ToughBuilt™ Reports Second Quarter 2020 Financial Results
LAKE FOREST, California, Aug. 14, 2020 (GLOBE NEWSWIRE) -- ToughBuilt Industries, Inc. (“ToughBuilt®” or the “Company”) (NASDAQ: TBLT; TBLTW) is an advanced product design, manufacturer and distributor with emphasis on innovative products, announced today its financial results for the quarter ended June 30, 2020.
Highlights of Second Quarter 2020 and 6-Month Financial Results
Operating Results for the Three Months Ended June 30, 2020
| - | Net sales for three months ended June 30, 2020 were $6.8 million, an increase of 43% from $4.7 million in the same period of 2019. |
| - | Gross profit increased by 117% to $2.5 million in the three months ended June 30, 2020, compared to $1.1 million in the same period in 2019. |
| - | Net loss for the three months ended June 30, 2020 was $2.5 million, as compared to a profit of $7 thousand in the same period of 2019. |
Operating Results for the Six Months Ended June 30, 2020
| - | Net sales for the six-month period ended June 30, 2020 were $10.7 million, an increase of 10% from $9.7 million in the same period 2019. |
| - | Gross profit increased by 73% to $4 million in the six months ended June 30, 2020, compared to $2.3 million in 2019. |
| - | Net loss for the six-month period ended June 30, 2020 was $6.2 million, as compared to a profit of $507 thousand in the same period of 2019. |
Michael Panosian, Chief Executive Officer of ToughBuilt, stated, “I am pleased with our accomplishments and believe our company to be in a good position to take advantage of global market opportunities as we are moving forward. We signed several new partnerships, including global distribution agreements and new sales channels that will be invaluable for the short and long term. Also, exceedingly proud of our team and global partners performance and would like to applaud everyone for always putting safety first. Our entire team has shown real dedication during this pandemic by quickly and effectively implementing new protocols to promote the safety and welfare of our employees and the communities in which we serve,” stated Mr. Panosian.
ABOUT TOUGHBUILT INDUSTRIES, INC.
ToughBuilt is an advanced product design, manufacturer and distributor with emphasis on innovative products. Currently focused on tools and other accessories for the professional and do-it-yourself construction industries. We market and distribute various home improvement and construction product lines for both the do-it-yourself and professional markets under the TOUGHBUILT brand name, within the global multibillion dollar per year tool market industry. All of our products are designed by our in-house design team. Since launching product sales in 2013, we have experienced significant annual sales growth. Our current product line includes three major categories, with several additional categories in various stages of development, consisting of Soft Goods & Kneepads and Sawhorses & Work Products. Our mission is to provide products to the building and home improvement communities that are innovative, of superior quality derived in part from enlightened creativity for our end users while enhancing performance, improving well-being and building high brand loyalty. Additional information about the Company is available at: https://www.toughbuilt.com/.
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements.” Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) market acceptance of our existing and new products, (ii) delays in bringing products to key markets, (iii) an inability to secure regulatory approvals for the ability to sell our products in certain markets, (iv) intense competition in the industry from much larger, multinational companies, (v) product liability claims, (vi) product malfunctions, (vii) our limited manufacturing capabilities and reliance on subcontractors for assistance, (viii) our efforts to successfully obtain and maintain intellectual property protection covering our products, which may not be successful, (ix) our reliance on single suppliers for certain product components, (x) the fact that we will need to raise additional capital to meet our business requirements in the future and that such capital raising may be costly, dilutive or difficult to obtain and (xi) the fact that we conduct business in multiple foreign jurisdictions, exposing us to foreign currency exchange rate fluctuations, logistical and communications challenges, burdens and costs of compliance with foreign laws and political and economic instability in each jurisdiction. More detailed information about the Company and the risk factors that may affect the realization of forward looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.
Investor Relations Contact:
Andrew J. Barwicki
Investor Relations
Tel: 516-662-9461
Andrew@barwicki.com
TOUGHBUILT INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
| June 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 19,628,685 | $ | 25,063 | ||||
| Accounts receivable | 3,086,402 | 2,075,380 | ||||||
| Factor receivables, net | 388,364 | 174,042 | ||||||
| Inventory | 1,855,595 | 2,215,497 | ||||||
| Prepaid assets | 1,792,666 | 254,070 | ||||||
| Note receivable | 1,480,000 | 4,480,000 | ||||||
| Total Current Assets | 28,231,712 | 9,224,052 | ||||||
| Property and equipment, net | 1,598,583 | 1,029,885 | ||||||
| Other assets | 470,688 | 215,688 | ||||||
| Total Assets | $ | 30,300,983 | $ | 10,469,625 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 2,105,052 | $ | 2,536,871 | ||||
| Accrued expenses | 404,197 | 364,309 | ||||||
| Factor loan payable | 294,868 | 125,645 | ||||||
| Convertible notes payable, net of discount | 1,759,081 | 4,216,307 | ||||||
| Total Current Liabilities | 4,563,198 | 7,243,132 | ||||||
| Total Liabilities | 4,563,198 | 7,243,132 | ||||||
| Shareholders’ Equity | ||||||||
| Series D Preferred Stock, $1,000 par value, 5,775 shares authorized, 0 and 5,775 issued, and outstanding at June 30, 2020 and December 31, 2019, respectively. Liquidation preference of $5,775,000 at December 31, 2019. | - | 4,816,485 | ||||||
| Common stock, $0.0001 par value, 200,000,000 shares authorized, 38,414,631 and 3,300,015 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 3,842 | 330 | ||||||
| Additional paid-in capital | 75,421,130 | 41,823,048 | ||||||
| Accumulated deficit | (49,687,187 | ) | (43,413,370 | ) | ||||
| Total Shareholders’ Equity | 25,737,785 | 3,226,493 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 30,300,983 | $ | 10,469,625 | ||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
TOUGHBUILT INDUSTRIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenues, net of allowances | ||||||||||||||||
| Metal goods | $ | 3,374,066 | $ | 2,274,978 | $ | 5,456,846 | $ | 3,916,250 | ||||||||
| Soft goods | 3,465,580 | 2,479,362 | 5,292,312 | 5,860,561 | ||||||||||||
| Total revenues, net of allowances | 6,839,646 | 4,754,340 | 10,749,158 | 9,776,811 | ||||||||||||
| Cost of Goods Sold | ||||||||||||||||
| Metal goods | 2,291,948 | 1,680,762 | 3,652,461 | 2,974,433 | ||||||||||||
| Soft goods | 1,990,681 | 1,896,656 | 3,017,911 | 4,447,742 | ||||||||||||
| Total cost of goods sold | 4,282,629 | 3,577,418 | 6,670,372 | 7,422,175 | ||||||||||||
| Gross profit | 2,557,017 | 1,176,922 | 4,078,786 | 2,354,636 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses | 4,313,015 | 2,528,461 | 8,816,839 | 5,258,003 | ||||||||||||
| Research and development | 422,072 | 666,448 | 946,239 | 1,130,043 | ||||||||||||
| Total operating expenses | 4,735,087 | 3,194,909 | 9,763,078 | 6,388,046 | ||||||||||||
| Loss from operations | (2,178,070 | ) | (2,017,987 | ) | (5,684,292 | ) | (4,033,410 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (341,088 | ) | (86,275 | ) | (589,525 | ) | (168,538 | ) | ||||||||
| Change in fair value of warrant derivative | - | 2,111,684 | - | 4,709,583 | ||||||||||||
| Total other income (expense) | (341,088 | ) | 2,025,409 | (589,525 | ) | 4,541,045 | ||||||||||
| Net income (loss) | $ | (2,519,158 | ) | $ | 7,422 | $ | (6,273,817 | ) | $ | 507,635 | ||||||
| Common stock deemed dividend | - | - | - | (2,137,190 | ) | |||||||||||
| Redemption of Series D Preferred Stock deemed dividend | - | - | (1,295,294 | ) | - | |||||||||||
| Net income (loss) attributable to common stockholders | $ | (2,519,158 | ) | $ | 7,422 | $ | (7,569,111 | ) | $ | (1,629,555 | ) | |||||
| Basic and diluted net loss per share attributed to common stockholders | ||||||||||||||||
| Basic net loss per common share | $ | (0.11 | ) | $ | 0.00 | $ | (0.49 | ) | $ | (1.06 | ) | |||||
| Basic weighted average common shares outstanding | 22,209,152 | 1,904,270 | 15,440,558 | 1,538,834 | ||||||||||||
| Diluted net loss per common share | $ | (0.11 | ) | $ | 0.00 | $ | (0.49 | ) | $ | (1.05 | ) | |||||
| Diluted weighted average common shares outstanding | 22,209,152 | 1,904,270 | 15,440,558 | 1,551,618 | ||||||||||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
TOUGHBUILT INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Six Months Ended June 30, | ||||||||
| 2020 | 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | (6,273,817 | ) | $ | 507,635 | |||
| Adjustments to reconcile from net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation | 217,631 | 101,911 | ||||||
| Amortization of debt discount and debt issuance cost | 448,908 | - | ||||||
| Change in fair value of warrant derivative | - | (4,709,583 | ) | |||||
| Stock-based compensation expense | 323,989 | 209,763 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (1,011,022 | ) | (809,543 | ) | ||||
| Factor receivables, net | (214,322 | ) | 150,995 | |||||
| Inventory | 359,902 | (786,682 | ) | |||||
| Prepaid assets | (966,196 | ) | (75,848 | ) | ||||
| Other assets | (5,000 | ) | (3,537 | ) | ||||
| Accounts payable | (431,819 | ) | (157,002 | ) | ||||
| Accrued expenses | 39,888 | (524,377 | ) | |||||
| Deferred revenue | - | (33,665 | ) | |||||
| Net cash used in operating activities | (7,511,858 | ) | (6,129,933 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from note receivable | 3,000,000 | - | ||||||
| Advance for property and equipment | (250,000 | ) | - | |||||
| Purchases of property and equipment | (786,329 | ) | (276,554 | ) | ||||
| Net cash provided by (used in) investing activities | 1,963,671 | (276,554 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from sales of common stock and warrants, net of costs | 28,122,740 | - | ||||||
| Proceeds from exercise of Series A warrants | - | 2,172,680 | ||||||
| Proceeds from exercise of Placement Agent warrants | - | 16,818 | ||||||
| Proceeds from factor loan payable | 169,223 | 1,809,884 | ||||||
| Repayments of factor loan payable | - | (2,028,866 | ) | |||||
| Repayments of Series D Preferred Stock | (3,140,154 | ) | - | |||||
| Net cash provided by financing activities | 25,151,809 | 1,970,516 | ||||||
| Net increase (decrease) increase in cash | 19,603,622 | (4,435,971 | ) | |||||
| Cash, beginning of period | 25,063 | 5,459,884 | ||||||
| Cash, end of period | $ | 19,628,685 | $ | 1,023,913 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | - | $ | - | ||||
| Income taxes | $ | - | $ | - | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Cashless exercise of warrants | $ | 244 | $ | - | ||||
| Conversion of Series C Preferred Stock to common stock | $ | 13 | $ | - | ||||
| Conversion of Series D Preferred Stock to common stock | $ | 2,971,311 | $ | - | ||||
| Conversion of convertible notes payable to common stock | $ | 2,906,134 | $ | - | ||||
| Issuance of common stock for prepaid services | $ | 572,400 | $ | - | ||||
| Conversion of Series B warrants into common stock | $ | - | $ | 13,369,232 | ||||
| Issuance of convertible preferred stock in exchange for warrants | $ | - | $ | 3,671,024 | ||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
Released August 14, 2020