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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
  
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended
September 30, 2023
 
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____to_____
 
Commission File Number:
001-38739
 
TOUGHBUILT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
46-0820877
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
8669 Research Drive
Irvine,
CA
 
92618
(Address of principal executive offices)
 
(Zip Code)
 
(949) 528-3100
(Registrant’s telephone number, including area code)
 
N/A
(Former name, former address and formal fiscal year, if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class:
 
Trading Symbol(s)
 
Name of each exchange on which registered:
Common Stock
 
TBLT
 
The Nasdaq Stock Market LLC
Series A Warrants
 
TBLTW
 
The Nasdaq Stock Market LLC
 
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 every Interactive Data File required to be submitted 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 such files).
Yes
x
No
¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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
x
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 accounting standards provided pursuant to section 13(a) of the Exchange Act.
¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
¨
No
x
 
As of November
20
, 2023, the registrant had
36,915,222 shares of common stock, par value $0.0001 per share, outstanding.
 

 


TABLE OF CONTENTS
 
 
 
 
 
 
 


 
 


 
 


 
 


 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

1
 
 

PART I. FINANCIAL INFORMATION
 
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
TOUGHBUILT INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
September 30,
 
 
December 31,
 
 
 
2023
 
 
2022
 
 
 
(UNAUDITED)
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
 
 
Cash
 
$
1,834,305
 
 
$
2,564,237
 
Accounts receivable, net
 
 
8,992,889
 
 
 
16,810,659
 
Inventory, net
 
 
28,070,889
 
 
 
40,365,286
 
Prepaid and other current assets
 
 
543,343
 
 
 
369,792
 
Total Current Assets
 
 
39,441,426
 
 
 
60,109,974
 
Other Assets
 
 
 
 
 
 
 
 
Property and equipment, net
 
 
18,904,135
 
 
 
17,500,383
 
Right-of-use asset
 
 
4,021,988
 
 
 
4,415,859
 
Other assets
 
 
2,165,301
 
 
 
1,890,780
 
Total Assets
 
$
64,532,850
 
 
$
83,916,996
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
 
Accounts payable
 
$
41,091,115
 
 
$
29,671,272
 
Accrued expenses
 
 
4,461,713
 
 
 
3,010,914
 
Lease liability, current maturities
 
 
1,247,062
 
 
 
959,630
 
Short-term loan payable
 
 
707,625
 
 
 
973,583
 
Warrant and preferred investment option liabilities
 
 
5,740,899
 
 
 
16,116,273
 
Total Current Liabilities
 
 
53,248,414
 
 
 
50,731,672
 
 
 
 
 
 
 
 
 
 
Lease liability, net of current maturities
 
 
3,013,214
 
 
 
3,477,380
 
Total Liabilities
 
 
56,261,628
 
 
 
54,209,052
 
 
 
 
 
 
 
 
 
 
Stockholders’ Equity
 
 
 
 
 
 
 
 
Series C Preferred Stock, $
0.0001
par value,
4,268
authorized,
0
issued and outstanding at September 30, 2023 and December 31, 2022
 
 
-
 
 
 
-
 
Series D Preferred Stock, $1,000 par value, 5,775 shares authorized, 0 issued and outstanding at September 30, 2023 and December 31, 2022
 
 
-
 
 
 
-
 
Series E Preferred Stock, $0.0001 par value, 15 authorized, 9 issued and outstanding at September 30, 2023 and December 31, 2022
 
 
-
 
 
 
-
 
Series F Preferred Stock, $0.0001 par value, 2,500 authorized, issued and outstanding at September 30, 2023 and December 31, 2022
 
 
-
 
 
 
-
 
Series G Preferred Stock, $0.0001 par value, 2,500 authorized, issued and outstanding at September 30, 2023 and December 31, 2022
 
 
-
 
 
 
-
 
Common stock, $0.0001 par value, 200,000,000 shares authorized, 36,915,222 and 14,078,997 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively
 
 
3,691
 
 
 
1,408
 
Additional paid-in capital
 
 
181,469,690
 
 
 
174,659,589
 
Accumulated deficit
 
 
(173,202,159
)
 
 
(144,953,053
)
Total Stockholders’ Equity
 
 
8,271,222
 
 
 
29,707,944
 
Total Liabilities and Stockholders’ Equity
 
$
64,532,850
 
 
$
83,916,996
 
 
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

 
2
 

TOUGHBUILT INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) 
 
 
 
Three Months Ended
September 30,
 
 
Nine Months Ended
September 30,
 
 
2023
 
 
2022
 
 
2023
 
 
2022
 
Revenues, net of allowances
 
 
          
Metal goods
 
$
12,754,504
 
 
$
19,226,191
 
 
$
30,475,518
 
 
$
34,354,744
 
Soft goods
 
 
6,035,706
 
 
 
8,239,785
 
 
 
25,938,923
 
 
 
27,258,989
 
Electronic goods
 
 
1,839,997
 
 
 
2,779,275
 
 
 
3,308,045
 
 
 
3,739,918
 
Total revenues, net of allowances
 
 
20,630,207
 
 
 
30,245,251
 
 
 
59,722,486
 
 
 
65,353,651
 
  
 
 
 
 
   
 
 
 
 
 
Cost of Goods Sold
 
 
 
 
 
 
   
 
 
 
 
 
Metal goods
 
 
10,351,690
 
 
 
14,923,322
 
 
 
25,732,707
 
 
 
28,041,096
 
Soft goods
 
 
3,646,862
 
 
 
4,868,601
 
 
 
16,528,326
 
 
 
18,011,023
 
Electronic goods
 
 
1,718,681
 
 
 
2,536,171
 
 
 
3,150,236
 
 
 
3,432,832
 
Total cost of goods sold
 
 
15,717,233
 
 
 
22,328,094
 
 
 
45,411,269
 
 
 
49,484,951
 
  
 
 
 
 
   
 
 
 
 
 
Gross profit
 
 
4,912,974
 
 
 
7,917,157
 
 
 
14,311,217
 
 
 
15,868,700
 
  
 
 
 
 
   
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
   
 
 
 
 
 
Selling, general and administrative expenses
 
 
12,572,066
 
 
 
14,676,135
 
 
 
42,618,510
 
 
 
45,106,976
 
Research and development
 
 
2,916,349
 
 
 
2,781,676
 
 
 
9,357,273
 
 
 
8,050,481
 
Total operating expenses
 
 
15,488,815
 
 
 
17,457,811
 
 
 
51,975,783
 
 
 
53,157,457
 
  
 
 
 
 
   
 
 
 
 
 
Loss from operations
 
 
(10,575,441
)
 
 
(9,540,654
)
 
 
(37,664,566
)
 
 
(37,288,757
)
  
 
 
 
 
   
 
 
 
 
 
Other income (expense)
 
 
 
 
 
 
   
 
 
 
 
 
Warrant issuance costs
 
 
(186,450
)
 
 
(969,791
)
 
 
(538,218
)
 
 
(1,415,229
)
Change in fair value of warrant and preferred investment option liabilities
 
 
3,033,537
 
 
 
19,065,297
 
 
 
17,761,007
 
 
 
23,111,029
 
Inducement expense
 
 
(6,373,353
)
 
 
 
-
 
 
 
 
(6,373,353
)
 
 
 
-
 
 
Interest expense
 
 
(146,867
)
 
 
(548,422
)
 
 
(1,433,975
)
 
 
(640,603
)
Total other income
 
 
(3,673,133
)
 
 
17,547,084
 
 
 
9,415,461
 
 
 
21,055,197
 
  
 
 
 
 
   
 
 
 
 
 
Net income (loss)
 
$
(14,248,574
)
 
$
8,006,430
 
 
$
(28,249,105
)
 
$
(16,233,560
)
  
 
 
 
 
   
 
 
 
 
 
Common stock deemed dividend
 
 
-
 
 
(7,467,200
)
 
 
-
 
 
(7,467,200
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders
 
$
(14,248,574
)
 
$
539,230
 
 
$
(28,249,105
)
 
$
(23,700,760
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income (loss) per share attributed to common stockholders
 
$
(0.46
)
 
$
0.05
 
 
$
(1.37
)
 
$
(5.42
)
Basic weighted average common shares outstanding
 
 
31,298,034
 
 
 
10,872,412
 
 
 
20,663,732
 
 
 
4,376,175
 
Diluted net income (loss) per share attributed to common stockholders
 
$
(0.46
)
 
$
0.03
 
 
$
(1.37
)
 
$
(5.42
)
Diluted weighted average common shares outstanding
 
 
31,298,034
 
 
 
19,721,339
 
 
 
20,663,732
 
 
 
4,376,175
 
 
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

  
3
 
 
TOUGHBUILT INDUSTRIES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(UNAUDITED)


 
 
Series C
Preferred
Stock
 
 
Series D
Preferred
Stock
 
 
Series E
Preferred
Stock
 
 
Series F
Preferred
Stock
 
 
Series G
Preferred
Stock
 
 
Common
Stock
 
 
Additional
Paid-in
 
 
 
 
Accumulated
 
 
Total
Stockholders’
Equity
 
 
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Deficit
 
 
(Deficit)
 
Balance - January 1, 2022
 
 
-
 
 
$
-
 
 
 
-
 
 
$
-