(14,394	)		0				(58,090	)		-
Repayment of short-term loan, net		(313,958	)		(237,767	)			(832,089	)		(534,948	)
Net cash used in financing activities		(72,552	)		(237,767	)			(634,379	)		(534,948	)

Effect of exchange rates on cash and cash equivalents		207,577			(18,225	)			(479,710	)		(98,178	)

Net increase (decrease) in cash and cash equivalents		(776,760	)		818,882
Net decrease in cash and cash equivalents									(187,168	)		(380,371	)

Cash and cash equivalents - beginning of period		5,022,436			2,967,042				5,022,436			2,967,042

Cash and cash equivalents - end of period	$	4,245,676		$	3,785,924			$	4,835,268		$	2,586,671

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:							SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for interest	$	16,133		$	9,323			$	37,427		$	21,741
Cash paid for income taxes	$	354		$	550,000			$	1,721,864		$	1,659,698

Other noncash investing and financing activities
Common stock issued for services	$	202,770		$	55,020			$	443,250		$	55,020

The accompanying notes are an integral part of these consolidated financial statements.

LEATT CORPORATION

Note 1 - Basis of presentation

The consolidated balance sheet as of December 31, 2021 was audited and appears in the Form 10-K filed by the Company with the Securities and Exchange Commission on March 10, 2022. The consolidated balance sheet as of ~~March 31,~~September 30, 2022 and the consolidated statements of operations and comprehensive income for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, changes in stockholders' equity for the ~~three~~nine months ended ~~March 31,~~September 30, 2022, cash flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, and the related information contained in these notes have been prepared by management without audit. In the opinion of management, all adjustments (which include only normal recurring items) necessary to present fairly the financial position, results of operations and cash flows in conformity with generally accepted accounting principles as of ~~March 31,~~September 30, 2022 and for all periods presented have been made. Interim operating results are not necessarily indicative of operating results for a full year. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. While management of the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these condensed consolidated financial statements be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2021 as filed with the Securities and Exchange Commission in the Company's Form 10-K.

Note 3 - Operating Leases - Right-of-Use Assets and Lease Liability Obligations

The Company has three non-cancelable operating leases, for office and warehousing space, ~~that expires~~expiring in June ~~2022~~2023, August 2023 and January 2027, respectively. Rent expense for these operating leases is recognized over the term of the lease on a straight-line basis. ~~A lease for office machinery lapsed on March 31, 2022.~~

Below is a summary of the Company's Operating Right-of-Use Assets and Operating Lease liabilities as of ~~March 31,~~September 30, 2022 and December 31, 2021:

		2022		2021
Assets
Operating lease ROU assets	$	1,163,782	$	1,393,213

Liabilities
Operating lease liabilities, current	$	286,564	$	318,621
Operating lease liabilities, net of current portion		877,218		1,074,592
Total operating lease liabilities	$	1,163,782	$	1,393,213

2022 2021
Assets
Operating lease ROU assets $ 1,287,949 $ 1,393,213

Liabilities
Operating lease liabilities, current $ 279,148 $ 318,621
Operating lease liabilities, net of current portion 1,008,801 1,074,592
Total operating lease liabilities $ 1,287,949 $ 1,393,213

During the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 the Company recognized ~~$99,318~~$260,892 and ~~$54,149,~~$164,097, respectively, in operating lease expenses, which are included in office lease and expenses in the Company's consolidated statements of operations and comprehensive income.

Generally, the Company's lease agreements do not specify an implicit rate. Therefore, the Company estimates the incremental borrowing rate, which is defined as the interest rate the Company would pay to borrow on a collateralized basis, considering such factors as length of lease term and the risks of the economic environment in which the leased asset operates. As of ~~March 31,~~September 30, 2022, and December 31, 2021 the following disclosures for the remaining lease terms and incremental borrowing rates were applicable:

Supplemental disclosure March 31, 2022 December 31, 2021
Weighted average remaining lease term 5 years 5 years
Weighted average discount rate 4.08% 4.08%

Supplemental disclosure	September 30,	December 31,
Supplemental disclosure	2022	2021
	2022	2021
Weighted average remaining lease term	5 years	5 years
Weighted average discount rate	3.75%	4.08%

Maturities of lease liabilities as of ~~March 31,~~September 30, 2022 were as follows:

Year ended December 31, Amounts under Operating Leases
Remaining 2022 $ 216,472
2023 273,449
2024 281,664
2025 290,098
2026 298,791
2027 25,455
Total minimum lease payments $ 1,385,929
Less: amount representing interest $ (97,980 )
Total operating lease liabilities $ 1,287,949

Year ended December 31,	Amounts under Operating Leases
Remaining 2022	$	74,879
2023		291,313
2024		281,663
2025		290,098
2026		298,791
2027		25,455
Total minimum lease payments	$	1,262,199
Less: amount representing interest	$	(98,417	)
Total operating lease liabilities	$	1,163,782

Supplemental cash flow information for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 are as follows:

		Three months		Three months	Nine months			Nine months
		ended March 31,		ended March 31,	ended September		ended September
		2022		2021		30, 2022		30, 2021
Cash paid for amounts included in the measurement of lease liabilities	$	82,817	$	59,285	$	262,832	$	179,129
Right-of-use assets obtained in exchange for lease obligations	$	0	$	15,170	$	41,163	$	1,418,719

Note 4 - Revolving line of Credit facility

On November 19, 2018, the Company entered into a $1,000,000 revolving line of credit agreement with a bank. Advances under the line of credit bear interest at the LIBOR Daily Floating Rate plus 2.5 percentage points commencing January 1, 2019. The line of credit matured on November 19, 2020, at which time the unpaid principal, interest, or other charges outstanding under the agreement were due and payable. On November 5, 2020, the Company executed an amendment to the line of credit agreement to extend the credit facility through November 19, 2021. The amendment took retroactive effect to October 27, 2020 and introduced an index floor so that payments for any future advances will bear interest at the greater of the LIBOR Daily Floating Rate or an Index Floor of 1.25 percentage points plus 2.5 percentage points. Obligations under the line of credit are secured by equipment and fixtures in the United States of America, accounts receivable and inventory of Leatt Corporation and Two-Eleven Distribution, LLC. On March 1, 2021, the Company executed an amendment to the line of credit. The amendment took retroactive effect to February 17, 2021 and extended the line of credit facility through February 28, 2022 and increased the revolving line of credit to $1,500,000. Effective January 21, 2022, the Company executed an amendment agreement for the line of credit to extend the line of credit facility through February 28, 2023, and to replace interest determined by LIBOR daily Floating Rate with the Bloomberg ~~short-term~~short- term Bank Yield Index Rate. As of ~~March 31,~~September 30, 2022, and December 31, 2021, respectively there were no advances of the line of credit leaving $1,500,000 and $1,500,000 available for advances.

Note 6 - Note payable

Two Eleven entered into a Note Payable with a bank effective December 17, 2021 in the principal amount of $272,519, secured by equipment. The Note is payable in 36 consecutive monthly installments of $7,990, including interest at a fixed rate of 3.5370%, commencing February 5, 2022, and continuing to January 5, 2025. As of ~~March 31,~~September 30, 2022 and December 31, 2021, the amounts of ~~$258,125~~$214,429 and $272,519 were outstanding, respectively.

		March 31,		December 31,	September			December 31,
		2022		2021		30, 2022		2021
Liabilities
Note payable, current	$	88,168	$	83,270	$	89,739	$	83,270
Note payable, net off current portion		169,957		189,249		124,690		189,249
	$	258,125	$	272,519	$	214,429	$	272,519

Principal maturities of note payable as of ~~March 31,~~September 30, 2022 were as follows:

Year ended December 31,		Amounts under Notes Payable	Amounts under Notes Payable
Remaining 2022	$	65,834	$	22,138
2023		90,535		90,535
2024		93,790		93,790
2025		7,966		7,966
	$	258,125	$	214,429

Note 7 - Revenue and Cost Recognition

The Company's products are sold worldwide to a global network of distributors and dealers, and directly to consumers when there are no dealers or distributors in their geographic area or where consumers choose to purchase directly via the Company's e-commerce website (collectively the "customers").

Revenues from product sales are recognized when earned, net of applicable provisions for discounts and returns and allowances in the event of product defect where no exchange of product is possible. Revenues are recognized when our performance obligations are satisfied as evidenced by transfer of control of promised goods to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Product royalty income, representing less than 1% of total revenues, is recorded as the underlying product sales occur, in accordance with the related licensing arrangements.

The Company's standard distributor payment terms range from pre-payment in full to 60 days after shipment and subsequent sales of our products by distributors have no effect on the amount and timing of payments due to us, however, in limited instances qualified distributors and dealers may be granted extended payment terms during selected order periods. In performing such evaluations, we utilize historical experience, sales performance, and credit risk requirements. Furthermore, products purchased by distributors may not be returned to us in the event that any such distributor relationship is terminated.

Since the Company (through its wholly-owned subsidiary) serves as the distributor of Leatt products in the United States, the Company records its revenue and related cost of revenue for its product sales in the United States upon shipment of the merchandise to the dealer or to the ultimate consumer when there is no dealer in the geographic area or the consumer chooses to purchase directly from the Company's e-commerce website and the sales order was received directly from, and paid by, the ultimate consumer. Since the Company (through its South African branch) serves as the distributor of Leatt products in South Africa, the Company records its revenue and related cost of revenue for its product sales in South Africa upon shipment of the merchandise from the branch to the dealer. The Company's standard terms and conditions of sale for non-consumer direct or web-based sales do not allow for product returns other than under warranty.

International sales (other than in the United States and South Africa) are generally drop-shipped directly from the third-party manufacturer to the international distributors. Revenue and related cost of revenue is recognized at the time of shipment from the manufacturer's port when the shipping terms are Free On Board ("FOB") shipping point, Cost and Freight ("CFR") or Cost and Insurance to named place ("CIP") as legal title and risk of loss to the product pass to the distributor. Sales to all customers (distributors, dealers and consumers) are generally final; however, in limited instances, product may be returned and exchanged due to product quality issues. Historically, returns due to product quality issues have not been material and there have been no distributor terminations that resulted in material product returns. Cost of revenues also includes royalty fees associated with sales of ~~Leatt-Brace~~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:

		Three months ended March 31,						Nine months ended September 30,
		2022	% of Revenues		2021	% of Revenues		2022	% of Revenues		2021	% of Revenues
Consumer and athlete direct revenues	$	595,479	2%	$	570,701	5%	$	1,928,171	3%	$	1,519,454	3%
Dealer direct revenues		5,003,608	21%		5,566,732	43%		13,781,437	21%		14,401,624	29%
International distributor revenues		18,629,021	77%		6,759,042	52%		49,715,562	76%		33,376,783	68%
	$	24,228,108	100%	$	12,896,475	100%	$	65,425,170	100%	$	49,297,861	100%

The Company reviews the reserves for customer returns at each reporting period and adjusts them to reflect data available at that time. To estimate reserves for returns, the Company estimates the expected returns and claims based on historical rates as well as events and circumstances that indicate changes to historical rates of product returns and claims. Historically, returns due to product quality issues have not been material and there have been no distributor terminations that resulted in product returns. The provision for estimated returns at ~~March 31,~~September 30, 2022 and December 31, 2021 was $0, and $0, respectively.

Accounts receivable consist of amounts due to the Company from normal business activities. Credit is granted to substantially all distributors on an unsecured basis. The Company continuously monitors collections and payments from customers and maintains an allowance for doubtful accounts receivable based upon 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, the Company is required to make certain estimates and assumptions. Accounts receivable balances that are still outstanding after the Company 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, the Company cannot guarantee that it will continue to experience the same credit loss rates as 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 future operating results. The allowance offor doubtful accounts was ~~$306,110~~$372,889 at ~~March 31,~~September 30, 2022 and $291,584 at December 31, 2021.

Sales commissions are expensed when incurred, which is generally at the time of sale, because the amortization period would have been one year or less. These costs are recorded in commissions and consulting expenses within operating ~~expense~~expenses in the accompanying consolidated statements of operations and comprehensive income.

Shipping and handling activities associated with outbound freight, after control over a product has transferred to a customer, are accounted for as a fulfillment cost and are included in revenues and cost of revenues in the accompanying consolidated statements of operations and comprehensive income.

Revenue recognized from contracts with customers is recorded net of sales taxes, value added taxes, or similar taxes that are collected on behalf of local taxing authorities.

Note 8 - Income Taxes

The Company uses the asset and liability approach to account for income taxes. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax basis of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The provision for income taxes included taxes currently payable, if any, plus the net change during the period in deferred tax assets and liabilities recorded by the Company.

The Company applies the provisions of FASB ASC Topic 740-10, Accounting for Uncertainty in Income Taxes ("Standard"), which provides that the tax effects from an uncertain tax position can be recognized in the consolidated financial statements only if the position is more likely than not of being sustained upon an examination by tax authorities. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, the standard provides guidance on derecognition, classification, interest and penalties; accounting in interim periods, disclosure and transition, and any amounts when incurred would be recorded under these provisions.

The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of ~~March 31,~~September 30, 2022, the Company has no unrecognized tax benefits.

Note 11 - Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements -In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2021-10 Government Assistance (Topic 832): "Disclosures by Business Entities About Government Assistance," which requires entities to provide annual disclosures about transactions with a government that are accounted for by applying a grant or contribution model by analogy. The standard is effective for annual periods beginning after December 15, 2021. The Company adopted the standard effective January 1, 2022. The adoption of the standard had no impact on the Company's consolidated financial statements.

Accounting Pronouncements Not Yet Adopted - In September 2022, the FASB issued ASU No. 2022-04, "Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations." This ASU requires a buyer that uses supplier finance programs to make annual disclosures about the programs' key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated rollforward information. The guidance is effective for the Company beginning on January 1, 2023, except for the rollforward, which is effective beginning on January 1, 2024. The Company is currently evaluating the impact of the new guidance and does not expect it to have a material impact on the Company's consolidated financial statements.

The Company evaluated all ASU's issued by the FASB for consideration of their applicability. ASU's not included in our 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 12 - Litigation

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

Note 13 - Risks and Uncertainties

~~As the COVID-19 pandemic continues to evolve, the~~The Company believes ~~the extent of the~~that any impact to its operations from continued COVID-19 developments worldwide will be primarily driven by the ~~severity~~duration and ~~duration~~severity of the pandemic, ~~the pandemic's~~its impact on the ~~U.S. and~~ global ~~economies~~economy, and the timing, scope and effectiveness of ~~federal, state and local~~ governmental ~~responses to the pandemic. Due to strong consumer demand for outdoor product categories, the Company did not see any significant material negative impact of~~response, including China's ongoing COVID-19 ~~on the Company's results of operations for the quarter ended March 31, 2022. The Company remains~~restrictions. We remain cautiously optimistic that ongoing efforts to increase the availability of new COVID-19 vaccines worldwide will mitigate the spread of the virus throughout the U.S., Europe, and ~~the U.S. (our largest markets)~~China, and will bring about an end to ~~global quarantines. The~~any remaining restrictions, and their potential effect on the Company's manufacturing and distribution partners. Any continued mutation and spread of the virus ~~economic headwinds caused by~~and the reintroduction of global ~~quarantines~~restrictions or the occurrence of any other catastrophic events, could have a negative impact on sales revenue for the coming periods and beyond.

The ongoing turmoil in the global economy caused by high inflation in the U.S., Asia and Europe markets where we operate, and the on-going conflict in Ukraine, may have an adverse impact on our financial operations. The global economic turmoil may reduce consumer spending and demand levels worldwide, including demand for our products. The significantly elevated inflation levels worldwide has also exposed us to foreign exchange risk. Approximately 78% of our sales are derived in international markets where the U.S. dollar is not the primary currency, and the significant strengthening of the U.S. dollar versus our customers' local currency can adversely affect consumer spending or our ability to remain competitive in those areas.

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.~~our latest annual report on Form 10-K filed with the SEC. 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:

Also, forward-looking statements represent our estimates and assumptions only as of the date of this quarterly report. You should read this quarterly report and the documents that we reference and filed as exhibits to the quarterly 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.

Except as otherwise indicated by the context, references in this ~~annual~~ report to:

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 neck braces 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 new body protection products which it markets under the Leatt Protection Range 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 3 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. For the US market our motorcycle helmets comply with the DOT (FMVSS 218) helmet safety standard and our bicycle helmet complies 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 our motorcycle helmets comply with ACU Gold and our ~~GPX~~Moto 3.5 helmet with JIS T 8133 for the Japanese Market. For the Brazilian market our Moto 7.5 and Moto 3.5 helmets comply with NBR 7471. ~~We are currently in the process of applying to certify our Moto 3.5 helmet and latest helmet model Moto 7.5 to the CCC standard in China.~~

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 are also building manufacturing capacity outside China, namely, in Thailand 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 55 distributors worldwide, 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 in the United States and South Africa, respectively.

We believe that the following factors will continue to affect our financial performance:

• 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.

• 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. As the COVID-19 pandemic continues to evolve, we believe the extent of the impact to our operations will be primarily driven by the severity and duration of the pandemic, the pandemic's impact on the U.S. and global economies and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic. Due to strong consumer demand for outdoor product categories since the initial stages of the pandemic, we did not see any significant material negative impact of COVID-19 on the Company's results of operations for the ~~quarter~~nine months ended ~~March 31,~~September 30, 2022. We remain cautiously optimistic that ongoing efforts to increase the availability of new COVID-19 vaccines worldwide will mitigate the spread of the virus throughout Europe and the U.S. (our largest markets) and bring about an end to global quarantines. The continued mutation and spread of the virus, 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.

• Conflict in Ukraine - We are exposed to conflicts that may disrupt our business and may reduce consumer demand for our products. A disruption or failure of our systems, government sanctions or operations in the event of a conflict 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, a prolonged conflict may have unintended global consequences such as increased inflation, fuel and transportation costs. WeWhile we have conducted due diligence on our customers in Russia to ensure that they do not fall into any sanctioned categories, we have seen ~~any significant impact due to~~a delay in the ~~outbreak~~receipt of ~~war~~receivables in ~~Ukraine and~~our bank account from the ~~subsequent institution~~distributors of our products in Russia caused by enhanced screening of Russian funds in compliance with global sanctions against Russia ~~by the U.S. and several European nations on the Company's results of operations~~ for the ~~quarter ended March 31, 2022.~~war in Ukraine. The prolonging or expansion of the conflict 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 this fluid situation and any adverse impact that it may have on the global economy in general and on our business operations and especially that of our customers in particular, and we will develop contingencies as necessary to address any disruptions to our business operations as they arise.

The following summary of our results of operations should be read in conjunction with our financial statements and the notes thereto for the ~~three-month~~three and nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 included herein.

Comparison of Three Months Ended ~~March 31,~~September 30, 2022 and Three Months Ended ~~March 31,~~September 30, 2021

The following table summarizes the results of our operations during the three-month periods ended ~~March 31,~~September 30, 2022 and 2021 and provides information regarding the dollar and percentage increase or (decrease) in such periods:

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 ~~three months~~quarter ended ~~March 31,~~September 30, 2022 were ~~$24.23~~$23.26 million, ~~an 88%~~a 5% increase, compared to ~~revenues of $12.90~~$22.10 million for the quarter ended ~~March 31,~~September 30, 2021. This increase in worldwide revenues is primarily attributable to a ~~$5.11 million increase in body armor sales, a $4.15~~$2.04 million increase in helmet sales, ~~and~~ a ~~$2.48~~$1.8 million increase in other products, parts and accessories, that were partially offset by a ~~$0.41~~$1.85 million decrease in body armor and a $0.81 million decrease in neck brace sales. Revenues generated from sales to our customers in the United States increased from $4.31 million, to $5.42 million, for the three months ended September 30, 2022 and 2021, respectively. Revenues associated with international customers were ~~$18.94~~$17.84 million and ~~$7.13~~$17.79 million, or ~~78%~~77% and ~~55%~~81% of revenues, respectively, for the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively.

The following table sets forth our revenues by product line for the ~~three months~~quarter ended ~~March 31,~~September 30, 2022 and 2021:

Sales of our flagship neck brace accounted for ~~$1.53~~$1.89 million and ~~$1.94~~$2.71 million, or 6%8% and ~~15%~~12% of our revenues for the quarters ended ~~March 31,~~September 30, 2022 and 2021, respectively. The ~~21%~~30% decrease in neck brace revenues is primarily attributable to a ~~32%~~24% decrease in the volume of neck braces sold to our customers globally, when compared to the third quarter of 2021, which was a particularly strong quarter for neck brace sales. Neck brace volumes in the ~~United States and abroad during~~third quarter of 2021 had increased by 181% over the ~~2022~~prior year 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 sales accounted for ~~$12.48~~$10.52 million and ~~$7.38~~$12.37 million, or ~~52%~~45% and 56% of our revenues for the quarters ended September 30, 2022 and 2021, respectively. The 15% decrease in body armor revenues during the 2022 third quarter is primarily the result of a 30% decrease in upper body armor revenues, when compared to the third quarter of 2021, which was an exceptionally strong quarter for upper body armor revenues. Upper body armor revenues in the third quarter of 2021 had increased by 114% when compared to the prior year period.

Our helmet sales accounted for $4.36 million or 19% of our revenues for the quarter ended September 30, 2022, as compared to $2.32 million or 11% of our revenues for the three months ended September 30, 2021. The 88% increase in helmet sales during the third quarter is primarily due to exceptional global demand for our redesigned MOTO helmet line-up for off-road motorcycle use.

Our other products, parts and accessories are comprised of goggles, hydration bags and apparel items including jerseys, pants, shorts and jackets as well as aftermarket support items required primarily to replace worn or damaged parts through our global distribution network. Other products, parts and accessories sales accounted for $6.49 million and $4.71 million, or 28% and 21% of our revenues for the quarters ended September 30, 2022 and 2021, respectively. The 38% increase in revenues from the sale of other products, parts and accessories during the 2022 third quarter is primarily due to a 51% increase in the sales volume of our MOTO and MTB technical apparel designed for off-road motorcycle and mountain biking use, respectively.

Cost of Revenues and Gross Profit - Cost of revenues for the quarters ended September 30, 2022 and 2021 were $13.12 million and $12.57 million, respectively. Gross Profit for the quarters ended September 30, 2022 and 2021 were $10.14 million and $9.53 million, respectively, or 44% and 43% of revenues, respectively. Ourneck braceproducts continue to generate a higher gross profit margin than our other product categories. Although neck brace revenues accounted for 8% and 12% of our revenues for the quarters ended September 30, 2022 and 2021, respectively, our gross profit improved during the third quarter of 2022 due to a stabilization in global and domestic shipping and logistics costs, when compared to the three month period ended September 30, 2022.

Product Royalty Income - Product royalty income is earned on sales to distributors that have royalty agreements in place, as well as on sales of licensed products by third parties that have licensing agreements in place. Product royalty income for the quarters ended September 30, 2022 and 2021 were $74,411 and $58,246, respectively. The 28% increase in product royalty income is due to an increase in the sale of licensed products by licensees during the 2022 period.

Salaries and Wages - Salaries and wages for the quarters ended September 30, 2022 and 2021 were $1,274,554 and $975,676, respectively. The 31% increase in salaries and wages during the 2022 period was primarily due to the employment of additional sales, marketing and brand management personnel in the United States and abroad as we continue to expand and build our selling activities globally in order to facilitate growth. Additionally, share compensation costs relating to a share issuance made to key personnel contributed to the increase in salaries and wages for the 2022 period.

Commissions and Consulting Expense - During the quarters ended September 30, 2022 and 2021, commissions and consulting expenses were $143,691 and $144,837, respectively. The 1% decrease in commissions and consulting expenses is primarily the result of a decrease in commissions and incentives paid to external sales representatives in the United States, that were partially offset by an increase in commissions and incentives paid to internal, Company employed sales representatives, in line with an increase in sales growth in the region and our continued drive to build out a strong domestic employee sales force.

Professional Fees - Professional fees consist of costs incurred for audit, tax and regulatory filings, as well as patent protection and product liability litigation expenses incurred as the Company continues to expand. Professional fees for the quarters ended September 30, 2022 and 2021 were $166,537 and $510,713, respectively. The 67% decrease in professional fees is primarily due to a decrease in product liability litigation expenses incurred during the 2022 period.

Advertising and Marketing - The Company places paid advertising in various motorsport and bicycle magazines and online media and sponsors a number of events, professional teams and individuals to increase product and brand visibility globally. Advertising and marketing expenses for the quarters ended September 30, 2022 and 2021 were $1,166,804 and $633,915, respectively. The 84% increase in advertising and marketing expenditure during the 2022 period is primarily due to an increase in global coordinated marketing campaigns undertaken in conjunction with our distribution partners and a return to industry tradeshows. During the 2022 period, the Company successfully partnered with its distribution partners in a cost sharing initiative designed to create synchronized launch campaigns, and returned to trade shows that were previously not well attended due to COVID-19 related travel restrictions.

Office Lease and Expenses - Office lease and expenses for the quarters ended September 30, 2022 and 2021 were $145,499 and $99,314, respectively. The 47% increase in office lease and expenses during the 2022 period is primarily due to additional warehouse storage rented in the United States as the Company continues to expand its Reno, Nevada warehousing capability to accommodate storage and distribution of its expanding line up of protective gear.

Research and Development Costs - These costs consist of the salaries of personnel who are directly involved in the research and development of innovative products, as well as the direct costs associated with developing these products. Research and development costs for the quarter ended September 30, 2022, increased to $501,604, from $468,922 during the same 2021 quarter. The 7% increase in research and development costs during the 2022 third quarter is primarily due to the employment of professional product development, design, and quality control personnel, in order to continue the refinement of the Company's product categories and the expansion of our pipeline of innovative cutting-edge products.

Bad Debt Expense - Bad debt expense for the quarters ended September 30, 2022 and 2021 were $97,325 and $42,197, respectively. The 131% increase in bad debt expense is primarily the result of an increase in the provision for unrecoverable debts relating to the Company's international sales.

General and Administrative Expenses - General and administrative expenses consist of insurance, travel, merchant fees, telephone, office and computer supplies. General and administrative expenses for the quarters ended September 30, 2022 and 2021 were $977,796 and $691,696, respectively. The 41% increase in general and administrative expenses is primarily due to an increase in product and general liability insurance premiums paid during the 2022 period and a significant increase in staff travel activity related to product development, industry trade shows and domestic customer sales visits, in line with a relaxation of COVID-19 related travel restrictions.

Depreciation Expense - Depreciation expense for the quarters ended September 30, 2022 and 2021 were $264,923 and $265,777, respectively. The marginal decrease in depreciation during the 2022 third quarter is primarily due to a decrease in depreciation expenses relating to mold and tooling items that had been fully depreciated, and were partially offset by the addition of warehouse racking and inventory management equipment utilized at the expanded Company's Reno, Nevada warehouse and the addition of upgrades to the Company's direct to consumer website to facilitate an increase in selling activity.

Total Operating Expenses - Total operating expenses increased by $905,686, to $4.74 million, in the quarter ended September 30, 2022, or 24%, compared to $3.83 million in the 2021 period. This increase is primarily due to increases in advertising and marketing, salaries and general and administrative costs, that were partially offset by the decrease in professional fees mentioned in this report.

Net Income - The net income after income taxes for the quarter ended September 30, 2022 was $4.09 million, as opposed to a net income of $4.29 million for the quarter ended September 30, 2021. This 5% decrease in net income is primarily due to the increase in total operating costs, that were partially offset by the increase in revenues and gross profit discussed above.

Comparison of Nine Months Ended September 30, 2022 and Nine Months Ended September 30, 2021

The following table summarizes the results of our operations during the nine-month periods ended September 30, 2022 and 2021 and provides information regarding the dollar and percentage increase or (decrease) in such periods:

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 internationally. Revenues for the nine-month period ended September 30, 2022 were $65.43 million, a 33% increase, compared to revenues of $49.30 million for the period ended September 30, 2021. This increase in worldwide revenues is primarily attributable to a $7.54 million increase in helmet sales, a $5.87 million increase in other products, parts and accessory sales and a $4.2 million increase in body armor sales, that were partially offset by a $1.48 million decrease in neck brace sales. Revenues generated from sales to our customers in the United States decreased from $14.79 million to $14.57 million, for the nine months ended September 30, 2022 and 2021, respectively. Revenues associated with international customers were $50.86 million and $34.51 million, or 78% and 70% of revenues, respectively, for the nine months ended September 30, 2022 and 2021.

The following table sets forth our revenues by product line for the nine months ended September 30, 2022 and 2021:

Sales of our flagship neck brace accounted for $4.74 million and $6.22 million, or 7% and 13% of our revenues for the nine-month periods ended September 30, 2022 and 2021, respectively. The 24% decrease in neck brace revenues is primarily attributable to a 25% decrease in the volume of neck braces sold globally, when compared to the nine months ended September 30, 2021, which was a particularly strong period for neck brace sales. Neck brace volumes for the first nine months of 2021 had increased by 67% over the prior year 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 sales accounted for $32.51 million and $28.31 million, or 50% and 57% of our revenues for the ~~quarters~~nine-month period ended ~~March 31,~~September 30, 2022 and 2021, respectively. The ~~69%~~15% increase in body armor revenues was primarily the result of continued global shipments of ~~our footwear category consisting of~~the off-road motorcycle boots and mountain biking shoes ~~and continued remarkable consumer demand for~~comprising our ~~innovative upper body and limb protectors.~~footwear category.

Our ~~helmets~~Helmets accounted for ~~$5.69~~$12.43 and $4.89 million, or ~~23%~~19% and 10% of our revenues for the ~~three months~~nine-month periods ended ~~March 31,~~September 30, 2022 ~~as compared to $1.54 million or 12% of our revenues for the same~~and 2021, ~~period.~~respectively. The ~~269%~~154% increase in helmet sales during the 2022 period is primarily ~~the result of~~due to continued strong demand for the Company's expanding and ~~award winning~~award-winning MTB helmet line up ~~that has appealed to a wide range of riders~~ and ~~continued shipments of our~~ redesigned MOTO helmet ~~line up~~offering for off-road motorcycle use ~~to our customers~~ in the United States and abroad.

Our other products, parts and accessories are comprised of goggles, hydrations bags and apparel items including jerseys, pants, shorts and jackets as well as aftermarket support items required primarily to replace worn or damaged parts through our global distribution network. Other products, parts and ~~accessory~~accessories sales accounted for ~~$4.53~~$15.74 million and ~~$2.04~~$9.88 million, or ~~19%~~24% and ~~16%~~20% of our revenues for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021, respectively. The ~~122%~~59% increase in revenues from the sale of other products, parts and accessories is primarily due to strong ~~consumer~~ demand for our MOTO and MTB technical apparel designed for off-road motorcycle and mountain biking use, respectively.

Cost of Revenues and Gross Profit - Cost of revenues for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 were ~~$14.60~~$38.02 million and ~~$6.84~~$27.52 million, respectively. Gross Profit for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 were ~~$9.63~~$27.41 million and ~~$6.05~~$21.77 million, respectively, or ~~40%~~42% and ~~47%~~44% of revenues respectively. Ourneck braceproducts continue to generate a higher gross ~~profit~~ margin than our other product categories. Neck brace revenues accounted for 6%7% and ~~15%~~13% of our revenues for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021, respectively. Additionally, revenues associated with international customers were 78% and ~~55%~~70% of our revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively, with ~~revenue~~revenues associated with international distribution customers continuing to generate a lower gross profit margin than direct dealer ~~direct~~ sales in the United States. The decrease in gross profit as a percentage of revenues for the three months ended March 31, 2022 was further influenced by a significant increase in global and domestic shipping and logistic costs as a result of the COVID-19 pandemic.

Product Royalty Income - Product royalty income is earned on sales to distributors that have royalty agreements in place, as well as on sales of licensed products by third parties that have licensing agreements in place. Product royalty income for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 were ~~$78,839~~$200,221 and ~~$24,810,~~$141,535, respectively. The ~~218%~~41% increase in product royalty income is due to an increase in the sale of licensed products by licensees during the 2022 period.

Salaries and Wages - Salaries and wages for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 were ~~$1,297,962~~$3,897,693 and ~~$924,537,~~$2,813,024, respectively. The ~~40%~~39% increase in salaries and wages during the 2022 period was primarily due to the employment of additional sales ~~professionals~~ and ~~operational~~ warehousing ~~staff~~personnel in the United States as we continue to expand and build our selling activities ~~domestically.~~to facilitate growth. Additionally, share compensation costs relating to a share issuance made to key personnel ~~in recognition of exceptional performance~~ contributed ~~significantly~~ to the increase in salaries and wages for the 2022 period.

Commissions and Consulting Expense - During the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021, commissions and consulting expenses were ~~$162,586~~$456,911 and ~~$220,662,~~$581,485, respectively. ~~The 26%~~This 21% decrease in commissions and consulting expenses during the 2022 period is primarily ~~the result of~~due to a decrease in commissions and incentives paid to both in-house and external sales representatives in the United States, in line with a decrease in sales growth in the region.

Professional Fees - Professional fees consist of costs incurred for audit, tax and regulatory filings, as well as patent protection and product liability litigation expenses incurred as the Company continues to expand. Professional fees for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 were ~~$259,115~~$505,305 and ~~$337,755,~~$971,969, respectively. ~~The 23%~~This 48% decrease in professional fees is primarily due to a decrease in expenditure on product liability litigation ~~expenses incurred~~ during the 2022 period.

Advertising and Marketing - The Company places paid advertising in various motorsport ~~and bicycle~~ magazines and online media, and sponsors a number of events, ~~professional~~ teams and individuals to increase product and brand ~~visibility globally.~~visibility. Advertising and marketing expenses for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 were ~~$613,890~~$2,526,808 and ~~$517,580,~~$1,669,648, respectively. The ~~19%~~51% increase in advertising and marketing expenditure during the 2022 period is primarily due to the production, execution and ~~execution~~synchronization of global marketing campaigns that incorporate high caliber athlete sponsorships, industry trade shows and event attendance activities, and other coordinated ~~digital~~global marketing ~~activities~~plans designed to market the Company's ~~growing~~ product offering to a wider group of riders and ~~increase global~~enthusiasts and continue building a globally recognizable and respected consumer ~~engagement.~~brand.

Office Lease and Expenses- Office lease and expenses for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 were ~~$207,021~~$546,398 and ~~$87,373,~~$273,887, respectively. The ~~137%~~99% increase in office lease and expenses during the 2022 period iswas primarily due to additional warehouse storage rented in the United States as the Company continues to ~~build out~~expand its Reno, Nevada ~~warehouse~~warehousing facility to accommodate storage and sales of its expanding ~~line-up~~line up of ~~exceptional~~ protective ~~gear.~~gear categories.

Research and Development Costs - These costs consist of the salaries of personnel who are directly involved in the research and development of innovative products, as well as the direct costs associated with developing these products. Research and development costs for the ~~quarter~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021, increased to ~~$533,700,~~$1,516,147, from ~~$405,105~~$1,319,183, during the same 2021 ~~quarter.~~period. The ~~32%~~15% increase in research and development costs during the 2022 period is primarily ~~as a result~~due to the employment of ~~increased~~industry specific product development, engineering, design and ~~certification costs incurred~~quality management professionals as the Company continues to ~~develop~~refine its widening product categories and expand a pipeline of ~~exceptional,~~ innovative ~~protective gear that appeals to a wider rider audience.~~products.

Bad Debt Expense - Bad debt expense for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 were ~~$18,324~~$101,680 and ~~$65,825,~~$56,290, respectively. ~~The 72% decrease~~This 81% increase in bad debt expense ~~is the result of a decrease in provisions made for unrecoverable debts~~ during the 2022 period ~~in line with a decrease~~is primarily the result of an increase in the ~~accounts receivable balance at Two Eleven Distribution in~~provision for unrecoverable debts relating to the ~~United States at March 31, 2022 when compared to December 31, 2021.~~Company's international customers.

General and Administrative Expenses - General and administrative expenses consist of insurance, travel, merchant fees, telephone, office and computer supplies. General and administrative expenses for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 were ~~$711,752~~$2,399,899 and ~~$528,599,~~$1,830,055, respectively. The ~~35%~~31% increase in general and administrative expenses during the 2022 period is primarily ~~due to~~as a result of an increase in expenditures on product liability, general risk and ~~directors~~directors' and officers' insurance premiums during the 2022 ~~period. A global industry wide increase in insurance risk as a result of the COVID-19 pandemic and increased inventory levels globally~~period, as the Company expands its product ~~offerings~~offering and ~~selling activities were~~due to the ~~primary factors that contributed to these~~increase in sales over the period. Additionally, travel expenditures increased ~~premiums.~~ in line with a relaxation of COVID-19 related travel restrictions and an increase in marketing, industry tradeshow and sales travel activity.

Depreciation Expense- Depreciation ~~expense~~Expense for the ~~quarters~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2021 were ~~$276,924~~$829,790 and ~~$236,535,~~$744,713, respectively. ~~The 17%~~This 11% increase in depreciation during the 2022 period is primarily due to the addition of ~~molds~~warehouse racking and ~~tooling~~inventory management equipment utilized inat the ~~production of~~expanded Company's Reno, Nevada warehouse and upgrades to the Company's ~~expanding product categories.~~direct to consumer website in order to facilitate an increase in selling activity.

Total Operating Expenses - Total operating expenses increased by ~~$757,303,~~$2.52 million to ~~$4.08~~$12.78 million, in the ~~three months~~nine-month period ended ~~March 31,~~September 30, 2022, ~~or 23%,~~ compared to ~~$3.32~~$10.26 million in the ~~2021 period.~~nine-month period ended September 30, 2021. This increase in total operating expenses during the 2022 period is primarily due to increases in salaries, advertising and marketing, general and administrative, warehouse leasing, and research and development ~~and advertising and marketing~~ costs, that were partially offset by athe decrease in professional fees and commissions ~~and bad debt expenditure discussed above.~~paid mentioned in this report.

Net Income - ~~The net~~Net income after income taxes for the ~~quarter~~nine-month period ended ~~March 31,~~September 30, 2022 was ~~$4.22~~$11.04 million, as opposed to a net income after income taxes of ~~$2.06~~$8.76 million for the ~~quarter~~nine-month period ended ~~March 31,~~September 30, 2021. This ~~105%~~ increase in net income during the 2022 period is primarily due to the increase in ~~sales revenues~~revenue and gross profit discussed above.

At ~~March 31,~~September 30, 2022, we had cash and cash equivalents of ~~$4.25~~$4.84 million and $0.06 million of short-term investments. The following table sets forth a summary of our cash flows for the periods indicated:

Cash decreased by ~~$776,760,~~$187,168 or ~~15%~~4%, for the ~~three~~nine months ended ~~March 31,~~September 30, 2022, when compared to cash on hand at December 31, 2021. The primary sources of cash for the nine months ended September 30, 2022 were net income of $11,037,798, decreased prepaid expenses of $2,845,924 and increased income taxes payable of $2,073,221. The primary uses of cash for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 were increased accounts receivable of ~~$5,097,249 and~~$9,925,342, increased inventory of $4,088,914, decreased accounts payable and accrued expenses of ~~$3,207,604. The primary sources~~$2,136,609, capital expenditures of ~~cash for~~$865,204 and the ~~three months ended March 31, 2022 were net income~~repayment of ~~$4,222,755, decreased inventory of $1,151,008 and increased income taxes payable of $1,407,703.~~a short term loan amounting to $ 832,089.

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 in the U.S. and abroad.

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 quarters ended ~~March 31,~~September 30, 2022 and 2021, the Company paid an aggregate of ~~$72,716~~$40,062 and ~~$62,124,~~$58,085 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 quarters ended ~~March 31,~~September 30, 2022 and 2021, the Company paid an aggregate of ~~$18,179~~$10,016 and ~~$15,531,~~$14,515, in licensing fees to Mr. De Villiers.

From May 15, 2015 through October 31, 2021, the Company was party to a consulting agreement, dated July 8, 2015, between the Company and Innovate Services Limited, or Innovate, a Seychelles limited company in which Dr. Leatt is an indirect beneficiary, pursuant to which, as amended, Innovate served as the Company's exclusive research, development and marketing consultant, in exchange for a monthly fee of $42,233; provided that Dr. Leatt personally performs the services to be performed by Innovate under the agreement. Either party had the right to terminate the agreement for convenience, upon ~~six~~nine months' prior written notice, or by the Company immediately without notice in the event of Innovate's breach of an obligation under the contract or if Dr. Leatt could no longer perform the services. On November 8, 2021, the Company terminated the agreement with Innovate, effective October 31, 2021, in connection with the wind-up of Innovate's business operations. The termination of the agreement with Innovate will not have an adverse effect on the Company's research and development operations as the Company simultaneously entered into a new consulting agreement with Innovation Services Limited, Jersey limited company beneficially owned by Dr. Leatt, for the same research, development and marketing services, and on substantially the same terms and conditions as the terminated agreement. During the quarters ended ~~March 31,~~September 30, 2022 and 2021, the Company recognized an aggregate of $0 and $126,699, respectively, in consulting fees to Innovate.

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 of $42,233; 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, by no greater than the lesser of: (a) two and one-half percent (2.5%) 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 consulting agreement was effective as of November 1, 2021, and will continue unless terminated by either party in accordance with its terms. Either party has the right to terminate the consulting agreement upon 6nine months' prior written notice, except that the consulting agreement may be terminated by the Company immediately 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. Accordingly, effective January 1, 2022, the Company's monthly fee to Innovation, increased to $43,289. During the quarters ended ~~March 31,~~September 30, 2022 and 2021, the Company recognized an aggregate of $129,867 and $0, respectively, in consulting fees to Innovation.

Pursuant to a Premium Finance Agreement, dated ~~June 14, 2021,~~May 27, 2022, between the Company and ~~AFCO Acceptance Corporation "AFCO",~~Aon Premium Finance, LLC, or APF, the Company is obligated to pay ~~AFCO~~APF an aggregate sum of ~~$238,696~~$80,233 in eleven monthly payments on a sliding scale, as follows, $37,381, $37,381, $1,172, $ 1,172, $ 1,172 and thereafter six payments of ~~$20,290,~~$326, at a ~~4.350%~~6.360% annual interest rate, commencing on June 1, ~~2021~~2022 and ending on April 1, ~~2022. This~~2023. Any late payment during the term of the agreement would be assessed a late penalty of 5% of the payment amount due, and in the event of default APF has ~~been adjusted~~the right to ~~$19,860~~accelerate the payment due under the agreement. As of September 30, 2022, the Company had not defaulted on its payment obligations under this agreement.

Pursuant to ~~returned premium.~~a Premium Finance Agreement, dated September 20, 2022, between the Company and APF, the Company is obligated to pay APF an aggregate sum of $138,470 in seven payments of $19,781, at a 6.360% annual interest rate, commencing on October 1, 2022 and ending on April 1, 2023. Any late payment during the term of the agreement will be assessed a late penalty of 5% of the payment amount due, and in the event of default ~~AFCO~~APF has the right to accelerate the payment due under the agreement. As of ~~March 31,~~September 30, 2022, the Company had not defaulted on its payment obligations under this agreement.

Pursuant to a Premium Finance Agreement, dated October ~~29, 2021,~~25, 2022, between the Company and ~~AFCO Acceptance Corporation "AFCO",~~APF, the Company is obligated to pay ~~AFCO~~APF an aggregate sum of ~~$1,122,858~~$1,235,372 in ~~eleven~~ten payments of ~~$102,078,~~$123,537, at a ~~4.650%~~8.250% annual interest rate, commencing on ~~November~~December 1, ~~2021~~2022 and ending on September 1, ~~2022.~~2023. Any late payment during the term of the agreement will be assessed a late penalty of 5% of the payment amount due, and in the event of default ~~AFCO~~APF has the right to accelerate the payment due under the agreement. ~~As of March 31, 2022, the Company had not defaulted on its payment obligations under this agreement~~.

On November 19, 2018, the Company entered into a $1,000,000 revolving line of credit agreement with a bank. Payments for the advances under the line bear interest at the LIBOR Daily Floating Rate plus 2.5 percentage points, commencing January 1, ~~2019. The line of credit matured on November 19, 2020, at which time the~~2019, and any unpaid principal, interest, or other charges outstanding under the agreement ~~are~~were due and ~~payable.~~payable on the November 19, 2020, maturity date. On November 5, 2020, the Company ~~executed an amendment to~~and the ~~line of credit~~bank agreed to extend the line of credit facility through November 19, ~~2021. The amendment took~~2021, with retroactive effect toon October 27, ~~2020 and introduced~~2020. The renewed line of credit also featured an index floor so that payments for any future advances will bear interest at the greater of the LIBOR Daily Floating Rate or an Index Floor of 1.25 percentage points plus 2.5 percentage ~~points. Obligations under~~points, and secured the ~~line of credit are secured by~~Company's obligations with Company-owned equipment and fixtures, ~~in the United States of America,~~ accounts receivable and inventory ~~of Leatt Corporation and Two-Eleven Distribution, LLC.~~in the U.S.. On March 1, 2021, ~~we executed a second amendment~~the Company and the bank agreed to ~~the line~~an extension of ~~credit. The amendment took retroactive effect to February 17, 2021, extended~~ the line of credit facility through February 28, 2022, with retroactive effect on February 17, 2021, and ~~increased~~to increase the ~~revolving line of credit~~facility amount to ~~$1,500,000. Effective~~1,500,000. On January 21, 2022, the Company ~~executed an amendment to~~and the ~~line of credit~~bank agreed to extend the line of credit facility through February 28, 2023 and to replace interest determined by LIBOR Daily Floating Rate with the Bloomberg Short-Term Bank Yield Index rate. As of ~~March 31,~~September 30, 2022, ~~there~~no amounts were ~~no advances of~~advanced to the Company from the $1,500,000 line of credit ~~leaving $1,500,000 of the line of credit available for advance.~~facility.

On December 29, 2021, Two Eleven entered into a Loan and Security agreement with a bank, effective December 17, 2021, to finance equipment. The Equipment Note financed under the Loan and Security Agreement has a total value of $272,519, payable in 36 consecutive monthly installments commencing February 5, 2022, and continuing to January 5, 2025. Interest shall accrue on the entire principal amount of this Equipment Note outstanding from time to time at a fixed rate of 3.5370% per annum. The principal and interest amount of each payment shall be $7,990. As of ~~March 31,~~September 30, 2022, $214,429 of the ~~amount of $258,125~~Equipment Note was outstanding.

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'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").

Our standard distributor payment terms range ~~from pre-payment~~frompre-payment in full to 60 days after shipment and subsequent sales of our products by distributors have no effect on the amount and timing of payments due to us, however, in limited instances qualified distributors and dealers may be granted extended payment terms during selected order periods. In performing such evaluations, we utilize historical experience, sales performance, and credit risk requirements. Furthermore, products purchased by distributors may not be returned to us in the event that any such distributor relationship is terminated.

International sales (other than in the United States and South Africa) are generally drop-shipped directly from the third-party manufacturer to the international distributors. Revenue and related cost of revenue is recognized at the time of shipment from the manufacturer's port when the shipping terms are Free On Board ("FOB") shipping point, Cost and Freight ("CFR") or Cost and Insurance to named place ("CIP") as legal title and risk of loss to the product pass to the distributor. Sales to all customers (distributors, dealers and consumers) are generally final; however, in limited instances, product may be returned and exchanged due to product quality issues. Historically, returns due to product quality issues have not been material and there have been no distributor terminations that resulted in product returns. Cost of revenues also includes royalty fees associated with sales of Leatt-Brace products. Product royalty income is recorded as the underlying product sales occur, in accordance with the related licensing arrangements.

Sales commissions are expensed when incurred, which is generally at the time of sale or cash received from customers, because the amortization period would have been one year or less. These costs are recorded in commissions and consulting expenses within operating ~~expense~~expenses in the accompanying consolidated statements of operations and comprehensive income.

Shipping and handling activities associated with outbound freight, after control over a product has transferred to a customer, are accounted for as a fulfilment cost and are included in revenues and cost of revenues in the accompanying consolidated statements of operations and comprehensive income.

Revenue recognized from contracts with customers is recorded net of sales taxes, value added taxes, or similar taxes that are collected on behalf of local taxing authorities.

Allowance for Doubtful Accounts Receivable - Accounts receivable consist of amounts due to the Company from normal business activities. Credit is granted to substantially all distributors on an unsecured basis. We continuously monitor collections and payments from customers and maintain an allowance for doubtful accounts receivable 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, we cannot guarantee that we will continue to experience the same credit loss rates that we have 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 doubtful accounts was ~~$306,110~~$372,889 at ~~March 31,2022~~September 30, 2022 and $291,584 at December 31, 2021.

Impairment of Long-Lived Assets - Our long-lived assets include property and equipment. We evaluate our long-lived assets for recoverability whenever events or changes in circumstances indicate that an asset may be impaired. In evaluating an asset for recoverability, we estimate the future cash flow expected to result from the use of the asset and eventual disposition. If the expected future undiscounted cash flow is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized. We have determined there was no impairment charge during the quarters ended ~~March 31,~~September 30, 2022 and 2021.

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. Please refer to Note 3 "Leases", in the Notes to Consolidated Financial Statements for additional information.

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.

See Note 11, "Recent Accounting Pronouncements" 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.

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 is material to its stockholders.

As of ~~March 31,~~September 30, 2022, the Company's management, under the direction of its Chief Executive Officer and the Chief Financial Officer, Mr. Sean Macdonald, carried out an evaluation of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Exchange Act Rule 13a-15.

There were no changes in our internal controls over financial reporting during the period ended ~~March 31,~~September 30, 2022, that materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting.~~reporting

From time to time, we may become involved in various lawsuits and legal proceedings in the ordinary course of our business. Other than as set forth below, 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.

On April 3, 2018, a wrongful death lawsuit was filed against the Company in Superior Court of California, Imperial County, and subsequently removed to USDC San Diego. The claims asserted included strict liability, negligence, failure to warn, and breach of implied and express warranties. After facing a vigorous defense, the plaintiffs agreed to a confidential settlement dismissing all claims against the Company. ~~A formal~~The Court granted a final dismissal order ~~has not yet been entered.~~on August 18, 2022.

There are no material changes from the risk factors previously disclosed in Item 1A "Risk Factors" of our annual report on Form 10-K for the period ended December 31, 2021.

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.

The following exhibits are filed as part of this report or incorporated by reference:

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~

PART I	FINANCIAL INFORMATION	13

ITEM 1.	FINANCIAL STATEMENTS.	23
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	1213
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	2326
ITEM 4.	CONTROLS AND PROCEDURES.	2326

PART II	OTHER INFORMATION	2327

ITEM 1.	LEGAL PROCEEDINGS.	2327
ITEM 1A.	RISK FACTORS.	2327
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	2327
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.	2327
ITEM 4.	MINE SAFETY DISCLOSURES.	2327
ITEM 5.	OTHER INFORMATION.	2427
ITEM 6.	EXHIBITS.	2427

Exhibit No.	Description

31.1	Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted 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)

Date: November 9, 2022	LEATT CORPORATION

	By: /s/ Sean Macdonald
	Sean Macdonald
	Chief Executive Officer and Chief Financial Officer
	(Principal Executive, Financial and Accounting Officer)

ExhibitNo.	Description

31.1	Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted 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~~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)

ASSETS
		March 31, 2022			December 31, 2021
		Unaudited			Audited
Current Assets
Cash and cash equivalents	$	4,245,676		$	5,022,436
Short-term investments		58,263			58,262
Accounts receivable, net		17,743,659			12,660,936
Inventory, net		19,916,817			21,081,481
Payments in advance		1,541,775			1,610,640
Prepaid expenses and other current assets		3,900,500			4,178,427
Total current assets		47,406,690			44,612,182

Property and equipment, net		3,147,973			3,128,086
Operating lease right-of-use assets, net		1,287,949			1,393,213
Other Assets
Deposits		49,750			33,339

Total Assets	$	51,892,362		$	49,166,820

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued expenses	$	11,410,067		$	14,617,671
Note payable, current		88,168			83,270
Operating lease liabilities, current		279,148			318,621
Income taxes payable		4,146,521			2,738,818
Short term loan, net of finance charges		661,067			975,025
Total current liabilities		16,584,971			18,733,405

Deferred compensation		340,000			320,000
Note payable, net of current portion		169,957			189,249
Operating lease liabilities, net of current portion		1,008,801			1,074,592
Deferred tax liability, net		228,600			228,600
Commitments and contingencies		-			-
Stockholders' Equity
Preferred stock, $.001 par value, 1,120,000 shares authorized, 120,000 shares issued and outstanding		3,000			3,000
Common stock, $.001 par value, 28,000,000 shares authorized, 5,791,683 and 5,673,683 shares issued and outstanding		130,280			130,162
Additional paid - in capital		9,689,299			9,230,847
Accumulated other comprehensive loss		(521,534	)		(779,268	)
Retained earnings		24,258,988			20,036,233
Total stockholders' equity		33,560,033			28,620,974

Total Liabilities and Stockholders' Equity	$	51,892,362		$	49,166,820

		Three Months Ended March 31,							Percentage
		2022		2021			Increase		Increase		Three Months Ended September 30,				Increase (Decrease)		Percentage Increase (Decrease)
Item							(Decrease)		(Decrease)		2022		2021		Increase (Decrease)		Percentage Increase (Decrease)

REVENUES	$	24,228,108	$	12,896,475		$	11,331,633		88%	$	23,258,752	$	22,100,827	$	1,157,925		5%
COST OF REVENUES		14,601,018		6,844,521		$	7,756,497		113%		13,122,213		12,571,692	$	550,521		4%
GROSS PROFIT		9,627,090		6,051,954		$	3,575,136		59%		10,136,539		9,529,135	$	607,404		6%
PRODUCT ROYALTY INCOME		78,839		24,810		$	54,029		218%		74,411		58,246	$	16,165		28%
OPERATING EXPENSES
Salaries and Wages		1,297,962		924,537		$	373,425		40%		1,274,554		975,676	$	298,878		31%
Commissions and Consulting		162,586		220,662		$	(58,076	)	-26%		143,691		144,837	$	(1,146	)	-1%
Professional Fees		259,115		337,755		$	(78,640	)	-23%		166,537		510,713	$	(344,176	)	-67%
Advertising and Marketing		613,890		517,580		$	96,310		19%		1,166,804		633,915	$	532,889		84%
Office Lease and Expenses		207,021		87,373		$	119,648		137%		145,499		99,314	$	46,185		47%
Research and Development Costs		533,700		405,105		$	128,595		32%		501,604		468,922	$	32,682		7%
Bad Debt Expense		18,324		65,825		$	(47,501	)	-72%		97,325		42,197	$	55,128		131%
General and Administrative		711,752		528,599		$	183,153		35%		977,796		691,696	$	286,100		41%
Depreciation		276,924		236,535		$	40,389		17%		264,923		265,777	$	(854	)	0%
Total Operating Expenses		4,081,274		3,323,971		$	757,303		23%		4,738,733		3,833,047	$	905,686		24%
INCOME FROM OPERATIONS		5,624,655		2,752,793		$	2,871,862		104%		5,472,217		5,754,334	$	(282,117	)	-5%
Other Income (Expenses)		6,157		(4,007	)	$	10,164		254%
INCOME BEFORE INCOME TAXES		5,630,812		2,748,786		$	2,882,026		105%
Other Income											7,784		1,413	$	6,371		451%
INCOME BEOFRE INCOME TAXES											5,480,001		5,755,747	$	(275,746	)	-5%
Income Taxes		1,408,057		687,948		$	720,109		105%		1,391,878		1,467,936	$	(76,058	)	-5%
NET INCOME	$	4,222,755	$	2,060,838		$	2,161,917		105%	$	4,088,123	$	4,287,811	$	(199,688	)	-5%

		Three months ended September 30,
		2022	% of Revenues		2021	% of Revenues
Neck braces	$	1,894,839	8%	$	2,708,364	12%
Body armor		10,519,065	45%		12,365,185	56%
Helmets		4,359,829	19%		2,320,111	11%
Other products, parts and accessories		6,485,019	28%		4,707,167	21%
	$	23,258,752	100%	$	22,100,827	100%

		Nine Months Ended September 30,				Increase (Decrease)		Percentage Increase (Decrease)
Item		2022		2021		Increase (Decrease)		Percentage Increase (Decrease)

REVENUES	$	65,425,170	$	49,297,861	$	16,127,309		33%
COST OF REVENUES		38,017,469		27,523,233	$	10,494,236		38%
GROSS PROFIT		27,407,701		21,774,628	$	5,633,073		26%
PRODUCT ROYALTY INCOME		200,221		141,535	$	58,686		41%
OPERATING EXPENSES
Salaries and Wages		3,897,693		2,813,024	$	1,084,669		39%
Commissions and Consulting		456,911		581,485	$	(124,574	)	-21%
Professional Fees		505,305		971,969	$	(466,664	)	-48%
Advertising and Marketing		2,526,808		1,669,648	$	857,160		51%
Office Lease and Expenses		546,398		273,887	$	272,511		99%
Research and Development Costs		1,516,147		1,319,183	$	196,964		15%
Bad Debt Expense		101,680		56,290	$	45,390		81%
General and Administrative		2,399,899		1,830,055	$	569,844		31%
Depreciation		829,790		744,713	$	85,077		11%
Total Operating Expenses		12,780,631		10,260,254	$	2,520,377		25%
INCOME FROM OPERATIONS		14,827,291		11,655,909	$	3,171,382		27%
Other Income		5,592		1,354	$	4,238		313%
INCOME BEOFRE INCOME TAXES		14,832,883		11,657,263	$	3,175,620		27%
Income Taxes		3,795,085		2,899,966	$	895,119		31%
NET INCOME	$	11,037,798	$	8,757,297	$	2,280,501		26%

~~Date: May 12, 2022~~	~~LEATT CORPORATION~~

	~~By: /s/ Sean Macdonald~~
	~~Sean Macdonald~~
	~~Chief Executive Officer and Chief Financial Officer~~
	(~~Principal Executive, Financial and Accounting Officer~~)

~~31.1~~	~~Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~31.2~~	~~Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~32.1~~	~~Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.2~~	~~Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted 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)~~