Leatt Corporation (OTCQB: LEAT) said the strong dollar led to a a sharp drop in sales of its helmets, braces and other protective gear and accessories for motocross riders, cyclists and other high-velocity sports enthusiasts in the second quarter ended June 30.

The South African company reported revenues of $3.7 million, with a net loss of $11,456, or 0 cents per share, compared to revenues of $5.2 million, with net income of $423,937, or 8 cents per share, for the 2015 second quarter. For the six months ended June 30, 2016, revenues were $8.5 million, with a net income of $101,524, or 2 cents per share, as compared to revenues of $9.2 million, with net income of $478,042, or 9 cents per share, for the 2015 second quarter.

“The second quarter of 2016 continued to be difficult for companies providing consumer products around the world because of the strength of the U.S. dollar,” said CEO Sean Macdonald. “For a non-U.S. consumer, this has meant up to a 20 percent price hike for products that are priced and invoiced in U.S. dollars.

“We expect to build on our areas of strength despite otherwise disappointing results for the first half of the year. We are still experiencing overall sales growth in the geographic U.S., which has not been impacted by the currency turmoil in other markets, and our new helmet line continues to be enthusiastically received by the global market. The U.S. market is the world’s single largest geographic market, and the helmet market is one of the largest product categories in sports safety equipment. So we are expanding our U.S. and helmet sales marketing teams, with the addition of key managers and marketers to both areas. We are also continually working on refining our brand and marketing message to our consumers across all our markets, especially in the bicycle market. We are focused on the development of the Leatt brand to support our growing range of product categories and foster our continued growth.”

In the coming third quarter, Leatt expects to ship its 2017 range of products, including several new categories, to distributors worldwide.

“In light of these efforts, we believe that the 2016 third and fourth quarters will mark a recovery for us, and that the results will be more positive, though possibly not strong enough to cancel out the negatives of the first six months,” said Macdonald.

Founder and Chairman Dr. Christopher Leatt said the company has been particularly pleased with the success of its new helmets, including those for road and mountain bicycling. “As such, we expect that the range of our helmet designs for specific sports will continue to expand,” Leatt said.

Macdonald went on to say that helmet sales, including the GPX 5.5 Composite helmet, the GPX 6.5 Carbon helmet, the DBX 6.0 Carbon helmet and the DBX 5.0 Composite helmets accounted for 10 percent of revenues in the second quarter.

Leatt continued to meet its working capital needs from cash on hand and internally generated cash flow from operations.  At June 30, 2016, the company had cash and cash equivalents of $1 million and there was no long term debt.

Business Outlook

“As we work through the rest of 2016 and into 2017, we see trend lines improving,” Macdonald said. “We are expecting a more positive 2017, due to further expansion of our helmet business, continued focus on marketing the Leatt brand in new markets, and the addition of our new product categories. We are also continuing our efforts to engineer new products for all forms of high-velocity sports and to expand our dealer network and B2B portal.  These developments are consistent with our long-range plan to grow the company, diversify our product line and strengthen our market position. This is a very busy and important time for Leatt.”